Chipotle Raising Burrito Prices

Prices for a steak are up 25% Chipotle’s CEO Steve Ells said. Cheese prices are up 10% and who knows high avocado prices will go. There are estimates that as much as 30% of California’s avocado crop will be lost to the state’s continuing drought this year. Prices for other table vegetables like lettuce are also likely to be threatened.

But even ground beef for those burritos will be more expensive because live cattle numbers have dropped and export demand for beef spiked. Export shipments are up 3% compared with just a week ago, when beef prices reached a 27-year high.

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And while Chipotle did not mention pork prices, those too are rising fast as a deadly virus has killed millions of piglets in the past year, and prices for pork are 13% higher than they were a year ago and 53% higher than they were four years ago.

Only chicken has not yet broken to new highs, but as consumers turn to poultry to replace beef and pork, demand will rise and so will prices. Analysts at Rabobank believe that chicken prices and margins will rise this spring and summer and that production needs to rise 8% to 9% to meet expected demand. That will not be easy to achieve.

Chipotle expects burrito prices to rise in the mid-single digits and said that the price hikes will take effect over the next several months.

The company’s shares are down about 4.4% in late afternoon trading on Thursday at $527.14 in a 52-week range of $326.46 to $622.90.

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