Chipotle: Good Portions Keep Diners Coming Back Amid Rising Prices

Consumers are willing to pay higher prices at fast-casual restaurants if they get good portions, quality ingredients and value for the money, Chipotle executives said Tuesday (Feb. 4).

Reporting the company’s results for the fourth quarter, executives said Chipotle’s food, beverage and packaging costs rose to 30.4% of total revenue in the fourth quarter, up from 29.7% in the same quarter a year earlier.

In a Tuesday earnings release, the company attributed this increase in part to using more ingredients “as we focused on ensuring consistent and generous portions.” Higher menu prices partially offset this increased cost, the release added.

During the call, Chipotle executives dubbed this higher cost the “portion investment.”

In the fourth quarter, the company saw this investment contribute to a 5.4% increase in comparable restaurant sales due to 4% higher transactions and a 1.4% increase in average check.

Chipotle CEO Scott Boatwright said during the call that the company gained momentum throughout 2024 by focusing on “high quality ingredients, value for the money, healthy and nutritious, good amount of food for the money.”

These offerings have appeal across consumers of different incomes, he said.

Asked by an analyst if Chipotle has seen any shift among the cohorts of consumers visiting its restaurants, Boatwright said there was “nothing really to report from an income cohort standpoint.”

“I mean, all were contributing to the comp very nicely,” Boatwright said. “We saw this throughout Q4, and that really hasn’t changed going into January.”

During the call, Boatwright also highlighted Chipotle’s expanded partnership with a mobile app for active people called Strava. This partnership includes motivational text messages, exclusive creator content, and promotions of Chipotle meals designed for healthy lifestyles.

“With health and wellness top of mind for our guests, this is a great way to show how the Chipotle ingredients can be customized to fit and fuel any dietary restrictions or lifestyle routines,” Boatwright said during the call.

Another new digital initiative is Chipotle’s development of an artificial intelligence assistant that will help with the customer journey when ordering through the digital channel.

“When the model detects that a customer’s behavior is changing in a particular way that would signal a propensity for churn, we will take them on a new journey with personalized extras and offers to encourage them to reengage,” Boatwright said.