Chipotle Steak Price Increase Down to Drought01 May 2014
US - Chipotle announced this week that it would be raising the prices of its steak filling more steeply compared to price raises on chicken, a decision that the company says reflects the record-high beef prices in the United States.
Chipotle, which announced earlier this month that it would be making its first price increases in three years, said that it would be hiking its beef prices 4 to 6 percent, resulting in an increase of 32 to 48 cents, the AP reports.
“There’s a very narrow gap between our steak burrito and our chicken burrito. We’re going to widen that,” Chipotle Chief Financial Officer Jack Hartung said. “We’re going to allow our customers to choose whether they want to pay the higher price of steak.”
One of the forces behind Chipotle’s choice to raise its beef prices is drought: dry weather in much of cattle-heavy U.S. is forcing feed prices up, which in turn has forced farmers to sell off their cattle.
This trend has created a national cattle herd whose numbers are at a 63-year low, leading to cost increases that could affect consumers into 2015. In February, the LA Times reported, “all-fresh” USDA choice-grade beef hit a record $5.28 a pound — in 2008, that same cut of meat cost $3.97.
“You can’t keep buying $7,000-$8,000 a load for hay. Pretty soon you’re in this hole, so you sell your cattle and try to buy them back next year,” rancher Jim Warren told the AP in January.
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