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Thursday, July 9, 2015

Chipotle Thinks a Living Wage and an Affordable Burrito Don't Go Together

Posted By on Thu, Jul 9, 2015 at 10:01 AM

click to enlarge THOMAS HAWK/FLICKR
  • Thomas Hawk/Flickr
Remember the spate of articles earlier this year that traced the unintended consequences of Prop J, San Francisco’s minimum wage hike? Everyone from the Chronicle to Forbes to the Wall Street Journal investigated how the increase could be the death knell for the city’s small businesses. Borderlands Books in the Mission became the public face of the wage war; citing high overhead costs exacerbated by the new $15 minimum wage, the shop teetered on the brink of shuttering. (A monthly sponsorship program is keeping it afloat for the time being.)

Not to bury the lede here, but the latest twist in the minimum wage saga comes from an unlikely source: Chipotle. A report from wealth management firm William Blair finds that the restaurant chain hiked prices more than 10 percent across the menu, with a 14 percent increase on steak and barbacoa entrees. The company had planned to raise prices four to six percent in select markets. So why the big bump in San Francisco?

Prop J.

Chipotle spokesperson Chris Arnold confirmed to Slate that the 10 Chipotle stores in the city did indeed raise prices, while 74 restaurants in the East Bay raised prices 7 percent. (In March, Oakland raised its minimum wage 36 percent, to $12.25.)  

“California, and San Francisco in particular, have a high cost of doing business,” Arnold wrote in an email to Slate. “In San Francisco, for example, our occupancy costs are about double the Chipotle average as a percentage of sales, and our menu prices there are right around the average for Chipotle restaurants around the country, so increases to wages can have a greater impact than they might elsewhere.”

Chipotle, by the way, boasts more than $4 billion in annual revenue.

Over at Daily Kos, there's an interesting response to Chipotle's increase that boils down to: the burrito died for labor's sins.

Chipotle has dealt a serious blow to the fight for a higher minimum wage. They are now going to be the poster child of how minimum wage increases hurt the average consumer. Every time someone says that increased labor costs can be absorbed, Chipotle will be brought up as the caring, progressive company that was forced to make its food unaffordable to the masses due to the greedy city who wanted to unreasonably raise the minimum wage, not so people could have a better life, but so the city could get more taxes. And as a result, the common person can no longer afford a burrito. 


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Jeremy Lybarger

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