Firms from Chipotle to Whirlpool are elevating costs amid inflation
An employee sprinkles cheese on a burrito at a Chipotle Mexican Grill restaurant in Hollywood, California.
Patrick T. Fallon | Bloomberg | Getty Images
Consumer brands from Chipotle Mexican Grill to Whirlpool are battling inflation by passing higher costs on to their customers through price increases.
Many companies that have released quarterly results over the past two weeks said they are raising prices to offset rising costs of labor, raw materials, and other inputs. Several large companies have had preliminary successes with their pricing efforts.
The steps come as recent data shows prices jump to record rates amid the economic recovery from the Covid pandemic.
The Federal Reserve believes that inflation will eventually ease and is largely the result of high demand that exceeds supply as the economy recovers from the pandemic. But companies aren’t waiting to find out if the Fed is right and pushing through price hikes that they may not roll back anytime soon, even if input costs come down.
Chipotle hit the headlines in June after announcing it would hike menu prices by 3.5% to 4% to offset the increase in the average hourly rate to $ 15.
The decision was worth it; The restaurant chain reported sales in the second quarter that exceeded pre-pandemic levels and said it would consider further price hikes across the board if inflation persists.
“There is still a chance that we could take additional pricing measures to fill the gap completely … Let’s see how the menu price continues to be accepted by customers. Really, really good so far. Really no resistance to be seen,” Chipotle Chief said CFO John Hartung said on the conference call Tuesday.
Whirlpool washing machines for sale in the Airport Home Appliance Store in Concord, California.
David Paul Morris | Bloomberg | Getty Images
Household appliance manufacturer Whirlpool has raised its prices in response to increased raw material costs. CEO Marc Robert Bitzer said on Thursday’s conference call that the company has already started “seeing the benefits”.
“We are confident that continued strong consumer demand and our previously announced cost-based pricing measures will offset the effects of global supply bottlenecks and rising production costs,” said Bitzer.
Slim Jims, Pizza and Pepsi
Conagra, the food company whose brands include names like Slim Jim and Reddi-wip, reported strong results from its price increases during the company’s fourth quarter conference call on July 13.
“We started implementing pricing measures on some of our products in the fourth quarter related to initial inflation. The data from these measures shows very early that our elasticities are looking good so far and that we expect more prices, ”said Sean M. Connolly, President, CEO and Director of Conagra.
Richard Allison, Jr., CEO of Domino’s Pizza, said on the restaurant chain’s second quarter conference call Thursday that “pricing is certainly one of the levers” to offset wage increases due to inflationary pressures in the labor market.
Allison said Domino’s corporate stores have increased their delivery fees and menu prices slightly, and franchisees have the option to do the same in their own stores.
Food and beverage giant PepsiCo said it will use its pricing power to offset inflationary pressures.
“As with everyone else in our business, we see inflation in many of our raw materials and in some of our labor, freight and everything else,” said Ramon Laguarta, CEO of PepsiCo, on the company’s second quarter conference call on July 13th.
“Is there a little more inflation out there? There is. Are we going to set prices to deal with it? We certainly do,” added Hugh Johnston, PepsiCo’s chief financial officer.
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