Chipotle CSO Talks California’s ‘Macro Resistance’ to Inflation

In an interview Tuesday with CNBC’s Jim Cramer, Chipotle CSO Jack Hartung discussed business in California since the burrito maker raised prices in April, saying there is “macro resistance” from consumers to inflation across the industry.

“Our read on California is less about resistance to our price increase and more of a macro impact,” Hartung said. “Because when you look at the restaurant industry, restaurant transactions are down for everybody.”

Hartung was previously Chipotle’s chief financial officer and characterized the California chain’s price hike as “in the middle” of the spectrum of other restaurants that have also made menu items more expensive. The company raised prices in the state by about 7 percent to offset new higher minimum wage regulations for fast-food workers, which raised the mandatory hourly rate from $16 to $20 an hour.

Chipotle beat Wall Street expectations in its most recent quarter and reported growth in market share and restaurant transactions at every revenue level. Other fellow consumers described a pullback from lower-income customers. Chipotle’s core customer base — like other fast-casual chains — consists of higher-income consumers, CNBC reported.

Hartung also teased how Chipotle plans to use artificial intelligence to help its business, pointing to “Autocado,” a robot that cuts, cores and peels avocados, and another program that automates the process of creating bowls and salads. He said it was “early days” for the technology, but argued he would not “remove that personalization” from the business.

“There will still be that eye-to-eye contact,” Hartung said. “But there are things behind the scenes, like long before our restaurants ever open, that are complicated tasks, they’re time-consuming tasks, and if we can simplify them for our crew, they’re going to have a better experience. “