Chipotle CFO Sees Wage Inflation Easing Amid Pandemic
(Bloomberg) -- The global pandemic has alleviated upward pressure on worker pay in the U.S. and a higher federal minimum wage should be phased in rather than enacted suddenly, Chipotle Mexican Grill Inc. Chief Financial Officer Jack Hartung said.
The burrito chain’s current starting wage is more than $10 an hour at its restaurants, Hartung said, and its average hourly wage is about $13. That compares with the $15 hourly minimum proposed by President Joe Biden.
“I suspect that when the two sides of the aisle try to work on this, the phasing is what they’re going to talk about,” Hartung said. “I suspect Biden and the team will try to do it more quickly. The phased approach is going to be a pragmatic approach.”
Labor was one of the industry’s main concerns before the pandemic, with restaurants struggling to find enough workers, even at higher pay. That has been superseded by Covid-19, which has broadly helped fast-food and delivery-focused companies pick up market share at the expense of sit-down establishments.
Chipotle saw its sales jump 14% in the third quarter after a 4.8% decline in the previous period. It will report fourth-quarter results on Feb. 2.
Easing wage pressure for restaurants, where data from the Bureau of Labor Statistics has shown a steady rise in recent years, would be welcomed by the industry since worker pay represents one of its biggest costs. A mandated increase could erode profitability at the same time that restaurants are contending with wild demand fluctuations and new costs for protective equipment.
Hartung said Chipotle is more than halfway to meeting its recently announced target of hiring 15,000 new workers. The company will encourage its more than 94,000 employees to get Covid-19 vaccinations without making it mandatory, Hartung said.
“We’re not going to require it. We think that this is something that people should make their own choice -- but we’re going to encourage it and we’re going to accommodate it,” he said.
The company is in the early stages of organizing vaccination for employees with health-care partners like CVS Health Corp., he said. Chipotle will likely offer workers paid time off to get vaccinated, he added.
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