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 coping with inflation by passing higher costs on to their customers through price increases.
Many companies that released quarterly results in the past two weeks said they were raising prices to offset rising costs for labor, raw materials and other inputs. Several large companies have had preliminary success with their pricing actions.
The measures come as recent data shows prices are leaping at record rates amid the economic recovery from the Covid pandemic.
The Federal Reserve believes inflation will eventually moderate and is largely the result of strong demand exceeding supply as the economy picks up after the pandemic. But companies aren’t waiting to find out if the Fed is right, implementing price hikes they may not be so quick to reverse even if input costs fall.
Chipotle made headlines in June after announcing it would increase menu prices from 3.5% to 4% to offset the increase in its average hourly rate to $ 15.
The decision paid off; the restaurant chain said second-quarter revenues exceeded pre-pandemic levels and said it considered further price hikes if inflation persists.
“There is always this possibility that we can take additional pricing measures to completely close the gap… Let’s see how the menu price continues to be accepted by customers. So far, really, really good. really see no resistance, “Chipotle Chief Financial agent John Hartung said Tuesday during the results call.
Whirlpool washing machines for sale at the Airport Home Appliance store in Concord, California.
David Paul Morris | Bloomberg | Getty Images
Home appliance maker Whirlpool has raised prices amid rising raw material costs. CEO Marc Robert Bitzer said during Thursday’s earnings call that the company had already started to “see the benefits”.
“We are confident that sustained strong consumer demand and our previously announced cost-based pricing actions will offset the impact of global supply constraints and rising input costs,” Bitzer said.
Slim Jims, pizza and Pepsi
“We started implementing pricing actions on some of our products in the fourth quarter due to the initial inflation we experienced. Very early reading of the data for these actions is that our elasticities look good up to present, and we have more awards to come, “Sean M. Connolly, President, CEO and Director of Conagra said.
Domino’s Pizza CEO Richard Allison, Jr., said on Thursday during the restaurant chain’s second quarter earnings call that “prices are certainly one of the levers” to offset wage increases due to inflationary pressures in the labor market.
According to Allison, Domino’s corporate stores have slightly increased their delivery costs and menu prices, and franchisees have the option of doing the same in their own businesses.
Food and beverage giant PepsiCo has said it will use its pricing power to offset inflationary pressures.
“Like everyone else, we are seeing inflation in our business for a lot of our raw materials and some of our inputs in labor and freight and everything in between,” said PepsiCo Managing Director Ramon. Laguarta, during the company’s second quarter earnings call on July 13. .
“Is there a little more inflation? There is. Are we going to price it to deal with it? We sure are,” added Hugh Johnston, CFO of PepsiCo.
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