Chipotle: The rich are buying more burritos, and the poorest customers are pulling back

• CEO Brian Niccol says high-income customers are increasing Chipotle trips in place of more expensive dining.
• Chipotle says it relies on high-income customers for the bulk of sales.

Inflation is changing how Chipotle customers behave, and it might actually be a good thing for the fast-casual chain.

CEO Brian Niccol said that the majority of Chipotle customers have relatively high household incomes and they have increased the frequency of orders in a July earnings call. He attributed the phenomenon to those customers trading in meals at higher-priced restaurants for Chipotle orders instead.

This subset of Chipotle customers is ordering burritos and bowls more frequently despite regular price increases, with another planned for August that could bump the price of entrees in some markets by as much as a dollar. In the first quarter of 2022, Chipotle raised menu prices by 4%, CFO Jack Hartung told investors on an earlier call. Those were on top of earlier price hikes in part due to raising wages for employees in June 2021 when the fast-casual chain said that it raised prices by about 4%.

These purchasing trends are consistent with available information about Chipotle's customer base. The typical Chipotle customer is a white, married millennial between 25 and 34 years old, according to data provided by analytics firm Numerator. They're likely to have a college degree and make more than $80,000 a year.

Inflation, which is at a 40-year-high, isn't necessarily driving all customers to increase their Chipotle trips. The typical low-income consumer "definitely has pulled back their purchase frequency," Niccol said in the same call, though "fortunately," they don't make up the majority of its customers. Lower-income consumers are cutting back across the board, as McDonald's noted in its recent earnings call, leading to some customers downgrading to cheaper items and cutting back on combo meals.

Chipotle isn't the only fast food chain benefitting from inflation. McDonald's CEO Chris Kempczinski said that "there is some benefit" to McDonald's in the call, as prices of food away from home, including restaurants, increase less rapidly than grocery prices.

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