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Trendy Chipotle burritos show how pricing power belongs to the hip
Reuters ^ | July 28, 2014 | Jeffrey Dastin

Posted on 07/29/2014 6:28:27 AM PDT by C19fan

Corporate America can learn a lot from a chicken burrito. As many companies struggle to boost prices without alienating consumers, they may want to study Mexican-food chain Chipotle, which has managed to do both.

Companies including Chipotle Mexican Grill Inc (CMG.N), Apple Inc (AAPL.O) and PepsiCo (PEP.N) have shown they're able to take advantage of quality, trendiness, and, in the case of Pepsi's snack foods, market dominance, to maintain high prices or even raise them faster than the inflation rate, now at about 2.1 percent in the U.S. Chipotle raised chicken-dish prices by 5 percent this year after leaving them untouched since 2011, and sales went up 29 percent last quarter.

(Excerpt) Read more at finance.yahoo.com ...


TOPICS: Business/Economy; Computers/Internet; Food
KEYWORDS: apple; brandloyalty; chipolte; everyminute; hersheyco; hipspace; hipsters; inflation; ipodtouch; macbookair; maccult; mandmmars; millennials; obamaconomy; pepsico; pricefixing; recession; sluggisheconomy; stagflation; suckerborn; trends
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1 posted on 07/29/2014 6:28:28 AM PDT by C19fan
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To: C19fan

Sheep paying a premium to make sure they’re safely enfolded into the herd.


2 posted on 07/29/2014 6:32:24 AM PDT by Paine in the Neck (Socialism consumes EVERYTHING)
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To: C19fan

Increase your prices and your sales will automatically increase! Whodda thunk! I wonder why the capitalists never thought of that when they were running the country and the economy.


3 posted on 07/29/2014 6:35:09 AM PDT by FlingWingFlyer (America is not a refugee camp! It is my home!!!)
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To: C19fan

As a spice, I like chipotle. As a food chain, not so much.


4 posted on 07/29/2014 6:35:44 AM PDT by Mr Rogers
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To: C19fan

A modest price increase after 3 yrs. does not seem unreasonable to most people.


5 posted on 07/29/2014 6:37:55 AM PDT by Buckeye McFrog
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To: C19fan

kinda like a fool and his money, eh?


6 posted on 07/29/2014 6:39:23 AM PDT by camle (keep an open mind and someone will fill it full of something for you)
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To: C19fan

Never had one of their burritos. Then again, I live in a town where you can buy excellent burritos from any number of locally-owned family businesses.


7 posted on 07/29/2014 6:42:07 AM PDT by Army Air Corps (Four Fried Chickens and a Coke)
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To: C19fan
I've never eaten at Chipotle....I don't support lefties.
8 posted on 07/29/2014 6:42:56 AM PDT by liberalh8ter (The only difference between flash mob 'urban yutes' and U.S. politicians is the hoodies.)
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To: C19fan
I try to be a food nazi in my choices. Around here, the line at Chipolte is so long at lunch time it goes outside. They raised their prices some, but got even more nutritional adding a brown rice option and sticking to pure freshly prepared foods. Their meal is large enough for two people to share.

People shop for quality and value. Chipolte's advertising and product emphasize that. Another one with many healthy choices is Panera...another long line at busy times. Ever heard of DeBella's...fresh baked breads, good ingredients and preparation. Yep, crowded.

What's my point? Many people, as they have to think of where to cut back, will absorb a small price increase if there's value and quality.

9 posted on 07/29/2014 6:44:18 AM PDT by grania
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To: Paine in the Neck

“Sheep paying a premium...”

*************
In general, dining out is very expensive. But you’re right, the sheeple enjoy gathering at crowded watering holes and getting fleeced — and then paying a 20% tip on top of that for poor service. Go figure.


10 posted on 07/29/2014 6:45:22 AM PDT by Starboard
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To: Paine in the Neck

We’ve gotten to where we VERY rarely eat at restaurants and find that when we do the food is not only no better, but often worse than what we can prepare ourselves.

And the beef from the last steer we slaughtered is amazing.


11 posted on 07/29/2014 6:46:29 AM PDT by cuban leaf (The US will not survive the obama presidency. The world may not either.)
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To: liberalh8ter

I’ve never eaten at Chipotle....I don’t support lefties.


I ate at one once in Longbeach Ca. Wasn’t bad. Wasn’t good.


12 posted on 07/29/2014 6:47:27 AM PDT by cuban leaf (The US will not survive the obama presidency. The world may not either.)
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To: Starboard

The one thing we do LOVE to eat at restaurants is Wicks or Mellow Mushroom pizza. We make it count, though. We get three meals out of a pizza.


13 posted on 07/29/2014 6:48:34 AM PDT by cuban leaf (The US will not survive the obama presidency. The world may not either.)
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To: Paine in the Neck

Fads are great, while they last.... a few years from now we’ll be reading how Chipotle is struggling...

That’s the problem with fads.... Krispy Kreme anyone?


14 posted on 07/29/2014 6:50:34 AM PDT by HamiltonJay
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To: C19fan; GeronL

Hipster douchebags (aka “foodies”) have bought into trends like paying $11 for a hamburger from a food wagon “OMGFOODGASMNOMNOMNOM!”

Low information consumers being played like a fiddle.


15 posted on 07/29/2014 6:50:56 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: cuban leaf

Good to know - At least I’m not missing anything!


16 posted on 07/29/2014 6:52:19 AM PDT by liberalh8ter (The only difference between flash mob 'urban yutes' and U.S. politicians is the hoodies.)
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To: Buckeye McFrog

The competitors (like Mission Burrito and Freebirds) have likewise taken the opportunity to push up prices and nix longstanding weekly sales promotions.

It’s easy to maintain market share when they all (through collusion or “chance”) raise their prices at the same time.


17 posted on 07/29/2014 6:53:26 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: C19fan

Similar food but BETTER:

http://www.qdoba.com/


18 posted on 07/29/2014 6:54:53 AM PDT by US Navy Vet (Go Packers! Go Rockies! Go Boston Bruins! See, I'm "Diverse"!)
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To: grania

Places like Chipotle often sell to “groups” (co-workers, weekend sports teams, college students, etc.). It’s also easy to “nudge” the pricing if their peers continue to go there for lunch (”What, you aren’t coming?”).


19 posted on 07/29/2014 6:56:10 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: C19fan

The “decor” at Chipotle reminds me of the company cafeteria in Orwell’s 1984.


20 posted on 07/29/2014 7:00:28 AM PDT by left that other site (You shall know the Truth, and The Truth Shall Set You Free.)
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To: liberalh8ter

I’m 60. Restaurant food is kinda like roller coasters. It’s a really big deal when you are younger. When you are older, it’s not really worth the trouble.

We do restaurants mainly out of convenience, with the rare exception of the good pizza places, which we hit once every four or five months.


21 posted on 07/29/2014 7:00:36 AM PDT by cuban leaf (The US will not survive the obama presidency. The world may not either.)
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To: C19fan; GeronL
PepsiCo and the DNC know all about branding for millennials to achieve "brand loyalty".

I thought herds didn't like to be branded.

22 posted on 07/29/2014 7:01:29 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: cuban leaf

We prefer to eat at home most of the time (high quality food and wine at low prices, cooked just the way you like it!) but its nice to break the routine now and then and catch a bite to eat at a local Italian cafe where its never crowded, consistently great and fresh food, and downright reasonable prices. Limited selection of wine and beer but the pizza is incredible. You can’t have everything. ;)

I personally don’t enjoy being in trendy restaurants and overpaying for food and marginal service, but understand that some people do. Just a matter of lifestyle preferences I guess. To each his own.


23 posted on 07/29/2014 7:04:34 AM PDT by Starboard
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To: cuban leaf
We don't really eat out, either. On the rare occasion we do, there's so much salt in the food it takes me 3 days to recover! When not traveling by camper, I rent through VRBO so I can cook. I find my vacations are much more satisfying that way.
24 posted on 07/29/2014 7:06:04 AM PDT by liberalh8ter (The only difference between flash mob 'urban yutes' and U.S. politicians is the hoodies.)
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To: left that other site

Never been there but can visualize what you’re talking about. Big brother and all that.


25 posted on 07/29/2014 7:06:12 AM PDT by Starboard
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To: cuban leaf

The pizza at Mellow Mushroom lasts longer if you load up on the pretzels (kosher salt and butter, with the beer cheese add on) first.

Like any product, there’s a price point sweet spot beyond which sales will decrease. Chipotle has been expanding like crazy and between that and having prices below what it’s customers are willing to pay for their product, yes, sales are going to increase.

Now up the price of a burrito to $20, and watch what happens.


26 posted on 07/29/2014 7:07:08 AM PDT by tanknetter
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To: Starboard

Raw concrete walls, stainless steel tables, seats with no back rests, no ornamentation, long lines of sheeple waiting for their food.

The food was OK, but the atmosphere was oppressive, like they wanted me to eat and LEAVE.

I guess that is the intent.


27 posted on 07/29/2014 7:09:26 AM PDT by left that other site (You shall know the Truth, and The Truth Shall Set You Free.)
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To: C19fan

Crappy place; not that I care much for mexican food anyway. Too much starch, too much pasty, mushed cardboard refried beans. Won’t ever go there again so the price paid is up to the schmoes who continue to pay premium prices for subpar food.


28 posted on 07/29/2014 7:11:38 AM PDT by RJS1950 (The democrats are the "enemies foreign and domestic" cited in the federal oath)
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To: Buckeye McFrog
A modest price increase after 3 yrs. does not seem unreasonable to most people.

That's what I thought.

What's to complain about?

29 posted on 07/29/2014 7:14:56 AM PDT by metmom (...fixing our eyes on Jesus, the Author and Perfecter of our faith...)
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To: cuban leaf

I must be getting a lot older. The waiters are really starting to annoy me. Their conversational ability seems to be limited to one phrase: “no problem”. But there’s usually a problem of some type (e.g., no napkins, insufficient utensils, one dollup of ketchup left in the bottle, dirty plates, etc.). The one thing you can count on, however, is that service will dramatically improve when its time to pay for the meal. They’ll bring that to you right away — “no problem”.


30 posted on 07/29/2014 7:20:28 AM PDT by Starboard
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To: tanknetter

Hipsters are gladly paying $20 for “lobster roll” sandwiches because someone somewhere online told them it was “goooooooooooooood”


31 posted on 07/29/2014 7:21:47 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: left that other site

Sounds institutional. lol


32 posted on 07/29/2014 7:22:55 AM PDT by Starboard
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To: Mr Rogers

I like chipotle, but the only time I have it is when I want something a little more than fast food but don’t have the time/money for a restaurant, and there isn’t a good diner around. Good for dinner in the theater district.


33 posted on 07/29/2014 7:23:13 AM PDT by Tanniker Smith (Rome didn't fall in a day, either.)
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To: Starboard

When I lived in Seattle, restaurants were a huge hassle. Parking, traffic, and other annoyances made it an event best avoided. Now that I’m in a small town in KY, the problem is that the nearest civilization is 15 minutes away at 70 mph. And that’s if you want McDonalds or really bad chinese all you can eat.

But even in Louisville, if we’re willing to take the 90 minute drive, there is no traffic and plenty of parking. But yeah, at my age I don’t want any banter with the wait staff. Just get me my stuff and don’t make me wait a half your for my bill. I’ve actually gone up to the register quite a few times without my bill.


34 posted on 07/29/2014 7:26:08 AM PDT by cuban leaf (The US will not survive the obama presidency. The world may not either.)
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To: C19fan

I’ve feel discouraged about going to a restaurant simply because the hype it draws. Around here, people talk about Chipotle, HuHot, Metropolitan Grill, and sushi in general in this fashion. The food isn’t bad at these places, but because of the overrated hype, I avoid them the most. I’ll take a small mom/pop restaurant any day over these places.

That being said, my vice is In n Out.


35 posted on 07/29/2014 7:29:15 AM PDT by Marko413
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To: a fool in paradise

Sure. There will always be people who do things like buy Pet Rocks because it’s the in/cool thing to do.

But those are fads that burn out pretty quickly. Chipotle’s growth, while definitely having some drive by hipsters looking to fo the “in” thing, doesn’t appear to be a fad. Their core demographic seem to be the lunchime professional crowd, with suburbanites being a secondary one.


36 posted on 07/29/2014 7:30:35 AM PDT by tanknetter
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To: a fool in paradise

Hipster douchebags (aka “foodies”) have bought into trends like paying $11 for a hamburger from a food wagon “OMGFOODGASMNOMNOMNOM!”

Low information consumers being played like a fiddle.

<><><><

LOL. Enjoy your 5 dollar, barely beef burger at the fast food chain of your choice.

I’m happy to pay a premium for food that has flavor. The food trucks you disparage are making original food that is really good. Yes, you can still find your hot dog wagon, but that’s not what I’m talking about.

If that makes me a hipster douchebag, so be it.

Take a gander at their menus.

http://www.mdfoodtrucks.com/food-trucks.html


37 posted on 07/29/2014 7:32:55 AM PDT by dmz
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To: C19fan

Eating at Chipotle is more likely to add something to their hips. Those burritos are laden with calories.


38 posted on 07/29/2014 7:35:13 AM PDT by writmeister
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To: Starboard

Yes indeed. Post-Industrial Chic, I guess


39 posted on 07/29/2014 7:36:18 AM PDT by left that other site (You shall know the Truth, and The Truth Shall Set You Free.)
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To: dmz

It’s overpriced. Plenty of good burgers and barbeque sandwiches available for below $8.

The food at the wagons is NOT that good and some grudgingly admit that the prices are extreme.

If you like being exploited to be on the cusp of a commercial trend, so be it and have a happy day.


40 posted on 07/29/2014 7:40:41 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: Buckeye McFrog

Chipotle here in L.A. has opened an Asian version that is goog. It’s called Shop House Kitchen.

It’s the same concept:
\
http://shophousekitchen.com/


41 posted on 07/29/2014 7:41:45 AM PDT by BunnySlippers (I LOVE BULL MARKETS . . .)
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To: BunnySlippers

That is good.


42 posted on 07/29/2014 7:43:36 AM PDT by BunnySlippers (I LOVE BULL MARKETS . . .)
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To: a fool in paradise

another food & beverage trend is the “limited release” (as in one day availability) high end beers (that can be between 8-13% alcohol). Pricing per 12 oz bottle can range from $8-12 (and if you “pass” on it, you miss out, so sad).

Some people like being gouged I guess.

They can be good, they aren’t better than a $10-15 22oz “bomber” yet cost almost twice as much and they don’t all “live up to the hype”. Then again, the product usually sells out before the first review hits the internets.


43 posted on 07/29/2014 7:47:32 AM PDT by a fool in paradise (Elian Gonzalez sought asylum and was sent back to Cuba, send these kids back to THEIR parents.)
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To: C19fan

There’s nothing wrong with sucking money out of the home-equity ATM, and buying overpriced tacos at trendy fast-food joints.

That’s the American way.


44 posted on 07/29/2014 7:49:57 AM PDT by moovova
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To: Tanniker Smith

I used to like Chipotle, but I refuse to patronize them anymore. Not only did the raise their prices, they also decreased portion sizes. When Chipotle started, they had huge burritos with decent meat and veggies. Now, it’s $10 for a burrito and a drink and the burritos are the size of Taco Bell’s.

You can raise prices or reduce portions. But not both. No way I’m paying that premium.


45 posted on 07/29/2014 7:51:42 AM PDT by antidisestablishment (Islam delenda est)
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To: US Navy Vet
Similar food but BETTER: http://www.qdoba.com/

You've got that right!

46 posted on 07/29/2014 7:53:14 AM PDT by Alex Murphy ("the defacto Leader of the FR Calvinist Protestant Brigades")
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To: C19fan

The problem I see here is that when one food chain raises their price,it gives a “go” signal to the others & then we ALL pay more


47 posted on 07/29/2014 8:09:48 AM PDT by oldtech
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To: C19fan
If you are able to build a premium brand with a quality product, you are able to charge a premium price and obtain higher margins. It's the American way and capitalism at its finest. Starbucks, Apple, and Jack Daniels Distillery are good examples of this.

Yes, you can get your coffee cheaper at a gas station, go to Best Buy to get a cheap knockoff tablet or buy some rotgut at your local liquor store. Or you can go to Taco Bell to get your burrito on the cheap if you don't want to pay the price that Chipotle charges.

I'm surprised with some of the negative comments here about out capitalist system.

48 posted on 07/29/2014 8:14:44 AM PDT by SamAdams76
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To: cuban leaf

Hubby and I eat every meal at home except on Wednesday night and that is just an excuse to get out of the house together.
We don’t do anything fancy. We have a Mexican place here that does 2 for 1 on Wednesdays. I’ve found a really nice and cheap Chinese place. We usually don’t spend over $15 on dinner for us.


49 posted on 07/29/2014 8:19:42 AM PDT by sheana
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To: C19fan

My Wisconsin local Chipotle is still at $6.95 for the Burrito.


50 posted on 07/29/2014 8:57:30 AM PDT by UB355 (Slower traffic keep right)
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