Above: The Chipotle CEO business model
This is a good discussion on the bogus connection between higher minimum wages and higher prices. The real issue leading to higher prices are CEO salaries and corporate profit margins, not a slightly higher minimum wage.
Chipotle is just the latest company in the city to claim labor costs as the reason for price hikes. It sounds logical. Wages go up 10%, prices of menu items go up 10%. It’s fair, right? But Chipotle co-CEOs Steve Ells and Monty Moran’s earnings in 2014 were $28.9m and $28.2m, respectively. Ells also brought in around $42m in stock options in 2014, yet prices must go up because the lowest paid workers received a $1 raise? This is yet more evidence that executive pay and corporate profit margins must be maintained, at the expense of minimum wage workers.
It doesn’t make sense considering Chipotle’s growth in both sales and profits over the past year. The company saw a 47.6% increase in profits to $122.6m, while sales were up 20.4%, to $1.09bn. Yet, with the company wanting to maintain specific profit margins, prices go up, even when they don’t have to.
Ells and Moran saw their own personal pay increase 15% year-to-year, according to Chipotle’s own reporting – that’s millions of dollars – but sadly, minimum wage debates over the past year have highlighted how companies, from Chipotle to McDonald’s to Walmart, just can’t afford to give their workers a living wage.
Ells and Moran could easily have taken a pay cut, or frozen their income for the year, but instead Chipotle spokesman Chris Arnold was clear about what the company wanted:
California, and San Francisco in particular, has a high cost of doing business. In San Francisco, for example, our occupancy costs are about double the Chipotle average as a percentage of sales, and our menu prices there are right around the average for Chipotle restaurants around the country, so increases to wages can have a greater impact than they might elsewhere.
Of course, people largely blame higher prices on lazy workers, supporting the CEOs destroying this country’s middle class in order to buy another ivory backscratcher.