Chipotle CSO Jack Hartung says there’s ‘macro resistance’ to inflation from California consumers

In a Tuesday interview with CNBC’s Jim Cramer, Chipotle CSO Jack Hartung discussed business in California since the burrito-maker upped prices in April, saying there’s “macro resistance” from consumers to inflation across the industry.

“Our read on California is less about resistance to our price increase, and it’s more of a macro impact,” Hartung said. “Because when you look at the restaurant industry, the restaurant transactions are down for everybody.”

Hartung formerly served as Chipotle’s CFO, and he characterized the chain’s California price increase as “in the middle” on the spectrum of other restaurants that also made menu items more expensive. The company raised prices in the state by about 7% to offset the new higher minimum wage regulations for fast-food workers, which raised the mandated hourly rate from $16 to $20 per hour.

Chipotle beat Wall Street’s expectations during its last quarter and reported growing market share and restaurant transactions across every income level. Other consumer peers have described a pullback from lower income customers. Chipotle’s core customer base — like other fast-casual chains — consists of consumers with higher incomes, CNBC reported.

Hartung also teased at how Chipotle plans to use artificial intelligence to help its business, pointing to the “Autocado,” a robot that cuts, cores and peels avocados, and another program that automates the process of creating bowls and salads. He said it’s “early days” for the technology but claimed it wouldn’t “remove that personalization” from the business.

“There’s still going to be that eye-to-eye contact,” Hartung said. “But there are things behind the scenes, like way before our restaurants ever open, that are complicated tasks, they’re time consuming tasks, and if we can make those simpler for our crew, they’re going to have a better experience.”

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