Many companies that reported quarterly results in the past two weeks said they’re raising prices to offset rising costs from labor, raw materials and other inputs. Several major businesses saw preliminary success from their pricing actions.
The moves come as recent data show prices jumping at record rates amid the economic recovery from the Covid pandemic.
The Federal Reserve believes the inflation will moderate eventually and is largely the result of high demand outstripping supply as the economy restarts from the pandemic. But companies aren’t waiting around to find out if the Fed is right, implementing price increases they may not be so quick to roll back even if input costs come down.
Chipotle made headlines in June after announcing it would raise menu prices 3.5% to 4% to offset increasing its average hourly rate to $15.
The decision paid off; the restaurant chain reported second-quarter revenue surpassing pre-pandemic levels and said it’s considering more price hikes down the line if inflation persists.
“There’s still that possibility that we could take additional pricing action to fully close the gap…Let’s see how the menu price continues to be accepted by customers. So far, really, really good. Really seeing no resistance whatsoever,” Chipotle Chief Financial Officer John Hartung said on the earnings call Tuesday.
Home appliances maker Whirlpool raised its prices in the face of higher raw material costs. CEO Marc Robert Bitzer said on Thursday’s earnings call that the company already started “seeing 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,” Blitzer said.
Slim Jims, pizza and Pepsi
Conagra, the food processing company whose brands include names like Slim Jim and Reddi-wip, reported strong results from its price hikes during the company’s fourth-quarter earnings call July 13.
“We began implementing pricing actions on some of our products in the fourth quarter related to the initial inflation we experienced. The very early read on the data from those actions is that our elasticities look good so far, and we have more pricing coming,” Sean M. Connolly, Conagra’s president, CEO and director said.
Domino’s Pizza CEO Richard Allison, Jr., said on the restaurant chain’s second-quarter earnings call Thursday that “pricing is 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 fee and menu prices, and franchisees have the ability to do the same in their own businesses.
Food and beverage giant PepsiCo said it will use its pricing power to offset inflationary pressures.
“Same as everybody else, we’re seeing inflation in our business across many of our raw ingredients and some of our inputs in labor and freight and everything else,” PepsiCo chief executive Ramon Laguarta said on the company’s second-quarter earnings call July 13.
“Is there somewhat more inflation out there? There is. Are we going to be pricing to deal with it? We certainly are,” Hugh Johnston, PepsiCo’s chief financial officer, added.
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