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Reuters has a piece using Chipotle as an example of how a retailer can raise prices without affecting sales or offending customers, and it all comes down to "cultivating a brand that commands pricing power," says Morningstar analyst R.J. Hottovy.

According to the story, "Chipotle is prospering even as it raises prices on burritos that are already expensive – about twice as much as those sold by Taco Bell. Besides its naturally-raised meats and organic ingredients such as beans and avocados, the company occupies the center of fast-casual dining - the booming 'sweet spot of the restaurant industry,' according to Hottovy - in which customers order at a counter but eat quality products inside a hip space.

"And Chipotle is still growing. The chain runs about 1,700 restaurants in the U.S., and analyst Stephen Anderson at Miller Tabak estimates that it could grow to 3,100, expanding in less populated areas beyond its urban strongholds.

"Chipotle hadn't raised menu prices for three years, but the higher cost of ingredients compelled it to roll out up to a 6.5 percent average increase in the second quarter.

"To be sure, the hike did not go unnoticed: some customers said goodbye to steak burritos because their price jumped on average 4 percentage points more than Chipotle's chicken-based dishes, the company said."

But it didn't seem to matter, because Chipotle had established a value proposition that did not depend on low prices. That's something that companies such as McDonald's and Dunkin' Donuts can't say, because price is so much a part of their brand identity that increases have a far great impact on customer perception and behavior.
KC's View:
The thing is, depending on low price is always a dicey proposition … since someone somewhere always is capable of beating you by going lower. It all depends on how much margin they are willing to sacrifice and/or how much money they're willing to lose. Now, some companies can afford to play that lowest-common-denominator game … but most can't. Which is why it makes sense to create a value/values proposition that is not dependent on low price.