Containers of avocados are seen on the Central de Abastos market in Guadalajara, Jalisco state, Mexico, on Jan. 31, 2025.
Ulises Ruiz | Afp | Getty Photos
Chipotle Mexican Grill mentioned Tuesday that it doesn’t anticipate prices to rise a lot if tariffs on key imported components go into impact subsequent month, noting that solely about half of its avocados come from Mexico.
A day earlier, President Donald Trump paused his plans for 25% tariffs on Mexican and Canadian imports. If applied after the one-month suspension, imports corresponding to avocados and beef can be costlier for eating places, which might probably attempt to go on the elevated price to their diners.
However Chipotle executives shook off the tariff fears in the course of the firm’s earnings convention name on Tuesday. If tariffs aimed toward Mexico, Canada and China all go into impact, Chipotle expects that its price of gross sales would rise about 60 foundation factors, or 0.6 proportion factors, in response to Chief Monetary Officer Adam Rymer.
Chipotle solely sources about 2% of its gross sales from Mexico, importing produce corresponding to avocados, tomatoes, limes and peppers, Rymer mentioned.
In truth, whereas Mexico provides roughly 90% of the avocados eaten within the U.S., Chipotle buys about half of its avocado provide from Colombia, Peru and the Dominican Republic, in response to CEO Scott Boatwright. Lately, Chipotle has taken steps to purchase extra of its avocados outdoors of Mexico, he advised analysts.
Trying past Chipotle’s guacamole provide, lower than 0.5% of Chipotle’s gross sales are sourced from Canada and China. Trump has already imposed a ten% tariff on Chinese language imports.
In current quarters, Chipotle has proven that it has pricing energy, whilst diners develop into extra value-conscious.
For the fourth quarter, the corporate reported same-store gross sales development of 5.4%, fueled by a visitors enhance of 4%. Chipotle’s earnings topped Wall Road estimates, however a conservative forecast for its same-store gross sales development despatched shares down 5% in prolonged buying and selling.
The outlook didn’t embody the impact of any tariffs.