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Chipotle downplays looming Trump tariffs, says only half of its avocados are from Mexico

by admin February 7, 2025
February 7, 2025
Chipotle downplays looming Trump tariffs, says only half of its avocados are from Mexico

Chipotle Mexican Grill said Tuesday that it does not expect costs to rise much if tariffs on key imported ingredients go into effect next month, noting that only 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 implemented after the one-month suspension, imports such as avocados and beef would be more expensive for restaurants, which would likely try to pass on the increased cost to their diners.

But Chipotle executives shook off the tariff fears during the company’s earnings conference call on Tuesday. If tariffs aimed at Mexico, Canada and China all go into effect, Chipotle expects that its cost of sales would rise about 60 basis points, or 0.6 percentage points, according to Chief Financial Officer Adam Rymer.

Chipotle only sources about 2% of its sales from Mexico, importing produce such as avocados, tomatoes, limes and peppers, Rymer said.

In fact, while Mexico supplies roughly 90% of the avocados eaten in the U.S., Chipotle buys about half of its avocado supply from Colombia, Peru and the Dominican Republic, according to CEO Scott Boatwright. In recent years, Chipotle has taken steps to buy more of its avocados outside of Mexico, he told analysts.

Looking beyond Chipotle’s guacamole supply, less than 0.5% of Chipotle’s sales are sourced from Canada and China. Trump has already imposed a 10% tariff on Chinese imports.

In recent quarters, Chipotle has shown that it has pricing power, even as diners become more value-conscious.

For the fourth quarter, the company reported same-store sales growth of 5.4%, fueled by a traffic increase of 4%. Chipotle’s earnings topped Wall Street estimates, but a conservative forecast for its same-store sales growth sent shares down 5% in extended trading.

The outlook did not include the effect of any tariffs.

This post appeared first on NBC NEWS

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