Receptacles of avocados are seen at the Central de Abastos market in Guadalajara, Jalisco state, Mexico, on Jan. 31, 2025.
Ulises Ruiz | Afp | Getty Concepts
Chipotle Mexican Grill said Tuesday that it does not expect costs to rise much if tariffs on key purported ingredients go into effect next month, noting that only about half of its avocados come from Mexico.
A day earlier, President Donald Trump lulled his plans for 25% tariffs on Mexican and Canadian imports. If implemented after the one-month suspension, imports such as avocados and beef desire be more expensive for restaurants, which would likely try to pass on the increased cost to their diners.
But Chipotle leaders 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 impression, Chipotle expects that its cost of sales would rise about 60 basis points, or 0.6 proportion points, according to Chief Financial Officer Adam Rymer.
Chipotle only sources about 2% of its sales from Mexico, importing give rise to such as avocados, tomatoes, limes and peppers, Rymer said.
In fact, while Mexico supplies roughly 90% of the avocados consumed 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 new years, Chipotle has taken steps to buy more of its avocados outside of Mexico, he told analysts.
Looking beyond Chipotle’s guacamole quantity, less than 0.5% of Chipotle’s sales are sourced from Canada and China. Trump has already imposed a 10% menu on Chinese imports.
In recent quarters, Chipotle has shown that it has pricing power, even as diners become assorted 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 first-rate Wall Street estimates, but a conservative forecast for its same-store sales growth sent shares down 5% in stretch out trading.
The outlook did not include the effect of any tariffs.