- Chipotle could raise burrito prices by roughly five cents in response to President Donald Trump’s proposed tariffs on Mexican imports.
- The tariffs suggested by Trump could increase Chipotle’s costs by roughly $US15 million in 2019.
- Last week, Trump tweeted that the US would impose a 5% tariff on all Mexican imports.
Chipotle is considering raising burrito prices by about a nickel, as the chain weighs its options for covering the cost of President Donald Trump’s proposed tariffs.
The fast-casual chain said in a statement that its costs could increase by roughly $US15 million in 2019 if Trump’s proposed tariffs on Mexican imports are enacted. The tariffs could reduce Chipotle’s margins by 20 to 30 basis points. Reuters was first to report on Chipotle’s response to the threat of tariffs.
“If the tariffs become permanent, we would look to offset these costs through other margin improvement efforts already underway,” chief financial officer Jack Hartung said in an emailed statement to Business Insider.
“We could also consider passing on these costs through a modest price increase, such as about a nickel on a burrito, which would cover the increased cost without impacting our strong value proposition,” Hartung continued.
Last week, Trump tweeted that the United States would impose a 5% tariff on all Mexican imports starting June 10. According to the White House, tariffs would increase to 25% by September if illegal immigration did not decrease.
“On June 10th, the United States will impose a 5% tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP,” Trump tweeted.
In 2018, the US imported $US1.7 billion worth of avocados and $US2.3 billion worth of tomatoes – two ingredients commonly found in a Chipotle burrito.
“The tariffs will likely raise the price of groceries for American consumers, since the US imported $US26 billion in Mexican agricultural goods last year,” Business Insider’s Grace Panetta reported.
Volatile avocado prices have long been an issue for Chipotle, as everything from weather to politics can drastically impact the cost of the key guacamole ingredient.
“We know that we could easily solve the volatility in our supply chain by purchasing pre-mashed or processed avocados which would be cheaper, readily available and provide stability, but we are committed to our brand purpose and upholding our food with integrity principles,” Hartung said in the statement.
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