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Chipotle Estimates a $15 Million Fallout Following President Trump's Latest Tariffs

Chipotle Estimates a $15 Million Fallout Following President Trump's Latest Tariffs

Tuesday, June 4th, 2019

Chipotle has a few concerns regarding President Trump's announcement that Washington will impose tariffs on all goods coming from Mexico, as we reported on our sister site, AndNowUKnow. In fact, the fast casual chain is one of the first in the foodservice space to step forward with concerns about costs, possible price hikes, and supply, according to Reuters.

Should the latest round of tariffs go into effect on June 10th, Chipotle expects to shoulder a $15 million hit, particularly because Mexico serves as its main supplier of fresh avocados.

Jack Hartung, Chief Financial Officer, Chipotle“We know that we could easily solve the volatility in our supply chain by purchasing pre-mashed or processed avocados,” Chief Financial Officer Jack Hartung said in an emailed statement, according to the news source. “Using whole, fresh ingredients and making guacamole by hand in our restaurants each day leads to better-tasting guacamole.

While Chipotle isn’t budging on its commitment to fresh ingredients, its Chief Corporate Reputation Officer Laurie Schalow did disclose to Reuters that the chain has begun sourcing avocados from Peru and Chile over the last couple of months to offset the effects of possible tariffs.

Chipotle may raise prices on its menu items to compensate for Trump's tariffs

Another strategy Chipotle is also considering is raising the prices of its menu items.

“If the tariffs become permanent, we would look to offset these costs through other margin improvement efforts already underway,” Hartung continued, according to Bloomberg. “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.”

Will additional foodservice operators have to consider price hikes of their own? Deli Market News will continue to keep an eye on all industry happenings.