Chipotle's Tariff Troubles: Only 0.6% Cost Increase Expected

Chipotle Mexican Grill anticipates a modest 0.6 percentage point rise in its cost of sales if President Trump’s proposed 25% tariffs on Mexican and Canadian imports, and 10% on Chinese goods, are implemented. Despite the looming tariffs, Chipotle remains relatively unfazed, sourcing only about half of its avocados from Mexico. The company imports produce like avocados, tomatoes, limes, and peppers from Mexico, which accounts for just 2% of its sales. In contrast, Mexico supplies roughly 90% of the avocados consumed in the U.S., but Chipotle has diversified its supply, obtaining about half from Colombia, Peru, and the Dominican Republic. Less than 0.5% of Chipotle’s sales come from Canada and China. The company’s recent earnings showed a 5.4% same-store sales growth, driven by a 4% increase in traffic, though its conservative forecast led to a 5% drop in shares during extended trading.

Source: www.cnbc.com