The company sources about 2% worth of its sales from Mexico, or about 6% to 7% of cost of goods
Last year, Chipotle estimated that it would go through nearly 5.2 million cases of avocados, which is equivalent to 129.5 million pounds of fruit. So, when President Trump promised he would slap a 25% tariff on imports from Mexico, which is the world’s largest avocado producer, some alarms went off.
Those tariffs have since been put on hold for a month, but Chipotle has been putting the pieces in place to manage the potential impact anyway. During the company’s fourth quarter earnings call Tuesday after market, chief executive officer Scott Boatwright said the chain’s supply team has spent the past couple of years diversifying vendors and moving “some countries of origin out of Mexico.”
“Today we source from Colombia, Peru, as well as the Dominican Republic. Only about 50% of our avocado supply today is coming out of Mexico,” he said.
In total, Chipotle sources about 2% worth of its sales from Mexico (6% to 7% of cost of goods), which also includes tomatoes, limes, and peppers, and less than 0.5% from Canada and China.
“If the recently announced tariffs go into full effect, it would have an ongoing impact of about 60 basis points on our cost of sales,” chief financial officer Adam Rymer said during the call, adding that the company anticipates offsetting that increase through in-restaurant initiatives such as produce slicers and the roll off of its 2024 investment to increase portion sizes.
Rymer added that no additional pricing is expected this year after a 2% increase in December. According to BTIG analyst Peter Saleh, if Chipotle doesn’t take any additional menu price increases, 2025 same-store sales will benefit by 200 basis points from its 2% price increase taken in December.
Chipotle’s guidance for 2025 includes a low-to-mid-single digit increase in same-store sales and low-single-digit commodity inflation. For Q1, Chipotle expects its cost of goods to be in the high 29% range, as pricing leverage and the benefit from brisket ramping down will be partially offset by higher costs across several items, most notably avocados and chicken. That guidance does not include the impact of the potential new tariffs on items imported from Mexico, Canada, and China.
Contact Alicia Kelso at [email protected]
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