Chipotle Mexican Grill is considering increasing prices after 2019 costs are predicted to rise by about $15 million because of tariffs proposed last week by President Trump.
“If the tariffs become permanent, we would look to offset these costs through other margin improvement efforts already underway,” Chipotle CFO Jack Hartung said in a Monday statement 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.”
Trump announced his plan last week to place a five percent tariff on Mexican goods starting June 10. Tariffs could rise to as high as 25% by October, if Mexico fails to help stop the flow of immigrants across the U.S. southern border.
Avocado prices, up 125% this year according to the American Restaurant Association, have already caused problems for Chipotle. The restaurant continues to make efforts to modify its produce supply without compromising its commitment to fresh ingredients.
“We know that we could easily solve the volatility in our supply chain by purchasing premashed 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 told Fox Business.
Up 52% in 2019, Chipotle’s stock has been the best performer among restaurants this year.
