Chipotle Mexican Grill is on the verge of a guacamole crisis following the U.S. government’s suspension of Mexican avocado imports.
The halt of importing the fruit from Mexico comes in the wake of threats against plant inspectors, according to a report.
Despite having diverse sources for its products, Chipotle relies heavily on Mexico for avocados.
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The United States’s southern neighbor is the U.S.’s primary supplier of the fruit, shipping 83% of the nation’s yearly Hass avocado supply, the Hass Avocado Board said.
The chain is “working closely with our suppliers to navigate through this challenge,” according to Chipotle CFO Jack Hartung.
“Our sourcing partners currently have several weeks of inventory available, so we’ll continue to closely monitor the situation and adjust our plans accordingly,” he added.
Prior to the halt of incoming avocados, Chipotle was already struggling with higher costs surrounding the purchasing and transporting of the fruit, which resulted in the chain raising menu prices.
The ban on avocados from Michoacan, Mexico, the sole area approved to export avocados into the U.S., is set to be in place “as long as necessary” following a “verbal threat” against Animal and Plant Health Inspection Service workers, the U.S. Department of Agriculture said.
The state of Michoacan witnesses persistent cartel violence, the report noted.
Chipotle and other companies may be forced to turn to Peru or other markets for avocados, according to the report.
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However, there is “probably not enough avocado supply from other areas of the world to make up for an inability to ship Mexican avocados into the U.S., especially on a nearer-term time horizon,” a JPMorgan Chase analyst said.
