Chipotle Absorbs Tariff Costs, Maintains Value Proposition
Chipotle Mexican Grill (CMG) remains committed to providing customers with value despite ongoing tariff concerns. CFO Adam Rymer indicated the company is closely monitoring the evolving tariff situation and intends to avoid sudden price adjustments.
"We don't necessarily want to act quickly with price," said Rymer. "We're going to be very patient when it comes to this to get an idea if these are going to be permanent or not."
Chipotle can withstand the initial impact of tariffs due to its diverse sourcing and ability to absorb costs. Only 2% of its cost of sales originates from Mexico, and it has diversified its avocado supply chain.
"We're not completely dependent on one region," said Rymer. "We'll continue to make sure that we're diversified."
Despite the conservative guidance for 2025 same-store sales growth, Chipotle's Q4 and fiscal 2024 results met analyst expectations. It plans to maintain its value proposition through competitive pricing.
"We're very careful with when we take a price increase because we really want to maintain that value proposition," said Rymer.
Analysts believe that if Chipotle refrains from additional price hikes, it could benefit from a 200-basis-point boost to same-store sales in 2025.
Chipotle continues to prioritize value, diversify its supply chain, and closely monitor the tariff situation to ensure its long-term viability.