Chipotle Resilient to Tariff Impacts, Maintains Value Proposition

Chipotle Customers Can Still Enjoy Guacamole

Chipotle (CMG) has assured its customers that they can continue to indulge in guacamole in their burritos without breaking the bank. CFO Adam Rymer has stated that the company is closely monitoring the fluid tariff situation, with the Trump administration imposing tariffs on Mexican and Canadian imports and additional tariffs on Chinese goods.

Tariffs Not Impacting Prices in the Near Term

Rymer emphasizes that Chipotle is not planning any immediate price increases. The company will adopt a patient approach to assess the permanence and potential impact of tariffs. Rymer notes that Chipotle can absorb the tariff costs for an extended period.

Minimal Mexican Imports

Chipotle's cost of sales from Mexico, including avocados, tomatoes, and peppers, составляет only 2%. The company has diversified its avocado imports by sourcing 50% from Mexico and 50% from other countries, including Colombia, Peru, and the Dominican Republic.

Diversification Protects Against Dependence

Rymer stresses that Chipotle is not overly reliant on any single region. The company has been working to diversify its supply chain and will continue to do so over time.

Improved Food Margins in 2025

Analysts anticipate improved food margins in 2025 if tariffs do not take effect. In 2024, Chipotle faced challenges with rising avocado prices and portion size investments.

Same-Store Sales Growth Remains Strong

For Q4 and fiscal 2024, Chipotle reported same-store sales growth of 5.4% and 7.4%, respectively. The company remains focused on offering value to its customers, with a 30% discount on average compared to its peers.

Price Increases Only if Necessary

Rymer reiterates that Chipotle is cautious about implementing price increases, prioritizing the maintenance of its value proposition. Analysts suggest that if no additional price hikes are initiated, same-store sales in 2025 could benefit by 200 basis points from the price increase taken in December 2024.