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American Focus > Blog > Economy > No price hikes in the near future while we watch the impact of tariffs on food
Economy

No price hikes in the near future while we watch the impact of tariffs on food

Last updated: February 5, 2025 8:19 am
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No price hikes in the near future while we watch the impact of tariffs on food
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Chipotle (CMG) fans can breathe a sigh of relief as the beloved chain assures that they won’t be raising prices anytime soon, despite the looming threat of tariffs on Mexican and Canadian imports. CFO Adam Rymer emphasized the company’s cautious approach, stating that they will closely monitor the situation before making any decisions.

While the Trump administration’s proposed tariffs could have a potential impact on Chipotle’s cost of sales, Rymer reassured that they are prepared to absorb these costs for an extended period. However, if the tariffs prove to be a long-term burden, the company may consider adjusting prices to offset the effects, with a focus on maintaining value rather than increasing margins.

Interestingly, only 2% of Chipotle’s cost of sales come from Mexico, which includes essential ingredients like avocados, tomatoes, limes, and peppers. The company has already diversified its avocado sourcing, now importing half from Mexico and the other half from countries like Colombia, Peru, and the Dominican Republic. This strategic move has helped mitigate risks associated with potential spikes in avocado costs.

Despite the uncertainties surrounding tariffs, Chipotle remains optimistic about its future food margins. If the tariffs do not come into effect, the company expects improved food margins for 2025 compared to the previous year. In 2024, Chipotle faced challenges such as rising avocado prices and investments in portion sizes, which impacted its financial performance.

In terms of financial results, Chipotle recently reported fourth-quarter and full-year figures that were in line with analyst estimates. However, the company issued a conservative guidance for 2025, projecting low- to mid-single-digit growth in same-store sales. Despite this, Chipotle continues to prioritize value as a key strategy, offering a 30% discount on average compared to its quick-service competitors.

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Looking ahead, Chipotle remains committed to maintaining its value proposition and market share. CEO Scott Boatwright highlighted the company’s successful market positioning and recent price adjustments, which included a 2% increase in December. By carefully choosing when to implement price hikes, Chipotle aims to uphold its reputation for quality and affordability in the competitive fast-casual dining industry.

In conclusion, Chipotle’s proactive approach to potential tariffs and strategic business decisions reflect its dedication to providing customers with high-quality ingredients at reasonable prices. As the company navigates challenges and explores opportunities for growth, Chipotle fans can continue to enjoy their favorite burritos with guac without breaking the bank.

TAGGED:FoodFuturehikesimpactPriceTariffsWatch
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