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Chipotle Shields Customers from Tariff-Induced Price Hikes

Food and Beverages

Business Honor
12 March, 2025

CEO says cost impact is minimal, but long-term price hikes may happen.

In an exclusive interview with "NBC Nightly News" on Sunday, Chipotle CEO Scott Boatwright reassured consumers that the company will absorb the added cost caused by trade policies instead of passing it on to consumers through price hikes. Chipotle consumers will not necessarily notice a price hike even as tariffs threatened by former President Donald Trump loom.

According to Trump's tariff policy, a 25% import duty from Canada and Mexico and a 10% on imports from China, has created fear in several sectors. Most businesses expect increased costs, with resultant price hikes likely to be passed on to both consumers and the supply chain. Chipotle, however, seems to be most protected from the immediate effect of these tariffs given the geographical diversity of its supply chain.

Boatwright admitted that although Chipotle obtains roughly 50% of its avocados from Mexico, the rest are imported from other countries like Colombia, Peru, and the Dominican Republic. Therefore, the restaurant chain's estimated cost raise is likely to be around 0.6%, or 60 basis points, on a trailing basis. This comparatively slight effect has enabled the firm to keep its present pricing scheme in place for now.

Even though this is the commitment, Boatwright did warn that price hikes would become unavoidable, if the tariffs make the long-term a "significant headwind." Whereas some companies are already adapting to cover added costs, Chipotle is waiting and observing before committing to concrete pricing adjustments.

While tariffs on major trade partners become effective, economic volatility still resonates across the U.S. economy. Chipotle's success in managing these pressures without short-term consumer effects makes it stand out from other companies that are dealing with increasing costs. Whether or not the company can continue with this strategy in the long term, however, is yet to be determined.