Chipotle Says Proposed Mexican Tariffs Could Increase Costs by $15 Million
Chipotle Says Proposed Mexican Tariffs Could Increase Costs by $15 Million

The chain told CNBC that if these tariffs are enacted, the company’s margins would be reduced by 20 to 30 basis points in addition to the increased costs.

Last week, President Donald Trump said that he was planning to place tariffs on Mexican goods beginning June 10 if the country doesn’t help prevent the flow of illegal immigrants into the U.S from its southern border. Under Trump’s plan, the tariffs would gradually increase over time and could rise as high as 25% this year.

Implementing these tariffs would certainly impact restaurant operators of all kinds, though CNBC is reporting that Chipotle will be hit particularly hard—to the tune of $15 million this year, to be exact. Chipotle is also projecting reduced margins would result from the tariffs, by as much as 20 to 30 basis points.

“If the tariffs become permanent, we would look to offset these costs through other margin improvement efforts already underway,” Chipotle CFO Jack Hartung said in a statement to CNBC. “We could also consider passing on these costs through a modest price increase, such as about a nickel on a burrito, which would cover the increased cost without impacting our strong value proposition.”

While the article noted Chipotle specifically would face increased costs and decreased margins, “anyone with avocados would be hurt most by Mexico import tariffs,” Morningstar senior restaurant analyst R.J. Hottovy was quoted as saying.

Read the full article here.

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