Chipotle CEO unveils shocking decision on prices amid tariff | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Few restaurant chains consume as many avocados as Chipotle (CMG) . And much of that supply is imported.

According to Chipotle CEO Scott Boatwright, about half of the company’s avocados come from Mexico. That supply faces new cost risks as President Donald Trump briefly imposed a 25% tariff on Mexican imports in early March before pausing the move shortly after.

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But Chipotle has prepared for such economic fluctuations and is on the hunt for avocados globally.

The burrito chain has spent years diversifying its supply chain. Since seven years ago, the company has been actively sourcing avocados from across the Americas and the Caribbean, the Wall Street Journal reported. It has expanded its supply team and focused on regions near the equator, where the climate supports consistent avocado growth year-round.

That strategy now looks especially smart, as trade policy and its ripple effects on food costs hang in the balance.

Chipotle stock is down 17% year-to-date.

Image source&colon; Joe Raedle/Getty Images

Uncertainty grows around tariffs and pricing

Even on hold, the tariffs are keeping the restaurant industry on edge. Any new tariff could push up sourcing costs and affect menu prices, bringing changes that are often hard to reverse.

“Most people I talk to in the business community are concerned about what’s next with the current administration, because there just seems to be a lot of uncertainty,” Boatwright said on Fortune’s podcast on April 9.

“It’s my take that the consumer is being very cautious and optimistic at present. Many are preserving cash because of the unknown, or, you know, potential consequences, downstream consequences, intended or unintended from the current administration. And so you’re seeing a pullback, a market pullback, at present.”

But when it comes to pricing, Chipotle says it’s holding the line. Boatwright, who spoke about the issue weeks ago, hasn’t changed his stance.

“I think it’s unfair…to pass those costs off to the consumer, because pricing is permanent,” he said.

Boatwright said the tariff impacts could cause Chipotle to lose about 60 basis points of margin this year, but this is what the company could “absolutely absorb” based on a strong balance sheet.

“We have such an extraordinary balance sheet today. We have very little debt on the balance sheet. We have lots of cash that we can deploy, and we enjoy margins that are largely unprecedented in the industry to begin with.”

That’s supported by the numbers: In 2024, Chipotle reported a 14.6% jump in revenue and a 5.4% increase in comparable restaurant sales. It has zero debt and over $2 billion in cash reserves, as stated in its fourth-quarter report.

Chipotle’s pressure goes beyond tariffs

Last August, Chipotle’s longtime CEO, Brian Niccol, left the company to lead Starbucks. Chipotle’s share price has not yet returned to its peak in June 2024. Year-to-date, the stock is down roughly 17%.

In February, the company said it expected same-store sales to increase in the low- to mid-single-digit range due to “progressively tougher” year-over-year comparisons, which struggled to meet Wall Street consensus estimates of 5.3%.

Still, Boatwright is optimistic. The company plans to open more than 300 new company-owned restaurants this year, more than 80% of which will feature a Chipotlane—a drive-thru lane for mobile pickup.

“I’m really excited for the year ahead. There’s such extraordinary growth in the Chipotle brand right now,” said Boatwright. “We’re not only advancing our footprint here in North America, but also in Western Europe.”

Chipotle raised its menu prices by 2% nationwide last December “to offset inflation,” according to Laurie Schalow, the company’s chief corporate affairs officer.

That was its fifth price hike in four years. According to FinanceBuzz, fast-food prices across the industry have risen nearly twice as fast as inflation over the past decade.

More Restaurants

Beyond inflation and tariffs, other seasonal factors are weighing on restaurant sales, including the wildfires in Los Angeles that impact traffic.

“In the industry we see Easter as kind of the kickoff to spring. This year, it’s about three weeks delayed, and then we’re seeing income tax payments that are a little slower this year than years prior,” Boatwright said. “So I think there’s a host of reasons why there’s a bit of a slowdown in the industry.”