Key Takeaways
- Chipotle gets half its avocados from outside Mexico, according to CEO Scott Boatwright; meanwhile, the U.S. imports more than 90% of its avocados, and Mexico accounts for nearly 90% of those imports, Department of Agriculture data shows.
- Chipotle’s diverse supply chain could help it weather tariffs on imports from Mexico, which the Trump administration has threatened to implement early next month.
- Chipotle estimates its expenses would increase by about 0.6% this year if the proposed tariffs were enacted.
Chipotle Mexican Grill (CMG) is dishing out guacamole that relies on the nation that inspired its menu less than you might think.
“Today, we source from both Colombia, Peru, as well as the Dominican Republic. Only about 50% of our avocado supply today [is] coming out of Mexico,” Chipotle Chief Executive Officer Scott Boatwright said Tuesday on the company’s earnings call, a transcript of which was made available by AlphaSense. “Our supply chain team has done a remarkable job over the last couple of years with vendor diversification.”
The move may help Chipotle weather tariffs on imports from Mexico, which accounted for 89% of all fresh avocados shipped to the U.S. in 2023, according to the U.S. Department of Agriculture. Nearly all the avocados imported by the country from elsewhere came from Peru, the Dominican Republic, or Colombia.
Avocado consumption in the U.S. has ballooned since the early 2000s, as has the country’s dependence on international producers. As recently as 2005, more than half of fresh avocados consumed in the U.S. were grown domestically. In 2023, that figure was just 8.1%, the lowest on record, according to Department of Agriculture data.
Trump’s Tariffs Would Raise Chipotle Costs Slightly
The Trump administration added a 10% tariff on Chinese imports this week and may impose a 25% import tax on items from Mexico and Canada in early March.
Chief Financial Officer Adam Rymer on Tuesday said Chipotle spends a sliver of its total costs on ingredients from China, Mexico, and Canada. The avocados, tomatoes, limes, and peppers that Chipotle sources from Mexico account for about 2% of its cost of sales, while Chinese and Canadian exports make up an additional roughly 0.5% of input costs. If enacted in full, the tariffs could increase Chipotle’s expenses by about 0.6% this year, CEO Boatwright said.
Researchers have warned that American consumers would likely feel the pain of the tariffs. Economists at Yale University estimate the plan could raise the cost of living by 0.7% and cost American households an average of $1,250 annually.
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