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A few restaurant chains consume many avocado, such as chipotle ((CMG)) . A lot of this offer is imported.
According to Chipotel President, Scott Boatwright, CEO of Chipotle, comes about half of the company Avocado from Mexico. This offer faces the risk of new costs, as President Donald Trump has briefly imposed a 25 % tariff on Mexican imports in early March before they stopped moving shortly after.
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But Chipotle has prepared for such economic fluctuations and is in the search for avocado worldwide.
The Borito series spent years diversifying its supply chain. Seven years ago, the company was releasing avocado activity from all over the Americas and the Caribbean, according to the Wall Street Journal. Its supply team has expanded and focused on the areas near the equator, where the climate supports fixed avocado growth throughout the year.
This strategy is now particularly smart, as commercial policy and its effects on food costs are suspended in balance.
Photo and colon source; Joe Ridel & Sol; Getty Images
Uncertainty grows around definitions and prices
Even in waiting, the customs tariff keeps the restaurant industry on the edge of the abyss. Any new tariff may increase the costs of the sources and affect the price of the list, which changes the changes that are often difficult to reversible.
“Most of the people I talk to in the business community are concerned about what is the following with the current administration, because it seems that there is a lot of uncertainty,” said Puttrett at the Fortune on April 9.
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“My opinion is that the consumer is very cautious and optimistic at the present time. Many keep criticism due to unknown, or, as you know, possible consequences, consequences in the direction of the estuary, intended or unintended by the current administration. Thus you see a decline in the market, at the present time.”
But when it comes to pricing, Chipotle says it holds the line. Boatwright, who talked about the number weeks ago, did not change his position.
“I think it is not fair … transferring these costs to the consumer, because the pricing is permanent,” he said.
Boatwright said that the effects of customs tariffs may cause Chipotle a loss of about 60 basis points of the margin this year, but this is what the company can “absorb completely” based on a strong public budget.
“We have an unusual public budget today. We have a little debt on the public budget. We have a lot of money that we can spread, and we enjoy the largely unprecedented margins in the industry to start.”
This is supported by numbers: In 2024, Chipotle recorded a 14.6 % jump in revenue and an increase of 5.4 % in similar restaurant sales. It has zero debts and more than two billion dollars in cash reserves, as mentioned in the fourth quarter report.
Chipotle pressure exceeds the definitions
Last August, Chipotle CEO, Brian Nicole, left the Starbucks leadership. Chipotle’s share price is no longer in June 2024.
Related: Starbucks CEO appears to be alert to the coffee chain problems
In February, the company said it expected to increase the same store sales in the low range to the middle of the number due to “tougher” comparisons on an annual basis, which struggled to meet the estimates of the 5.3 % Wall Street consensus.
However, boats are optimistic. The company plans to open more than 300 new restaurants owned by the company this year, more than 80 % of which will include Chipotlane-a car lane for mobile phones.
“I am very excited for the next year. There is an exceptional growth in the Chipotle brand now,” said Boatwright. “We are not only a footprint here in North America, but also in Western Europe.”
Chipotle increased the list rates by 2 % in the country last December “to compensate for inflation,” said Lori Shalo, the company’s chief affairs in the company.
This was the fifth increase in the price in four years. According to Financebuzz, fast food prices throughout the industry increased nearly twice the inflation during the past decade.
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In addition to inflation and definitions, other seasonal factors weigh restaurant sales, including forest fires in Los Angeles that affect traffic.
“In the industry, we see Easter a kind of spring start. This year, this year is delayed about three weeks, then we see income tax payments a little slower this year than previous years,” said Boatwright. “So I think there is a set of reasons that make there a little slowdown in the industry.”
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