Chipotle Might Be Raising Its Prices Because Of The President’s New Tariffs
First they came for our Coca-Cola, and now they’re coming for our Chipotle burritos. In this case, “they” refers to controversial tariffs on overseas goods enacted by the U.S. government.
After first affecting prices in the automobile, aerospace, and construction industries, the impact of the President’s tariffs on steel and aluminum imported from Canada, Mexico, and the European Union eventually trickled down to the food and beverage market last summer. This led to price hikes on some our favorite soda pop and other products.
Meanwhile, the President has recently announced a plan to authorize tariffs on other Mexican goods, which threatens to raise prices on items like avocados, beer, and tequila. As a result, we could soon end up paying more for our beloved Chipotle runs, Delish reported today, June 4th.
“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, according to Yahoo Finance. “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.”
Sure, it’s only 5 cents. We’re really just angry based on principle.
Same, kid. Same.
Trump’s initial 5% tariff on Mexican imports is scheduled to go into effect on June 10th.
Trump has said the levies will increase by 5% each month, reaching 25% in October unless Mexico stops “all illegal migration into the United States,” the Washington Post reported.
Chipotle’s CEO said the tariffs would cost the company $15 billion in 2019. It would also reduce profit margins by up to 30 points.
Of course, Chipotle won’t be the only restaurant affected, according to Restaurant Business magazine.
“Food will be hit first, and it’ll be felt almost immediately both by restaurants and grocers,” Phil Kafarakis, president of the Specialty Food Association, wrote in an analysis issued Friday, May 31st. “It’ll take about three to four weeks to feel the impact.”
About 70% of vegetables imported into the U.S. come from Mexico.
Mexico also provides roughly 40% of the United States’s fresh fruit.
“Whether it’s fast casual or quick service, they’ll all be affected,” Kafarakis wrote in the analysis.
“The longer these tariffs stay in effect, the greater the danger businesses will lose the customer, who’ll stop coming back and will find an alternative,” he added.
Republican lawmakers have reportedly warned the President of the potentially disastrous effects on the U.S. economy, but he remains undeterred.
“There’s nothing more important than borders,” the President said Tuesday, June 4th, at a news conference in Britain with Prime Minister Theresa May. “Mexico shouldn’t allow millions of people to try and enter our country, and they could stop it very quickly and I think they will.”
The announcement of potential price increases at Chipotle was met with mixed reactions on Twitter.
Some swore allegiance to the burrito lords, while others laughed off the admittedly minor impact an extra nickel would have on their wallets.
At least one Twitter user was more worried about the tariffs’ other effects.
What about other items on the Chipotle menu? Would they, too, see price increases?
Regardless of whether you eat at Chipotle, the President’s plan to impose tariffs on Mexico is sure to have far-reaching implications for the U.S. economy. Paying slightly more for a burrito is just the tip of the iceberg.