Chipotle Raising Prices Due To Tariffs

Alpha8472
Valued Contributor
Valued Contributor
Posts: 996
Joined: February 24th, 2009, 8:55 pm
Status: Offline

Chipotle Raising Prices Due To Tariffs

Post by Alpha8472 » June 3rd, 2019, 10:40 am

The company says that many of their ingredients come from Mexico. The prices could increase by 5 cents.

Chipotle uses fresh avocados from Mexico. The company does not want to use pre-mashed avocados.

In the past few months, the company has been trying to switch to avocados from Chile or Peru.

storewanderer
Valued Contributor
Valued Contributor
Posts: 3999
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by storewanderer » June 3rd, 2019, 7:19 pm

This "PR" seems to come out every year. In 2017 they didn't blame it on tariffs. This year they are. Same thing every year.
https://www.cnbc.com/2017/08/25/avoid-c ... uisse.html

Avocado prices always go up in price at this time of year and it is not uncommon to see them $3 at grocery stores now when they were $1 or even less a couple months ago. The prices are the same at this time of year this year as they were at this time of year last year.

Also there is the issue that the avocado item at Chipotle (Guac) is not even an included item and there is a surcharge on it if you want it on your order.

With that said many other produce items particularly in the southwestern United States commonly come from Mexico and this could cause some price spikes. Avocado, tomato, limes, cilantro, various berries... but again as previously discussed the tariffs are based on item cost not item retail. That avocado that retails for $3 has a cost closer to $1. We will see what happens.

There is a lot of variance in the price of these things but cost on produce is generally very, very low. This week I can go to one store here and get 10 limes for $1 and at the worst I can go to Safeway who is 2 limes for $1 and go to other stores with various other price points in between the two for limes that are all the same exact size. It is possible the 10/$1 store is losing money but I suspect they are making a little.

jamcool
Gold Member
Gold Member
Posts: 295
Joined: March 5th, 2009, 10:27 pm
Been thanked: 1 time
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by jamcool » June 4th, 2019, 7:53 am

What happened to California avocados?

Alpha8472
Valued Contributor
Valued Contributor
Posts: 996
Joined: February 24th, 2009, 8:55 pm
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by Alpha8472 » June 4th, 2019, 11:41 am

There was a recall due to listeria. California avocados are unsafe.

storewanderer
Valued Contributor
Valued Contributor
Posts: 3999
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by storewanderer » June 4th, 2019, 6:02 pm

Alpha8472 wrote:
June 4th, 2019, 11:41 am
There was a recall due to listeria. California avocados are unsafe.
So it appears the avocado price increase is not directly due to tariffs but due to this issue. Of course the tariff will add another layer of increase. Assuming the tariffs even happen, which I doubt. Too many US corporations are producing things in Mexico at this point. Cars, cookies, breads, lotions, just too much. Enough big corporations with enough influence to stop it from happening.

Usually the price spike is more as we get into summer.

Alpha8472
Valued Contributor
Valued Contributor
Posts: 996
Joined: February 24th, 2009, 8:55 pm
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by Alpha8472 » June 6th, 2019, 2:35 pm

These tariffs could actually happen. What will be the results if they do happen? What is the purpose of these tariffs? Is it supposed to make jobs come back to the United States?
Last edited by Alpha8472 on June 6th, 2019, 9:16 pm, edited 1 time in total.

storewanderer
Valued Contributor
Valued Contributor
Posts: 3999
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by storewanderer » June 6th, 2019, 6:42 pm

Alpha8472 wrote:
June 6th, 2019, 2:35 pm
These tariffs could actually happen. What will be the results if they do happen? What is the purpose of these tariffs? Is it supposed to makes jobs come back to the United States?
Let's face reality here. If these tariffs were going to be something other than temporary, it would potentially bring jobs back to the US. But there are major corporate interests in Mexico that are producing things there at very low wages there, then bringing those things back here to the US and selling at inflated prices as if those things are being produced here. Those corporations are lining their pockets big time doing this paying people in Mexico $30 a day when the same worker in the US would be $30 an hour after benefits. Add in lower raw material costs for some of those things in Mexico and it is a huge win for these corporation's profitability. You can't just flip a switch and move production back to the US overnight... takes years to make such major moves.

And elections are every 2-4 years and if one thinks those big corporate interests don't have a say in them, well, I don't know. So ultimately either the current rules will be tinkered so the corporations get what they want, or the current group of "elected officials" will be replaced with a group that will do what the corporations want. That means, these tariffs are going to be a short term thing and what do they accomplish? Well, I don't know.

It is sort of like 10-15 years ago when prices went up on everything because "gas is now 4 dollars a gallon." Gas fell back to 2 dollars a gallon. Did prices come down? Nope.

With that said last night at Wal Mart I noticed some displays of camping equipment, fishing poles, and some big plastic things that were all made in USA with large "Wal Mart support American Jobs" signs. These items probably weren't made in the USA before...

babs
Silver Member
Silver Member
Posts: 151
Joined: December 20th, 2016, 3:08 pm
Been thanked: 3 times
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by babs » June 7th, 2019, 8:48 am

Alpha8472 wrote:
June 6th, 2019, 2:35 pm
These tariffs could actually happen. What will be the results if they do happen? What is the purpose of these tariffs? Is it supposed to make jobs come back to the United States?
The tariffs are to punish Mexico for illegal immigration unlike the Chinese tariffs which are more in response to some of the tariffs and restrictions on American imports to China.

babs
Silver Member
Silver Member
Posts: 151
Joined: December 20th, 2016, 3:08 pm
Been thanked: 3 times
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by babs » June 7th, 2019, 8:56 am

storewanderer wrote:
June 6th, 2019, 6:42 pm
Alpha8472 wrote:
June 6th, 2019, 2:35 pm
These tariffs could actually happen. What will be the results if they do happen? What is the purpose of these tariffs? Is it supposed to makes jobs come back to the United States?
Let's face reality here. If these tariffs were going to be something other than temporary, it would potentially bring jobs back to the US. But there are major corporate interests in Mexico that are producing things there at very low wages there, then bringing those things back here to the US and selling at inflated prices as if those things are being produced here. Those corporations are lining their pockets big time doing this paying people in Mexico $30 a day when the same worker in the US would be $30 an hour after benefits. Add in lower raw material costs for some of those things in Mexico and it is a huge win for these corporation's profitability. You can't just flip a switch and move production back to the US overnight... takes years to make such major moves.

And elections are every 2-4 years and if one thinks those big corporate interests don't have a say in them, well, I don't know. So ultimately either the current rules will be tinkered so the corporations get what they want, or the current group of "elected officials" will be replaced with a group that will do what the corporations want. That means, these tariffs are going to be a short term thing and what do they accomplish? Well, I don't know.

It is sort of like 10-15 years ago when prices went up on everything because "gas is now 4 dollars a gallon." Gas fell back to 2 dollars a gallon. Did prices come down? Nope.

With that said last night at Wal Mart I noticed some displays of camping equipment, fishing poles, and some big plastic things that were all made in USA with large "Wal Mart support American Jobs" signs. These items probably weren't made in the USA before...
I have to respectfully disagree with much of what you are saying.

Mexico is appealing as a production spot because you can get items from Mexico into the USA within 1 day so you can more quickly respond to demand. Anything coming from China requires 6 weeks on the ocean vs an overnight truck drive. Mexican labor is more expensive than China and the quality tends to be lower than Chinese goods but the quick transit times make it very appealing.

As for pocketing profits. I'm sure some of that goes on. However, why is it so many products are the same price or lower than they were 20 years ago? Look at electronics, apparel, home goods, etc... The American consumer doesn't want to pay for USA made products. They don't, they want the cheapest price with zero regard for where it's made. How is Old Navy able to sell $5 t-shirts? 43" TVs for $250? Laptops for $200? Heck, I can buy a Hershey's bar for 50 cents. It was about the same price 30 years ago. When you try to raise prices, sales tank and there is too much pressures on execs to make their numbers.

storewanderer
Valued Contributor
Valued Contributor
Posts: 3999
Joined: February 23rd, 2009, 3:54 pm
Been thanked: 12 times
Contact:
Status: Offline

Re: Chipotle Raising Prices Due To Tariffs

Post by storewanderer » June 7th, 2019, 9:28 am

babs wrote:
June 7th, 2019, 8:56 am
storewanderer wrote:
June 6th, 2019, 6:42 pm
Alpha8472 wrote:
June 6th, 2019, 2:35 pm
These tariffs could actually happen. What will be the results if they do happen? What is the purpose of these tariffs? Is it supposed to makes jobs come back to the United States?
Let's face reality here. If these tariffs were going to be something other than temporary, it would potentially bring jobs back to the US. But there are major corporate interests in Mexico that are producing things there at very low wages there, then bringing those things back here to the US and selling at inflated prices as if those things are being produced here. Those corporations are lining their pockets big time doing this paying people in Mexico $30 a day when the same worker in the US would be $30 an hour after benefits. Add in lower raw material costs for some of those things in Mexico and it is a huge win for these corporation's profitability. You can't just flip a switch and move production back to the US overnight... takes years to make such major moves.

And elections are every 2-4 years and if one thinks those big corporate interests don't have a say in them, well, I don't know. So ultimately either the current rules will be tinkered so the corporations get what they want, or the current group of "elected officials" will be replaced with a group that will do what the corporations want. That means, these tariffs are going to be a short term thing and what do they accomplish? Well, I don't know.

It is sort of like 10-15 years ago when prices went up on everything because "gas is now 4 dollars a gallon." Gas fell back to 2 dollars a gallon. Did prices come down? Nope.

With that said last night at Wal Mart I noticed some displays of camping equipment, fishing poles, and some big plastic things that were all made in USA with large "Wal Mart support American Jobs" signs. These items probably weren't made in the USA before...
I have to respectfully disagree with much of what you are saying.

Mexico is appealing as a production spot because you can get items from Mexico into the USA within 1 day so you can more quickly respond to demand. Anything coming from China requires 6 weeks on the ocean vs an overnight truck drive. Mexican labor is more expensive than China and the quality tends to be lower than Chinese goods but the quick transit times make it very appealing.

As for pocketing profits. I'm sure some of that goes on. However, why is it so many products are the same price or lower than they were 20 years ago? Look at electronics, apparel, home goods, etc... The American consumer doesn't want to pay for USA made products. They don't, they want the cheapest price with zero regard for where it's made. How is Old Navy able to sell $5 t-shirts? 43" TVs for $250? Laptops for $200? Heck, I can buy a Hershey's bar for 50 cents. It was about the same price 30 years ago. When you try to raise prices, sales tank and there is too much pressures on execs to make their numbers.
I didn't want to call out any specific products but I am thinking specifically of some food items that moved production from US to Mexico. Specifically, Nabisco various cookies and other items. Prices did not fall when production moved to Mexico. Same pricing as before (package content of actual product has been getting smaller, and packages have more plastic than before probably to help the product in the longer transport time)... similar observation with some lotions that shifted production from US to Mexico (Eucerin, Lubriderm), when the switch happened, prices did not fall. Prices did not increase, either.

Don't think for a minute this isn't about pocketing profits. It is a hedge against price increases as you point out and that is the benefit of it to the consumer, but the additional profits from shifting production, are a lot more than the price increase that would have been had the production stayed here.

The ship has long sailed on doing manufacturing here and the concept of moving the manufacturing back to the US is a pipe dream for a multitude of reasons, as nice as the concept may sound.

Margins are pretty low on those $250 TV's and $200 laptops and that Hershey bar you describe (which by the way is still made in the US or Canada) has a regular retail of over $1 at most stores (1.25 at Safeway, CVS here and 1.59 at most convenience stores now) and .50 is a fairly sale these days I see at Rite Aid or Kroger sometimes.

Post Reply