Tariffs are front and center on the minds of a lot of businesses out there. Would it surprise you to know that fast-casual burrito giant Chipotle Mexican Grill (CMG) was among them? But as it turns out, Chipotle is not so afraid of the tariffs as they might once have been, thanks to a seven-year quest for different avocado suppliers. Shares gained nearly 1.5% in Tuesday afternoon’s trading as a result.
Chipotle’s guacamole is a wildly popular addition. About half of all its orders include it. This has also prompted concerns about where they get the avocados to make it. In fact, as far back as 2018, Chipotle has been trying to branch out, since most of its avocados are a Mexican import. Mexico actually supplies around 85% of Chipotle’s avocados, and with potential tariffs set to hit Mexico, that could be a huge problem.
But Chipotle saw this coming. It has worked to diversify its supply chain for years now; in fact, its chief strategy officer, Jack Hartung, notes that Chipotle “…essentially take(s) every avocado from California that we can.” Chipotle ramped up its supply chain team, and found six different countries were avocados could be grown. One big win came from Colombia, where a minor player got some help from Chipotle and is now a major operation.
Break the Burrito Vault
And Chipotle will need those avocados, as it plans to bring back its Burrito Vault giveaway game just in time for National Burrito Day, which this year is April 3. The game has already begun, reports note, and Chipotle Rewards members will be able to start guessing the ingredients that will crack open the vault.
The first 2,500 users that decode the vault’s combination every hour will get prizes, reports note, will receive either buy-one-get-one-free codes, or 25 rewards points, reports noted. With over two million plays back in 2024, Burrito Vault proved a hit. So much so that, this year, Chipotle will be changing the winning code every hour to make the prize drops last longer.
Is Chipotle a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CMG stock based on 20 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 12.28% loss in its share price over the past year, the average CMG price target of $66.65 per share implies 30.64% upside potential.
