Nation & World

Trade war could boost cost of lunch

Total could be $875 million for avocados, tomatoes

Bloomberg

An employee adds sour cream to a burrito bowl at a Chipotle Mexican Grill restaurant in Louisville, Ky.
Bloomberg An employee adds sour cream to a burrito bowl at a Chipotle Mexican Grill restaurant in Louisville, Ky.

The growing threat of an all-out global trade war means Americans may have to fork out more cash at lunchtime.

Jacksonville, Fla.-based Firehouse Subs, for example, likely will bump sandwich prices by 10 cents because of tariffs on to-go packaging it gets from China.

The cost is amplified by the fact that about 60 percent of the company’s orders are for takeout or delivery, according to Don Fox, chief executive officer of the 1,100-store chain.

“It’s a critical item for us,” Fox said. “It might not seem like a lot, but it adds up in a hurry.”

Across the industry, tariffs are causing another headache for chains already grappling with higher wages, a dearth of workers and pork prices inflated by an outbreak of African swine fever.

Imminent levies on staple imports such as avocados and tomatoes, part of the Trump administration’s pledge to punish Mexico for immigration, may add up to $875 million for those two products alone, according to an estimate from A.T. Kearney.

This will likely be passed along to consumers in the form of price increases.

Like Firehouse, Chipotle Mexican Grill, based in Newport Beach, Calif., uses sugar-cane pulp known as bagasse for its burrito bowls and children’s meals packaging.

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China is an important supplier of the material, but the tariffs forced the 2,500-store company to diversify its supply chain earlier this year to reduce costs. It’s now also getting bagasse from Taiwan and is looking at other Asian nations as well for supplies.

Tomatoes and avocados are a tougher nut to crack, however. Mexico’s geographic proximity and longer growing season has made it a key U.S. supplier for these products.

Mexican-grown avocados made up 78 percent of the U.S. market last year, Hass Avocado Board data show. The United States’ southern neighbor also exports significant quantities of cucumbers, berries, peppers, coffee, beef and other food.

Chipotle estimates the Mexico tariffs, if enacted, could cost it $15 million this year. The chain would consider bumping menu prices by “about a nickel on a burrito,” according to a statement from Chief Financial Officer Jack Hartung.

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