Restaurant company Chipotle Mexican Grill (NYSE:CMG) could be negatively impacted by pending tariffs on Mexico, which could increase the cost of avocados and other food items.

While companies will be faced with tough challenges of how to offset the increased prices and lower profits, Chipotle's CEO Scott Boatwright is committed to not passing the costs onto the consumer.

What Happened: Tariffs of 25% on items imported into the United States from Mexico are expected to take effect Tuesday and the restaurant industry is one of many that could face higher costs as a result.

Boatwright recently shared how the company was bracing for higher costs as a result of President Donald Trump’s tariffs.

"It is our intent as we sit here today to absorb those costs," Boatwright said on "NBC Nightly News" Sunday. He said the tariffs could be a "significant headwind" for the company and pricing changes could come in the long run.

Boatwright previously said Chipotle imports around 50% of its avocados from Mexico, with the remaining share coming from places like Colombia, Peru and the Dominican Republic.

"We are fortunate to have such an extraordinary economic model at Chipotle that we can withstand those types of inflationary pressures and not have to pass those costs off to the consumer."

The Chipotle CEO said the company's cost of goods could increase 0.6% on a rolling basis from the tariffs.

"We don't think it's fair to the consumer to pass those costs off to the consumer, because pricing becomes permanent,” Boatwright said. “And so again, back to the idea of delivering extraordinary value to the consumer. We're going to stay the course."

Read Also: Warren Buffett Unfazed By Trump’s Tariff Threats: Oracle Of Omaha Bets On Mexico, Beer

Why It's Important: The decision not to pass costs onto consumers was likely a tough one and one that other companies will wrestle with.

Benzinga previously shared that Dollar Tree said tariffs could mean price hikes in stores or changes to the product assortment.

Dollar Tree Interim CEO Mike Creedon said the company would look to negotiate lower costs with suppliers, could change product specs and pack sizes and stop the sale of certain items altogether.

Chipotle said earlier this year that 2025 could prove to be a volatile year with slower sales growth than analysts expected.

As a public company, Chipotle faces the tough task of appealing to both investors and consumers. While the move to eat the costs at the restaurant level will be praised by consumers, investors may not share that sentiment. The question will be if they can gain additional customers who appreciate the move or take share from other restaurants that put surcharges on items.

Companies will likely be impacted by tariffs and with stocks selling off on Monday, investors may be expecting things to get worse before they get better.

Benzinga recently asked if the tariffs could impact stock market indexes like the S&P 500, which is tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY).

"How will Trump's tariffs affect the stock market?" Benzinga asked.

The results were:

• Weigh down: 59%
• Push higher: 23%
• No real impact: 19%

The majority of respondents said Trump's tariffs will send the stock market lower. The remaining voters were split nearly even between the stock market going higher as the result of tariffs or the tariffs not having a real impact on stock market returns.

CMG Price Action: Chipotle stock was up 0.7% to $54.33 on Monday versus a 52-week trading range of $47.98 to $69.26. Chipotle stock is down 9.3% year-to-date in 2025 and trading flat over the last year.

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