El Pollo Loco CEO on Trump-Mexico deal: 'We’re breathing a sigh of relief'

Business leaders across America are feeling a weight lifted off of their shoulders after President Donald Trump announced he struck a deal that would keep him from slapping new tariffs on Mexico late last week.

“We’re breathing a sigh of relief from the standpoint that we do bring in from Mexico quite a bit of our avocados and tomatoes,” Bernard Acoca, CEO of Mexican fast casual chain El Pollo Loco (LOCO), told Yahoo Finance. “It comprises about 4%-7% of our commodity basket, so naturally we’re keeping a watchful eye to see what decisions are being made with our trade relationship with Mexico,”

The president had previously threatened a series of tariffs if Mexico didn’t step up its efforts to curb illegal immigration into the U.S., but backed off late Friday night, claiming Mexican officials came forward with a new deal that satisfied the White House’s demands.

Avocados and tomatoes from Mexico are seen for sale in a store on June 6, 2019 in Washington,DC. - US President Donald Trump has trumpeted the robust US economy but hitting all products from Mexico with 25 percent tariffs threatens to undercut growth and undermine key American industries, economists warn. Tomatoes and avocados -- nearly 90 percent of which come from Mexico and other seasonal fruits would be hit hard. (Photo by Anna-Rose GASSOT / AFP) (Photo credit should read ANNA-ROSE GASSOT/AFP/Getty Images)

According to the U.S. Department of Agriculture, the U.S. imported nearly $12 billion worth of fruits and vegetables from Mexico in 2017. Like thousands of other businesses operating in the U.S., El Pollo Loco relies on Mexico to supply ingredients for many of the items it offers at its restaurants. Just last week, Chipotle (CMG) estimated the tariffs would cost the company $15 million in 2019 and it would have to raise burrito prices in order to cover the costs. Acoca said El Pollo Loco would have to do the same should the Trump administration backtrack on the new agreement.

“We could [buy from California], but it wouldn’t make up for the full amount that we would not be getting from Mexico,” Acoca said. “There are different seasons, so when we buy from California, for instance, in one season, we’re not buying from Mexico in another. So, it would put a strain on the business in the form of potentially increased prices in avocados that we would have to find a way to pass on to our customers in one form or another.”

Nick Rose is a producer for Yahoo Finance On the Move.

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