Chipotle Blames Guacamole and TV Ads for Its Latest Problems
Although Chipotle's $2-or-so up-charge for guacamole is almost always worth it, the extra expense can easily add up if you're not careful. And while you'd think the chain would be making a killing off the chunky and delicious burrito accessory, it looks like Chipotle itself felt what it's like when all that guac breaks the bank, thanks to high avocado prices last quarter.
As explained in a report by Business Insider, the burrito giant released preliminary results for its fourth quarter earnings on Tuesday, coming in slightly below what analysts expected, apparently due to increased expenses during the time period. Chipotle said its expenses surpassed what it forecasted for the quarter, pointing to increased prices for the avocados it uses to make guacamole, as well as big spends on marketing and testing new TV commercials. All said, the company anticipates its operating margin for the quarter to be around 13-14%, per the report.
"During the quarter we incurred higher expenses compared to our originally-forecasted amounts in other operating costs, driven by increased promotional spend and costs related to testing television advertising," the company stated in the preliminary report. "Our marketing and promotional expenses during the quarter totaled approximately 4.7% of sales. We also incurred higher food costs compared to our originally-forecasted amounts as a result of increased market costs for avocados."
Meanwhile, comparable same-store sales decreased by 20.2% in October and decreased by 1.4% in November before turning around and increasing by 14.7% in December. Ultimately, Chipotle said it expects same-store sales to have declined by 4.8% for the fourth quarter as a whole, which would actually make it the best quarter its seen since the devastating food-borne illness incidents in late 2015, according to a report by Nation's Restaurant News. The company said it will present its fourth quarter results and full year 2016 results on February 2nd.
As a reminder, Chipotle actually revealed its guac recipe back in 2015. Use that information wisely.
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