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."