Chipotle says guacamole fears 'way overblown'

Calm down, everyone. The Mexican-food chain says that while global warming could impact its ingredients in the future, no changes are expected.

By MSN Money Partner Mar 5, 2014 1:39PM
Credit: © Noel Barnhurst/the food pass/Corbis
Caption: Bowl of traditional guacamoleBy Barbara Kollmeyer, MarketWatch

Holy guacamole, Batman!

Chipotle Mexican Grill (CMG) lovers everywhere have been fussing and fretting over hints the company may have to cut the beloved green gunk from its menu due to global warming. 

Buried in the company's 10-K filing from early February, under the "risks to business" heading, the company had this to say:

"Increasing weather volatility or other long-term changes in global weather patterns, including any changes associated with global climate change, could have a significant impact on the price or availability of some of our ingredients."

That's the buildup. The clincher came when Chipotle said if prices go up for crucial ingredients, it could mean an adverse hit on operation results. And then . . . 

"Alternatively, in the event of cost increases with respect to one or more of our raw ingredients, we may choose to temporarily suspend serving menu items, such as guacamole or one or more of our salsas, rather than paying the increased cost for the ingredients."

Chipotle said in the 10-K that cutting out guacamole, or other vital burrito stuffers, could be a potential hit to restaurant traffic, comparable sales and adversely impact the brand. But is this a storm in a burrito bowl? In an emailed response to MarketWatch, Chipotle's communications director Chris Arnold had this to say:

"This is way overblown. It's routine 'risk factor' disclosure," Arnold said. "We are required to disclose issues that could present risks to our business  --  like supply constraints or higher food costs -- and we are very thorough in making those decisions."

With regards to avocados, Arnold said there were similar issues in 2011. That meant higher prices for the avocados they used, but they "never stopped serving guacamole . . . the sky is not falling," he said.

Chipotle's stock has been a darling over the last 12 months -- up around 78 percent -- and got a sizeable bump after the company posted a 30 percent rise in fourth-quarter earnings early this year, as more traffic for restaurants boosted sales. Shares weren’t paying the slightest attention to the latest news, but there was a lot of panic online.

Guacamole is a big deal to Chipotle. On its website, Chipotle says it uses 97,000 pounds of avocados on an average day, and it takes 70 to make a single batch of guacamole. The company boasts it provides "Food with Integrity," such as locally-sourced vegetables -- grown on farms within 350 miles of the restaurant -- meat from animals that aren't given antibiotics and 100 percent recycled napkins.

According to Wikipedia, 95 percent of U.S. avocado production is found in Southern California, a state that is in the throes of a three-year drought and the site of plenty of Chipotle restaurants. 

ClimateProgress, which raised the alarm over the guacamole threat on Monday, pointed to a  2006 study showing hotter temps are likely to cause a 40 percent drop in California's avocado production over the next 32 years. ClimateProgress says Chipotle's green attitude makes it all the more vulnerable to climate shifts, as it buys from smaller farmers who are less able to weather difficult conditions without lifting prices.

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Tags: CMG
Mar 5, 2014 4:14PM
How about getting some avocado from Hawaii?  We've been growing some of the best in the world, but Hawaii avos have been blocked by the collusion of Calif. Avocado growers and the USDA.  They don't want Hawaii to make it on the market, so they stifle us with bogus USDA inspections requirements for medfly, while Calavo brings in everything from south of the border, because it's cheap.
Mar 5, 2014 6:14PM
The investment community always responds to everything in spastic, knee-jerk reactions. A butterfly could fart in China and the Dow would drop 100 points on a whim. These people seem so schizophrenic and take everything way out of proportion. Why, you ask? I believe it's all scheming to create the dips they all buy on and is part of the game. That's the only way any of it makes sense. MANIPULATE AND PROFIT is the Street's game! If Chipotle really sees this as a serious business risk, they should consider investing in their own avocado growing businesses in differing regions so their supply is ensured.
Mar 5, 2014 7:53PM
Global warming is a proven
Mar 5, 2014 8:24PM
climate change (originally global warming) has been proven false by the very people who invented the scam.

so eat all the guacamole you want
Mar 5, 2014 3:41PM
Southern California is yes in a drought, but they get the water farmers would/used to get from the mountain snow melt and system the Government helped build  to supply them. There is water available for farming but the environmentalists are protecting a little minnow. Sad thing about this story is these same knuckle heads fly to DC to lobby for the little fishy while their enjoying a bowl of guac. and chips  at the same time complaining about carbon emissions. Give them a bicycle and tell them to go away!!!  Do you see the need to elect people with common sense?
Mar 6, 2014 12:44AM
Ask people in Minnesota, Virginia and other eastern and Midwestern states about global warming!
Mar 5, 2014 9:08PM
There is no such thing as global warming. Get the facts and stop being lied to!!!
Mar 6, 2014 12:07AM

Chipotle-you are full of CRAP! We have had enough of your BS! Your food is not that good anyway!    

Global warming or "climate change is a myth perpetuated by liberals and the far left media like TWC for financial gain and social engineering, aka, people control. It is a fraud and never existed. Only total morons still believe in it.

Mar 6, 2014 12:10AM
ROFL you Warmers are too much, man.
Mar 6, 2014 2:33AM
California Politicians need to engage in a real solution to their "drought" by building more reservoirs to store their rain-water.
Mar 5, 2014 8:30PM
Global warming? Did Al Gore come out of his cave too early this year? We are in the midst of an ice age winter and wackos are talking about global warming? I give up...
Mar 24, 2014 5:42PM
Guacamole (and Chipotle) sucks so who cares?  Plenty of mom & pop taquerias and other Mexican cuisines worth going to for better quality and in most cases equal or less price.
Mar 10, 2014 2:33PM
California is in big trouble.....water and the misuse of it ...
Mar 5, 2014 8:08PM

Well we have people lined up on both sides of the Global warming issue or Climatic Crisis..

Both say the other side are lying...

I guess my only concern, is I don't want to be on the WRONG side....??

Mar 6, 2014 5:15PM

Thanks to fingerling fish, how many farmers are out of business?  Idiotic Nancy Pelosi wants us to buy all our produce from that **** south of the border.............. 


Politicians are diseased in the brain, and are political prostitutes. 

Mar 5, 2014 5:27PM
global warming is a falacy anyway.  good lord folks take a chill pill.  progressives keep beating the global warming drum...ala al gore...what a joke.
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