Chipotle Fans, Have No Fear: Guacamole Will Still Be Here
Chipotle (NYSE:CMG) lovers, have no fear — guacamole will still be here. That’s right: We sounded the guacamole alarm, but as it turns out, according to NPR, a spokesman for the Mexican fast-food chain says there’s no reason for Chipotle fans to panic. Because although Chipotle listed a warning in its filing with the U.S. Securities and Exchange Commission recently that led us all to believe the company’s famous guacamole could be on its way out, the chain maintains that the warning was only a routine disclosure of risk factors that could impact business. Read: Guacamole is here to stay.
Public companies are required to routinely submit stock filings to the SEC, and in Chipotle’s earlier this week, the company cited recent climate change and weather volatility to explain why it could need to curtail its production of guacamole in the future, leading to rumors of a “guacapocalypse.” United Press International reported Wednesday that Chipotle was forced to make the warning due to its recognition of the fact that food prices — namely those of avocados, beef, dairy, and chicken — are set to rise in 2014, and that’s an issue for the popular Mexican fast food chain, which goes through a reported 97,000 pounds of avocado in a day. That’s why Chipotle listed a halt in guacamole production under its “risks to business” heading, noting that many customers visit the chain solely for its avocado-based dip.
That’s reason enough to hunker down and prepare for a guacapocalypse, right? Luckily, Chipotle spokesman Chris Arnold says no, and NPR reports that he told The Salt in an email, “There is no looming ‘guacapocalypse’ and I wouldn’t read too much into this.”
Now that your blood pressure is back down, we can talk about this. Why would Chipotle seemingly sound the guacamole alarm to the SEC when there’s no real threat to its production? That much is still up for debate, especially because the reasoning behind its warning makes sense. If avocado prices, among many others, really are on the rise, that’s a significant problem for Chipotle’s business, considering it takes the chain 70 avocados to make just one batch of its guacamole. Of course, many of the warnings that public companies put forward in their SEC filings don’t always end up being relevant, but there is still also a possibility that Chipotle’s is, and the chain just doesn’t want its consumers to panic and get started on their slow withdrawal.
And if Chipotle does end up halting the production of its guacamole in the future, just as it recognizes in its SEC filing, it could mean devastating things for its business. While fast food restaurants like McDonald’s (NYSE:MCD) and Burger King (NYSE:BKW) are suffering slowing sales and a lack of consumer demand, Chipotle’s lines are only getting longer, and its shares are also soaring. Though consumers don’t visit Chipotle solely for its guacamole, the savory topping is something the chain is well known for, and the company recognizes that the ingredient’s removal could affect restaurant traffic, comparable sales, and “could have an adverse impact on our brand.”
Is that a risk it’s willing to take? Chipotle may have no choice, or it might just be playing it safe in its SEC filing. We won’t know unless the chain comes clean and warns us of a real guacapocalypse, and that happens, let’s just hope Chipotle gives us fair warning.