Reported 9 months ago
Avocado prices surged 54% due to disruptions in Mexico, raising concerns for Chipotle, a major buyer of avocados. However, analyst Danilo Gargiulo believes Chipotle's exposure to avocado price fluctuations is limited, estimating avocados account for only 3-5% of the restaurant's expenses and 8% of its food costs. Chipotle has diversified avocado sourcing and hedged risks through supplier contracts, enabling it to manage costs effectively. Despite anticipated food cost inflation, Chipotle's strong margins and operational strategies suggest that rising avocado prices won't significantly impact the company's performance.
Source: YAHOO