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Goodbye Guacamole?
By Michael Schweibinz

Chipotle is renowned for its innovative take on healthy fast food. The company promotes itself as not only providing superior customer service, but also a healthier, more sustainable product. Chipotle uses only fresh, organic and local ingredients in their burritos, tacos, and salads which they prepare right in front of the customer.

A staple on Chipotle’s menu may be in danger of losing its place on the menu and in the hearts of Chipotle fans. The guacamole that Chipotle prepares with abundant avocado is a customer favorite, and an important element in the success of the restaurant chain. Company stores dice through 35.4 million pounds of avocado annually to produce their guacamole—that’s almost 100,000 pounds per day!

Recently, Chipotle’s front office issued a statement to investors explaining that it may delete guacamole from their menu. Although avocado supplies are not in immediate danger, environmental scientists speculate that climate change will cause a dramatic decline in avocado production—perhaps reducing yields by 40% in the next 32 years. Because Chipotle exclusively uses smaller, responsible avocado farmers, these farmers would need to raise their prices to help absorb the loss of supply. These price hikes would need to be passed on to Chipotle and ultimately on to the customer.

However, avocado prices are not the only factor contributing to Chipotle’s decision to suspend the production of guacamole. Because of back-to-back years of drought, specifically in California, beef prices have soared. Beef is absolutely vital to the production of Chipotle’s burritos and tacos, so to compensate for the higher beef prices, the company needs to find somewhere to cut costs. Unfortunately for guacamole enthusiasts, avocados would likely be first in line to be sacrificed.

In an increasingly warming world, buffeted by more and more severe storms and droughts (as climate scientists have long predicted), even something as simple as an abundance of tasty avocados is a privilege, not a right.

 

At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?

Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security. Past performance is no guarantee of future results.

 

Posted: April 28, 2014