Rising Avocado Prices and Your Bottom Line

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on Aug 2, 2019 9:00:00 AM
Learn About: Supply Chain Assessments 

Fluctuating prices are nothing new in the restaurant business. Food costs can vary greatly depending on current supply and demand or changing growing conditions. Restaurants are usually used to these changing prices and can plan accordingly, but when prices rise dramatically, such as with the avocado, it can leave restaurants scrambling to keep profits up.

Rising Prices

The price of avocados in early July had risen 129% since last year according to a USA Today report. To put this into perspective, last year the wholesale cost of avocados was $37.00 for a 25-pound box, this year that price was $84.25. The price increase is due in part to rising demand. Avocados are becoming a staple in the American diet and are touted as a superfood, causing more restaurants to add avocado-based foods to their menus. 

Low Supply

Roughly 90% of avocados imported to the US come from Mexico. With both Mexico and California's avocado peak season coming to an end, this means fewer avocados are available to import. Both areas saw a less than stellar avocado season as well, with low crop yields compared to previous years. This factor also put a large dent in the regular avocado supply.

Responses From Restaurants

This price increase has given restaurants reason to be concerned and looking for ways to make up for this rise in food cost. Restaurants that feature avocado products as staples are looking for ways to get creative with their menu offerings and prices. 

Qdoba Mexican Eats recently did a test of charging extra for their guacamole in select locations. This was met with complaints and resistance from customers and was quickly ended. Qdoba now continues to add a scoop of their guac to all entrees.

In contrast to this, restaurant chain Chipotle, who says they have diversified their avocado suppliers to minimize the impact of rising prices to their bottom line, gave away their guacamole for an entire day if an order was placed through their mobile app.

Whether your restaurant serves a variety of avocado dishes or just a few, the changing costs can affect your bottom line. Keeping up to date on current prices, having a good relationship with your supplier, and making sure you are purchasing quality products will help your restaurant adapt to any fluctuations in food costs. 

Learn About: Supply Chain Assessments 

Topics: Food Cost, Supply Chain, Menu

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