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High wholesale avocado prices cause some restaurants to re-think their guacamole strategy

Tim Nelson
July 30, 2018

“Yes, I know guac is extra.” So goes the phrase you’ve probably seen emblazoned on the t-shirts and Tinder profiles of people willing to pay a premium for that avocado goop we all know and love. But even with the routine upcharge, surging prices can mean the math still doesn’t add up for some restaurants. These days, they’re forced to walk a tightrope when it comes to guacamole, caught between the increasingly high cost of avocados and a customer base that expects guac to be on the menu.

For taqueria chain Dos Toros (home to 14 New York locations with three more in Chicago), that meant paying as little as $30 for a crate or avocados in some cases, and as many as $90 (a 300% jump) in others. While larger restaurants can leverage their size to get better wholesale deals, the margins still aren’t great and the volatility makes managing expenses a challenge.

“When it was $90 a crate, we estimated that we were losing money every time someone added guacamole to their burrito," Dos Toros co-owner Leo Kremer told NBC News. "Avocado is a huge percentage, roughly 10 percent of sales volume, but it's a higher percentage of cost for us because we try to subsidize guacamole for our guests."  

That was last year, and things are looking even worse in 2018. So far this year, worldwide avocado production has been down just over 4% from Hass Avocado Board projections, while demand continues apace. That dip in production relative to supply doesn’t account for macroeconomic forces that could drive up prices. Between the impact of Trump’s tariffs and the ongoing NAFTA renegotiation, the prices of imports from Mexico, the world’s foremost avocado exporter, could inflate even further. That’s not to mention the increased competition that places like Dos Toros (who have a pretty legitimate case for serving guacamole) face from cafes and sandwich shops trying to cash in on the avocado craze by smearing it on every carbohydrate in sight.

There aren’t a ton of alternatives for restaurants beset by unreasonable avocado prices. Chef Andrew Gruel, who runs three different California restaurants, has accepted the idea of abandoning avocado and guacamole is just untenable. “If you take it off the menu, you lose sales," he tells NBC News. Gruel admits that an avocado puree is something of a popular alternative, but that it “tastes like lemon juice and baby food.” After a long trial and error period, he says his go-to move to save money is to work with fast-freezing avocado slices for guacamole with a little bit of the fresh stuff mixed in. No doubt, many restaurants responding to market forces have begun to do the same.

So what are consumers to do? We’ll probably need to mentally prepare for guacamole costing us even more than before, and come to terms with the fact that any deal for avocado/guac that sounds too good to be true probably is. At the very least, there’s no reason to be salty over needing to splurge on guac: After all, it probably hurts the restaurant more than it hurts you.

 

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