As Chipotle Mexican Grill (NYSE: CMG) struggles to improve sales, its costs are increasing in large part due to an increase in avocado prices. Surging demand and a smaller crop in Mexico and California have impacted avocado prices significantly, and they are likely to remain high for the rest of the year. From Q1 to Q2 2017, the company’s food costs increased by 30 basis points due to higher avocado prices and stood at 34.1% in Q2 2017. However, if rising avocado prices keep these costs high there can be a downside to our price estimate. So while rising avocado prices are a concern, Chipotle is dealing with significantly larger issues as well.

Source: Forbes August 29, 2017 20:03 UTC