Why Is Guacamole Extra? A Lesson In Basic Economics

It is a universal truth so well known that comedians talk about it in their stand-up sets. It doesn't matter where you go, if guacamole is on the menu, it is always going to cost extra, usually about one dollar. So why does a side of guacamole, which uses about a quarter of an avocado, cost a buck when you can buy a whole avocado at the store for that price? There are a lot of factors that go into making this highly sought-after condiment one of the most expensive add-ons that you will find at a restaurant.

No matter where you live transportation is going to be a factor in the price of everything. It costs money to ship those Avocados all over the world which is true even when you buy them from the stores. The real issue comes with distribution; where a grocery store may have the option to buy their produce from multiple sources, driving down prices due to competition, restaurants usually only have one distributor where they buy all of their products. This means when that distributor decides that they are going to sell avocados for twice as much as they should there is nothing a restaurant can do but pass that cost to the consumer.

Probably the biggest reason for the price of guacamole is the cost of preparation. Yes, avocados are expensive, but there are other ingredients which make up guac including limes which have had their own price struggles in the past. The other foods are not as consequential considering most of them play other roles in the restaurant, the real cost to the restaurant is the preparer.

The hourly cost of a cook is going to have a wide range depending state wages, the style of restaurant, and other intangibles like how long the cook has been employed. Making guacamole can be a time-consuming process which eats up an hour or more of an employee's day. This means that the owner/operator of a restaurant is paying, let's say, $15 for that hour of guacamole preparation which needs to be spread across the cost of the final sale price of the product.

This could tie into preparation, but I feel as though it deserves a separate mention. The fact of the matter is that the guacamole is there and you want it. You could probably drive up the street to a grocery store and buy a vat of the green goodness for only a few dollars more, but that is taking time out of your precious day. The same goes for making it at home, you could get a lot more bang for your buck if you made it yourself but that requires taking the time to do it. When you pay that dollar for a side at the store, you are effectively paying a convenience fee.

After everything else is said and done the restaurant still needs to make a profit off of everything they sell. If you know anything about the industry, then you know that it is nearly impossible to make a profit. This is why restaurants will take the opportunity to charge you $1 for something that only costs them 50 cents to make. In other words, a restaurant can make a lot more from selling ten sides of guacamole than they can from a burger, especially if that burger has to be remade or comped for some reason. At the end of the day, the goal for any business is to make a profit.

When I first started writing this piece, I had no intention to make it an economics lesson; it just ended up that way. I just wanted to share an answer to a question that everyone who has ever eaten at Chipotle has both asked themselves and joked about. So, the next time you are reminded that guacamole is going to be extra just remember that there are multiple good reasons why and appreciate the fact that it is available in the first place.