Margarita Economics: The Cartel, The Rain, and More Reasons to Drink

The margarita tasting.

Four margaritas made with different mixes of lime juice await the big T-lish taste test.

A good restaurant is made up of quality service, food, and vibes. At our best, we’re in control of these three elements. However, the price of the food that we buy in order to prepare your dinner is out of our jurisdiction.

Food prices are dependent on so many zingers—supply and demand, weather patterns, bug infestations, crop disease. And even, apparently, Mexican drug cartels. This brings me to limes, the fruit that we count on more than pretty much anything else at Tacolicious. Limes garnish our tacos, brighten up our guacamole, and add zip to our salad dressings. But most of all, they are integral to our margaritas.

Which is why we’re wringing our hands right now. According to CNN Mexico, the price of Mexican limes has increased over 143 percent since December. We don’t need to read the news to know this. When the crops are plentiful, a case of limes costs us about $15 to $20 per case. Right now, it’s brinking on $120. (Take into consideration that at our four restaurants, we use up to 150 cases a week. At this rate, that’s $72,000 worth of limes a month.)

There are a couple of key reasons for this price hike. As Tacolicious’s director Mike Garcia retold it from our produce vendor, one of them is winter crop damage: “When it started to rain in Mexico, it wiped out all four regions of limes, which are rotated in order to let the limes regrow, and left them with only a ten percent yield from each region. Thus, little supply and a lot of demand.”

Teetotalers, optimists, and environmentalists, skip the next paragraph. Self-serving, shallow, doomsday-driven margarita lovers, read on.

(Of course, this is particularly worrisome because the world’s weird weather patterns are likely due to global warming. Thus, with the world’s end nigh, we need to drink as many margaritas as possible before we all perish!! This is a serious predicament.)

Add to this the reality of the influence of drug cartels on farmers. Sadly, farmers in the state of Michoacan, where the majority of Mexico’s limes are grown, are facing extortion and worse from the Knights Templar. To learn more, you can listen to this interview on NPR with Gustavo Arellano. This article on Bloomberg speaks to the issue of farmers banding together to establish a minimum price, which is another piece of the puzzle. 

So, in keeping with our belief that transparency is everything, here’s our quandry: Do we raise the price of our Tacolicious house margarita, made with solely freshly-squeezed Mexican lime juice (and tequila and agave syrup, of course), from its current price of $9.50 to $12.50? Or do we try to come up with a thoughtful—temporary—solution while this lime crisis plays itself out? In this case, a mix of 50 percent flash-pasteurized fresh lime juice from local juice company Voila!, 25 percent freshly squeezed lime juice, and 25 percent freshly squeezed lemon juice. We did a margarita taste test, pictured above, made of a few different lime-y combinations to come up with this mix and we think it has great integrity and is quite tasty to boot.

Ultimately, our first priority is your happiness. So rather than give you the impression that we’re presenting unfair prices or cocktails that aren’t up to our usual snuff, we’ve decided to give you a choice.

In honor of having it your way, we’re now offering two margaritas: For our usual $9.50, you can order the margarita de la casa, made with our lime concoction. And for $12.50, you purists can order the margarita de la cartel made with 100 percent freshly-squeezed Mexican lime juice, which maybe we should call the margarita del dia del jucio final. But if worse comes to worse, take solace in the fact that there is a simple answer: you can start drinking your tequila straight.

 

 

 

 

 

20 Responses to “Margarita Economics: The Cartel, The Rain, and More Reasons to Drink

  • Kathy Best said:
    March 24th, 2014 at 6:26pm

    The choice at the restaurant is a good idea. And, calling it ‘de la cartel’ is clever. We can always order the first ‘de la cartel and the second de la casa, cuz we would be hard pressed to tell the difference!

    Maybe a silly questions: are there no limes grown in California?

    Best,
    Kathy

  • Reza said:
    March 25th, 2014 at 9:01am

    How do you justify a $3 per drink price hike when at most the cost of the lime (typically 1 per Margarita) has only gone up $1 at most?

  • ari salomon said:
    March 25th, 2014 at 11:12am

    cartel! well, it’s good to know the story behind this. are the tacos also going to start to use the new casa formula?

  • Sara Deseran said:
    March 25th, 2014 at 11:14am

    No, our tacos will remain the same! And hopefully our margaritas will return to normal soon too.

  • Sara Deseran said:
    March 26th, 2014 at 8:05am

    Hi Reza,

    Joe Hargrave here, the owner of Tacolicious. I’ll send you a personal note with more details, but for the sake of this blog, here’s our basic thinking:

    I don’t want to bore you with the minutia of restaurant economics, but honestly there are better businesses out there if our goal was getting rich. We—like nearly functioning restaurant—look to run our prime costs (the combination of product and labor) just south of 60%. This leaves us the remaining $.40 on each dollar we bring in to pay rent, utilities, taxes, associated payroll costs and the like. It honestly goes a lot faster than you might think.

    Anyway, each restaurant is different, but at Tacolicious we have a product cost budget of 29% or for every dollar we generate, we budget to spend $.29 on product. In order to achieve this—and knowing our product mix—we budget to achieve a liquor cost of 19%. Last month Tacolicious on Valencia Street made 4.7% profit.

    The problem with the current lime situation for us is that we use limes in just about everything. All of our salsas, 90% of our cocktails, all of our garnishes, most of our braises, sauces, dressings, etc. Tacolicious a Mexican restaurant—there’s just no getting around using limes.

    We thought rather than making the decision to increase all of the prices, we’d modify the margarita—ever so slightly—in order to please the customer who chooses not to spend $12.50 for a drink, a decision we can respect.

    Thanks for reading.

    Best,

    Joe

  • Sara Deseran said:
    March 26th, 2014 at 8:12am

    Hi Kathy,

    From my understanding, the U.S no longer has commercial lime production (which used to be all Florida-based which is farther from us than Mexico anyhow), but California does a great job growing lemons. Maybe we’ll start a lemon margarita trend. :) Thanks for reading. More info here if you really want to dig deeper.

    http://www.agmrc.org/commodities__products/fruits/citrus/citrus-profile/

  • Les said:
    March 29th, 2014 at 10:24am

    Just read an article where a Bar owner is offering a free margarita to anyone who brings in a sack of limes. Probably aren’t too many like trees in SF, but many in East Bay, and possibly South Bay, Contra Costa, and folks commute to the city from those areas for work and fun.

  • Jenne said:
    April 2nd, 2014 at 9:44am

    It should be “margarita DEL día del juicio final” día es masculino. Anyway, I think this is important, thank you for bringing attention to the problem.

  • Sara Deseran said:
    April 3rd, 2014 at 2:01pm

    fixed and gracias!

  • Linda said:
    April 8th, 2014 at 3:31pm

    Sara D. that was the most sincere response I have ever witnessed in response to a customer’s question. Educational and respectful. If I visit your fair city I will stop in to enjoy and I hope the ‘lime crisis’ is over by then. Peace and love.

  • Reza said:
    May 21st, 2014 at 1:40am

    according to this, the lime shortage is over..

    https://www.yahoo.com/food/limepocalypse-over-daiquiri-time-86319872141.html

    will you be returning your prices to normal anytime soon?

    Reza

  • Sid said:
    May 21st, 2014 at 5:45pm

    Reza, I wouldn’t count on it.

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