> I don't understand how high avocado prices could cause Chipotle to loose money. Guacamole is an optional add on why wouldn't they just raise the price of the guacamole to reflect the market price of avocado

Potentially because then price sensitive people to whom avocado is important to enjoyment of the Chipotle menu items compared to other meal alternatives will instead not eat at Chipotle, so Chiptle will lose more money.