A franchise is one of those growing and exciting businesses you can invest in at any time. There are different franchises based on the industries they belong to. For instance, there are food, auto, and home services franchises. Because a Franchise is an already existing business's brand name and product, you are leveraging the brand history and name recognition. The process of becoming a successful franchisee is usually easy and convenient, and it even gets better if the company is a popular brand that sells marketable or in-demand products. Chipotle has brand recognition and a proven success story.
This article will discuss the Chipotle brand and franchise ownership, as well as answer questions about franchise availability for potential investors, and how investors can go about franchising this winning food giant.
Chipotle, aka Chipotle Mexican Grill, Inc., is an American fast-food restaurant serving properly sourced and classically cooked real food garnished with fresh ingredients. One of the brand's focuses is to ensure that the foods it produces are without artificial colors, preservatives, and flavors. The first restaurant Chipotle opened was in Denver, CO, in 1993. The company operated 2,666 domestic locations and 40 international locations as of September 30, 2020. As of December 31, 2019, Chipotle had about 83,000 employees, including approximately 6,000 salaried employees and about 77,000 hourly employees.
Chipotle is a known name when we talk about the food industry. The company has continued to show itself as a leader and innovator in the industry with how the company's operations are run. Chipotle aims to make fast and quality food accessible to everyone while also leveraging digital technology and sustainable business practices. Chipotle is also passionate about consistently giving the best guest experience possible.
The food company offers a menu of tacos, burritos, burrito bowls, and salads. These meals are specially made from fresh, raw, and high-quality ingredients to offer the best taste and healthy composition of nutrients and value. The company prepares these foods using classic cooking methods and serves them to customers in an interactive style. This allows everyone to get exactly what they want from the variety of high-quality menu.
Profitability of Chipotle Mexican Grill Restaurants
The best place to see the level of profits enjoyed by Chipotle restaurants is to check the company’s filings. Because Chipotle is a publicly traded establishment, the restaurant records and reports their quarterly finances publicly. The latest financial statements from Chipotle restaurants report record average sales of $2 million, which has reached $2.5 million on more than one occasion.
For a typical Chipotle location, the store-level annual profit for the store is around 20% of the overall sales and may rise to a peak of around $600,000 for each store. This says much about why a lot of people want to franchise this brand. The market loves this brand because it produces good quality fast food.
Does Chipotle Franchise?
The idea of franchising has continued to bring rapid growth to various businesses. Franchising is one way a business increases its network of offers and expands to new market areas. When investors franchise a business, they bankroll all the costs of building and running the locations. In return, they enjoy a percentage of the profits. That is why you’ll see a restaurant brand with multiple locations in different countries. They have franchises.
Sadly, Chipotle does not operate like the majority of fast food chain restaurants. All of Chipotle's restaurants are company-owned, rather than franchises. Chipotle is not interested in transferring any control over its restaurant. According to Chipotle spokesperson Chris Arnold, "the reason we do not franchise is because we do not need to. Companies tend to franchise because they need money to grow and/or operators to run their business. We have plenty of money for growth (more than $1 billion in cash on our books) and do not have trouble attracting great people to run our restaurants. When you franchise, you give up control over how the restaurants are run, and that can compromise the experience. What's more, our business model is so strong; we would rather not sell off any of our revenues for only a small percentage of that."
The brand operates strictly and keeps close supervision on how its lines of deliveries are operating and how its networks are expanding. One process is to review the security footage to ensure employees are doing their jobs as expected and to the best of their ability. Chipotle does not want to deal with pressures from franchisees over its way of sourcing for and making food. This is to avoid any potential conflict that may alter the processes of the food-making business.
In April 2018, Chipotle got a new CEO, Brian Niccol. The CEO, of course, was aware of the fact that the company does not offer franchises. In one interview he implied that Chipotle might consider franchising. However, till now, the chain has owned its own stores. Although the news of a possible franchise may sound refreshing to potential franchisees, the company is yet to make an official declaration.
In other words, there has not been any official announcement yet as to when and how potential investors can start franchising the brand’s restaurants. Like we have said, you cannot even run a Chipotle as a licensed store like other brands such as Starbucks. Interested investors can only hope that the food giant eventually agrees to franchise its business or spend their money on other brands. And yes, there are other franchise alternatives you can leverage instead of waiting for Chipotle to change its mind.
A Few Alternatives
While Chipotle may not offer franchises at the moment, there are some similar alternatives you can invest in. These alternatives operate within the same food industry and are also sellable brands. Check out some of the alternatives and their costs of franchising.
- Subway (between $115,000 and $265,000)
- KFC ($45,000 will do)
- Pinkberry (investment ranges from $300,000 to $620,000)
- McDonald’s (a minimum of $955,000)
- Taco Bell (cost of franchise is $40,000)
Just because Chipotle does not franchise does not mean there are no alternatives in the food industry. We have listed some of the available and trustworthy franchise alternatives in the same food industry if you have an interest in franchising a food brand. All you need to do is reach out to the company and request the details, requirements, and processes involved in franchising their brand to start your research. Another source for franchise information is Franchise.com. Here, you will find a multitude of franchises for sale by a variety of sort criteria (location, costs, type of franchise, and more).
Chipotle Annual Report http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&ref=114761988&type=HTML&symbol=CMG&companyName=Chipotle+Mexican+Grill+Inc.&formType=10-K&dateFiled=2020-02-05&CK=1058090
State Journal Register https://www.sj-r.com/article/20141004/BUSINESS/310049988