With over 2,819 locations, you can’t miss Chipotle. This Mexican restaurant chain is scattered all over the United States as well as in Canada, Germany, United Kingdom, and France. It’s considered healthy fast food by many due to its servings of vegetables and grains. The company serves food without artificial flavors, colors, and preservatives. Chipotle stands by their motto of “food with integrity” and values fresh ingredients.
How much does it cost to open a Chipotle in 2022?
Once upon a time, Chipotle allowed franchising of their restaurants but the program ended in 2006. As of today, Chipotle does not allow anyone to franchise their restaurant for the reason stating they wouldn’t like to “compromise the experience” on how their business is run. By working with franchisees, you give up a certain degree of control as a corporate entity.
In this industry report, I evaluate Chipotle’s sales, profit, and other business details. In the unlikely event the company decides to open up franchise opportunities again, you’ll be ready to take action. Let’s investigate the business this growing Mexican concept.
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Financial Requirements and Fees
Chipotle doesn’t offer a franchise opportunity and therefore doesn’t have any fees. With that being said, here’s what similar concepts charge by evaluating similar concepts like Qdoba and Moe’s Southwest Grill.
|Total Investment||$800,000 – $1,000,000|
|Franchise Fee||$20,000 to $75,000|
Average Sales / Revenue per Year
Chipotle’s average sales per store reached $2.2 million. In 2019, average sales per store was right in line with this number. Their worldwide revenue on the other hand is almost $6 billion which is considered Chipotle’s highest record ever with a sales growth of 7.13%
To put this sales number into perspective, this is phenomenal average store performance. Take for example the concept Steak ‘n Shake, grosses just over $1 million in sales per store annually. There are dozens of franchise opportunities that would be thrilled to hit the $1 million dollar threshold of gross revenue each year.
Chipotle Franchise Facts
|Incorporated Name||Chipotle Mexican Grill Inc.|
|Franchising Since||Does Not Allow Franchising|
Chipotle started in 1993 in Denver, Colorado. The restaurant chain was founded by Steve Ells who loaned $85,000 from his father to start the business after he left his job as a line cook in San Francisco. In order for the business to be profitable, Ells and his father calculated that they’d need to sell 107 burritos a day. After a month, Chipotle was already selling 1,000 burritos a day.
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McDonald’s invested in Chipotle in 1998. Their investment paved the way for Chipotle’s expansion from 16 restaurants to 500 in 2005. In 2006, McDonald’s divested from Chipotle. The company then bought back all the franchises and became company-owned.
Chipotle takes pride in using only 53 ingredients that “you can pronounce.” Store do not have any freezers or can openers. In other words, these practices ensure customers get ingredients that are made fresh daily.
Chipotle ranks number 4 in Fortune’s World’s Most Admired Companies in 2020. California has the most Chipotles with over 412 branches. As of March 2018, former Taco Bell CEO Brian Niccol is leading the direction of the company.
How Much Does Chipotle Make in Profit?
In 2020, Chipotle generated $6 billion in revenue. As of June 2021, Chipotle was operated at a profit margin of 9.93%. The company routinely exceeds earning numbers with each quarterly report the past couple of years.
Based on the performance of the company this year, the company could produce more than $595 million in profit by the end of the year. That’s a whole lot of burritos!
Even in the midst of the pandemic, while there was an impact on Chipotle’s sales due to lock-down, the company actually came out of the health crisis stronger than ever. Before the start of the pandemic, Chipotle had a revenue growth of 24.8% from 2017 to 2019. This is unheard of performance for a Mexican restaurant chain.
Advantages of a Chipotle Franchise
We know you can’t operate a Chipotle. But if you ever had the chance to, here are a couple of advantages you could take advantage of.
Healthy Version of Fast Food
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Let’s admit it: Chipotle is considered fast food. But it’s healthier than most places since food items are less greasy and assembled right in front of customers so they know how the staff handles their meal. The food is served fast, but it’s healthier than the alternative.
The company uses only fresh ingredients and offers plenty of vegetarian menu options. Chipotle does not have any freezer so everyone knows the ingredients laid out for customers have been delivered recently.
If you’ll be able to run a Chipotle, you can drive in a health-conscious crowd which is a lot since this trend continues to be on the rise.
Chipotle is so popular that you don’t need a lot of advertising to draw in the crowd. The concept is well-known globally with stores in the United Kingdom, Canada, France, and Germany. The restaurant might one day be as well recognized as popular as fast food joints you can think of.
Despite the wide array of toppings one can choose from at Chipotle, their menu is pretty simple. Customers choose whether they want a burrito, burrito bowl, taco, or salad, and then proceed to choose their grains, beans, and toppings. They also have a kid’s meal should customers bring their children there to eat using the same set of ingredients.
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Similar to other category leaders like Starbucks, Chipotle has been able to take advantage of online ordering. In 2020, Chipotle saw an 177.2% increase in online orders that resulted in $781.4 in sales. More and more customers are beginning to realize the advantages of ordering ahead through an app. In addition to generating more sales, the company is able to drive more longterm sales on digital through an online loyalty program as well. From a digital marketing standpoint, Chipotle is positioned well ahead of the competition.
Challenges of a Chipotle Franchise
Handling a business, even ones that are franchises does not guarantee you a smooth operation all throughout. There will be challenges and it’s better to know what these are before you dive into handling one. For Chipotle, here are some of the aspects I view as challenges to the business.
Keeping Things Fresh
As mentioned above, Chipotle is known for using fresh ingredients daily so the challenge here is to sell as much as you can for the day so you don’t have any leftovers. A former employee from Chipotle once said that the remaining meat is tossed at the end of the day. You don’t want to have a lot of wasted food at your branch. If the volume of customers were ever to slow down for this concept, food waste and expenses could skyrocket.
Sadly, Chipotle has gotten a lot of bad publicity for E-Coli outbreaks through the years. This has tarnished the company’s name and impacted their sales. Though they’ve managed to regain their footing and then some, the past still lingers for some people.
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In theory, Chipotle shouldn’t be that hard to replicate. After all, as someone who has lived in Southern California understands there are plenty of ma-and-pa taco shops out there that are fantastic. At the end of the day they are a company that serves Mexican food.
With that being said concepts like QDOBA have yet to reach even $1 billion in annual sales. While Chipotle should be easy to replicate in theory, the company has proven time and time again that they can execute unlike anyone else in the industry.
Is the Chipotle Franchise Right For You?
If Chipotle allows franchisees to get involved in the business again it could be an appealing opportunity. looks to be a profitable business should you be allowed to franchise one. It’s also growing stronger through the years and still stands strong despite fighting outbreaks and even this pandemic. It’s a business worth investing in if you have the savings to spare and a passion for serving freshly made Mexican food.
What is an alternative Chipotle franchise?
If you can’t wait for Chipotle to start accepting franchising again, you can check out Moe’s Southwest Grill or QDOBA Mexican Eats. Both serve the similar menu items as Chipotle. Moe’s franchise fee is $30,500 while QDOBA’s franchise fee is $30,000.
I’ll be doing an evaluation on both of these companies in the future. With this guide, you’ll surely be ready to handle a Chipotle franchise in the event it becomes an option.