A woman wearing a face mask leaves the Chipotle Mexican Grill with her takeout on January 14, 2021 in Monterey Park, California.
Frederic J. Brown | AFP | beautiful pictures
Small towns like big burritos, and it’s energizing Chipotle Mexican Grilldevelopment strategy in North America.
On Tuesday, the restaurant chain told investors it was expanding its long-term goal for its North American footprint from 6,000 locations to 7,000, largely due to its success in smaller towns. For comparison, McDonald’s There are 13,443 restaurants in the US alone, though most are run by franchisees. By the end of 2021, Chipotle has 2,966 restaurants worldwide – the majority of which are company-owned and in the US.
Shares of Chipotle were up nearly 9% in Wednesday morning trading after company topping Wall Street earnings estimates and share their new development goals.
BMO Capital Markets analyst Andrew Strelzik wrote in a note to clients: “We expect unit growth to accelerate in the coming years, but to a greater extent than we anticipated. “The small market opportunity that yields higher returns is interesting because we’ve seen similar dynamics work well for others in the space.”
By 2022, the chain is planning to open 235 to 250 new locations. Starting in 2023, they claim that they can accelerate the rate of opening new units to about 8% to 10% a year, citing improved return on the money they invest. More than 80% of new restaurants will include “Chipotlanes,” lanes dedicated to taking digital orders.
“What Chipotlane is also allowing us to do is go into these small towns, where we have another convenient point of access,” CEO Brian Niccol said during a conference call with analysts. accumulate. He defined “small towns” as areas with populations of 40,000 or more.
Many restaurant chains are growing, like Sweetgreen and Cava, have begun to shift their focus to suburban areas, but Chipotle is entering the next phase of growth for its footprint as it opens locations deeper in the suburbs of the United States and Canada.
Chipotle Restaurant Director Scott Boatright noted Chipotle’s popularity for marketing strategy under Niccol, who became CEO four years ago after a successful leadership stint Brand Yum’ Taco Bells. Chris Brandt, a Taco Bell alum, took over as chief marketing officer of Chipotle and began spending on traditional advertising, like television commercials. The company even runs Its first Super Bowl commercial last year.
“We have a nationwide presence now,” Boatright said in an interview. “I think these smaller communities, they recognize the brand and see it on social media [media]on television and people are actually showing up in these smaller communities that we’ve historically fought for. “
Boatright said the chain benefits from cheaper rents in small towns. And despite serving a smaller population, restaurants in smaller towns still have high turnover.
“It’s a really good location to be in,” he said.
