Small towns power Chipotle Mexican Grill’s ambitious North American development goals
Key takeaways:
- Chipotle Mexican Grill is peeking into smaller towns to fuel North American unit development.
- On Tuesday, the restaurant chain informed investors that it’s developing the long-term plan for its North American imprint from 6,000 places to 7,000 units.
- The chain helps from more affordable leases in small towns without noticing a drop-off in consumer need.
Chipotle Mexican Grill looks for expansion:
Small towns like giant burritos fueling Chipotle Mexican Grill’s expansion plan in North America.
On Tuesday, the restaurant chain informed investors that it’s developing the long-term plan for its North American print from 6,000 places to 7,000, mainly due to its achievement in smaller towns.
For comparison, McDonald’s has 13,443 restaurants in the U.S. sole, although franchisees use the overwhelming majority. At the end of 2021, Chipotle had 2,966 restaurants worldwide — most of which are company-owned and in the U.S.
Shares of Chipotle were up about 9% in morning trading on Wednesday after the firm outperformed Wall Street’s profits calculations and shared its new growth targets.
“We predicted revving unit increase in the future years, but the magnitude is more significant than we expected,” BMO Capital Markets critic Andrew Strelzik wrote in a letter to clients. “The higher return small market option is impressive as we have seen similar dynamics work well for others in the space.”
In 2022, the chain intends to open 235 to 250 new places. Beginning in 2023, it believes it can rev its speed of new units to a span of 8% to 10% a year, noting enhancing returns on the capital it’s investing. Almost 80% of the new restaurants will include “Chipotlanes,” the drive-thru streets devoted to picking only digital orders.