Chipotle in the UK – Does it franchise?
There is no doubt that Mexican cuisine has quickly become a fast food favourite in countries such as the US, Canada, France and the UK. At the forefront of the Mexican fast food movement is the popular outlet, Chipotle. Here, we take a look at how Chipotle has expanded to become one of the world’s leading restaurant chains and whether it offers franchising opportunities in the UK.
The Chipotle Brand
Chipotle Mexican Grill is one of the world’s most popular fast food restaurants and is probably the most recognisable brand selling Mexican cuisine. Based in the US, the chain encompasses around 2,250 restaurants, with locations in the US, Canada, Germany, France and the UK. Over the last ten years, Chipotle has won numerous awards and has repeatedly ranked in tables of the top 10 best-selling restaurant chains in the US.
Steve Ells founded the business in 1993 in Denver, Colorado. Having worked as a line cook in San Francisco, Ells witnessed the popularity of Mexican food in US cities first-hand and decided to try to introduce the cuisine to Colorado, where there was limited competition. This first store was a remarkable success and the profit generated from this one store was enough to open a second within two years of the first’s launch.
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In 1998, McDonald’s made its first investment in the business and, by 2001, it had become Chipotle’s primary source of capital. This allowed the company to expand rapidly, growing to a network of 500 restaurants by 2005. In 2006, McDonald’s divested and the business was floated on the stock market. Demand for stock forced share prices to double on two separate occasions and, during its first day of trading, Chipotle shares rose in value by 100 percent.
In 2017, Steve Ells stepped down as the company’s CEO and Brian Niccol, who previously acted as Taco Bell’s CEO, assumed the role.
Chipotle doesn't currently offer any franchising opportunities in the UK. The same can be said for its operations in other international markets. This means that the only way for investors to put their money into the company is to buy shares on the New York Stock Exchange (NYSE).
Chipotle Franchise UK
Chipotle has employed the franchise model in the past. Up until 2006, the chain experimented with franchising as a possible means of facilitating expansion, but it was decided that the business should remain privately owned and the few restaurants that had been franchised out were bought back.
In July 2018, rumours emerged suggesting that the restaurant chain might offer limited franchising opportunities in select locations again. However, this is little more than hearsay and Chipotle’s official position is that they will not consider franchising the restaurant out any time in the foreseeable future.
Why doesn’t Chipotle franchise?
Chipotle has explained its decision not to franchise. Chris Arnold, the company's Communications Director, argued that businesses franchise for one of two reasons. They either require the financial resources necessary to grow or they need more people to operate their restaurants. In the case of Chipotle, neither is true.
This is primarily due to the fact that Steve Ellis, the founder of the business, was able to utilise his professional contacts to encourage investment in Chipotle from other sources. Up until it divested in 2006, the biggest single investor in the company was McDonald's. Being able to rely on capital from McDonald's ensured that Chipotle could grow quickly without having to adopt the franchise model, allowing it to retain control of how it evolved in the process.
When a business franchises too early, it often faces more pressure from franchisees to alter the business plan and make compromises. This means that most businesses that adopt a franchise model too quickly have to prove themselves. For instance, if Chipotle had chosen to franchise before its business model was a proven success, it may have faced pressure to abandon its policy of only using sustainable ingredients. Franchisees are always interested in cutting costs, but it’s not always in the franchise’s best interest to do so. Chipotle recognised this conflict and decided to take a different approach.
How much does it cost to open a Chipotle franchise?
Because Chipotle no longer offers individuals the opportunity to invest in restaurant franchises, it is almost impossible to estimate the cost of a single, franchised Chipotle restaurant. However, we do have access to other financial data, including revenue and profit margins.
In 2018, Chipotle posted impressive growth figures, while many of the fast food industry's biggest names were reporting negative results. In the first nine months of the year, Chipotle had a revenue growth of nine percent. Its net income figures were also amongst the highest in the industry. Measured over 12 months, it boasted a net income of over £260 million.
Alternative Franchise Opportunities
These impressive growth statistics mean that it’s even more frustrating that Chipotle UK doesn’t offer franchising opportunities. However, there are some alternatives to Chipotle if you’re interested in investing in a Mexican restaurant.
Wrapchic is making the most of the enormous growth in popularity of Mexican cuisine by marrying it with Indian food to bring a unique product to the UK market. With a burgeoning franchise network that consists of 10 restaurants, the business hopes to expand operations over the coming months and years before taking the brand international. A Wrapchic franchise will typically set you back somewhere between £75,000 and £120,000, depending on its location.
El Mexicana has developed an attractive brand and an exciting restaurant aesthetic to become one of the most popular Mexican-style eateries in the UK. Blessed with great ambition, drive and dedication, the franchisor is well equipped to offer all franchisees a considerable amount of support and guidance. Franchisees will typically require around £100,000 to invest in the business, and at least half of this must exist in the form of liquid capital.
Fast Food Franchise Opportunities at Point Franchise
There are plenty of alternative ventures on offer at Point Franchise. If you’re interested in serving great food to hungry customers, why not take a look at our collection of food franchises? Here are a few of the best:
Walk through any town or city and you’re likely to spot a Subway sooner or later. This brand is so ubiquitous it has become the second largest food business in Europe. It’s recognised across the world, boasting 43,000 outlets across more than 110 countries, 2,500 of which can be found in the UK and Ireland.
Customers go crazy for Subway’s selection of customisable sandwiches, wraps and salads, which are sold alongside tasty snacks and drinks. But while ‘Subway’ is a household name now, it hasn’t always been known by that moniker. In fact, it was called ‘Pete’s Super Submarines’ when it was first established in 1965, after a 17-year-old college student named Fred DeLuca was given $1,000 by a nuclear physicist, Peter Buck, to set up the business in Connecticut. It wasn’t until 1968 that it changed its name to ‘Subway’.
If you would like to join the business, you’ll need to make an investment of between £100,000 and £200,000 and find a site of between 300 and 2,000 square feet in a popular location. Once you’ve done this, you’ll be able to enrol onto Subway’s two-week franchisee training programme to pick up essential skills.
This franchise has 40 years of industry experience and a loyal customer base of pizza and pasta-loving fans. Authentic, Italian-inspired dishes are Bella Italia’s speciality. At its restaurants, customers will find hand-stretched pizza and Italian De Cecco pasta, which has been made using high-quality grains since 1886.
A Bella Italia franchise requires a site of over 275 square metres and £700,000. However, the franchise asks that all franchisees are able to invest in the company for at least three years. Once you’re on board, you’ll gain access to a dedicated support system made up of an online guidance portal and a team of experts to help with people-management processes.
If fast food is more your style, look no further than Papa John’s. 30 years of experience has enabled it to become one of the UK’s top pizza franchises. It has developed a network of more than 5,000 stores in 45 countries worldwide and sees an annual sales income of over £2.3 billion.
You may be surprised to discover that you don’t need experience in the catering or food industry to get a slice of the action. As long as you are a team player, business-oriented and have the drive to create your own success, Papa John’s wants to hear from you. An investment of over £100,000 is required, and in return you’ll be given six weeks of training involving theoretical and practical work. This should give you all the tools you’ll need to get your Papa John’s outlet up and running.
Alice Tuffery, Point Franchise ©
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