Chipotle Mexican Grill, Inc. often known simply as Chipotle, is an American chain of quick-service restaurants in the United States, United Kingdom, Canada, Germany and France that specializes in tacos and mission burritos prepared to order in front of customers.
The name is derived from Chipotle, the Nahuatl name for a smoked and dried jalapeño chile pepper. The company is traded on the New York Stock Exchange under the ticker symbol CMG. I know you are here to learn about Chipotle competitors, but before we know that, let us take a look at Chipotle’s overview.
- Overview Of Chipotle
- Key Takeaways By Business Mavericks
- Chipotle Competitors
Overview Of Chipotle
Chipotle is one of the first chains of fast-casual restaurants. Competitors in the Mexican fast-casual market include Qdoba Mexican Grill, Moe’s Southwest Grill, Rubio’s Coastal Grill and Baja Fresh. Chipotle was founded by Steve Ells on July 13, 1993, and had 16 restaurants (all in Colorado) when McDonald’s Corporation became a major investor in 1998. When McDonald’s fully separated from Chipotle in 2006, the chain had grown to more than 500 locations. With more than 2,000 locations, Chipotle had a net income of $475.6 million in 2015 and employed more than 45,000 people.
In May 2018, Chipotle announced it was moving its headquarters to Newport Beach in Southern California, ending its relationship with Denver after 25 years. Chipotle Mexican Grill, Inc. often known simply as Chipotle, is an American chain of quick-service restaurants in the United States, United Kingdom, Canada, Germany and France that specializes in tacos and mission burritos prepared to order in front of customers. The name is derived from Chipotle, the Nahuatl name for a smoked and dried jalapeño chile pepper. The company is traded on the New York Stock Exchange under the ticker symbol CMG.
In May 2018, Chipotle announced it was moving its headquarters to Newport Beach in Southern California, ending its relationship with Denver after 25 years.
Key Takeaways By Business Mavericks
- Chipotle has expanded rapidly due to the growing demand for Mexican food and the increasing preference for fast-casual dining.
- Qdoba Mexican Eats, Moe’s Southwest Grill, Baja Fresh Mexican Grill, and Rubio’s Coastal Grill are Chipotle’s main competitors.
- Although Taco Bell is focused on fast food rather than fast-casual, it has also begun to compete with Chipotle by improving the quality of its food.
Also, Read What is Controlling?
1. Qdoba Mexican Eats
Qdoba operated restaurants at over 700 locations and was a franchisee in 2021.2 As a large Mexican fast-casual restaurant chain, it is one of Chipotle’s main competitors. A key difference is that about half of Qdoba’s restaurants were franchises in 2019.
After 15 years of expansion led by fast-food giant Jack in the Box (JACK), Qdoba was sold to Apollo Global Management in 2018. Apollo’s other restaurant holdings included Chuck E. Cheese’s and Peter Piper Pizza.
2. Moe’s Southwest Grill
Moe’s Southwest Grill, which is part of Focus Brands, had more than 700 restaurants in 2021, most of them east of the Mississippi River.3 Moe’s Southwest Grill restaurants try to differentiate themselves by offering fun and edgy environments. They offer menu items named after TV and movie stars. Focus Brands is focusing on franchising. As of early 2020, their other brands include Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s Deli, Schlotzsky’s and Seattle’s Best Coffee.
3. Baja Fresh Mexican Grill
MTY Food Group is a company that operates or franchises Baja Fresh Mexican Grill and also manages La Salsa Fresh Mexican Grill. Baja Fresh Mexican Grill introduced a new restaurant design in 2013, along with a revamped menu that places more emphasis on the flavour and freshness of the food. When MTY acquired Baja Fresh Mexican Grill in 2016, the restaurant had 162 locations.4 The La Salsa Fresh Mexican Grill subsidiary had 23 locations at that time.
4. Rubio’s Coastal Grill
Chipotle is not the oldest Mexican fast-casual dining chain. Rubio’s was founded ten years earlier. However, Rubio’s has not achieved the same geographic footprint as Chipotle. Although Rubio’s is primarily based in the West, the company expanded to Florida in 2019. Rubio’s is privately held and operates stores in over 200 locations.5
In 2010, Rubio’s went private through a merger with an affiliate of Mill Road Capital. Rubio’s is now trying to differentiate itself from Chipotle and other competitors by launching new fresh seafood dishes and giving some of its California restaurants a beach-like look.
5. Taco Bell
Chipotle is still dwarfed by the fast-food giant Taco Bell, which had more than 7,000 locations in 2020.6 However, traditional fast-food chains are not growing nearly as fast as the fast-casual segment. On the other hand, Taco Bell has made changes to keep up with changing consumer preferences. The company has introduced a Fresco menu with healthier dishes and has also improved the quality of its ingredients over the past decade. Taco Bell is a division of Yum! Brands (YUM), the world’s leading fast-food chain. Yum! Brands also own Pizza Hut and KFC.
Freebirds is a quirky Mexican restaurant that is very similar to Chipotle but offers some of the most unique and sought-after dishes. It is one of the few fast-casual restaurants that offers burritos made with grass-fed steak and free-range chicken. Chipotle and other chains use only cilantro-lime rice, while Freebirds uses traditional Spanish rice.
But those ingredients are in short supply, and their price keeps rising, cutting into profits. In the recent past, Freebirds has struggled with high costs, leading to the closure of several locations.
McDonald’s was founded in 1940 and is a household name around the world. It is synonymous with the fast-food business and is recognized worldwide. McDonald’s and Chipotle have a long history. Fifteen years ago, McDonald’s spun off Chipotle Mexican Grill and attracted big investors and consumers to the burrito chain.
Today, McDonald’s is one of Chipotle’s largest indirect competitors. Although McDonald’s is not known for offering burritos, it has more than 14,200 restaurants in the United States. So it can attract consumers and poach them before they come to Chipotle.
In 2020, McDonald’s was one of the few food chains to increase its third-quarter profits. Chipotle did better than expected and nearly turned the corner in Q3 2020.
Chick-fil-A is a unique restaurant brand that specializes in chicken. Their business model is focused on customer satisfaction, which is why the chicken chain has risen to become the leading restaurant brand for six consecutive years.
The American Restaurant Report Customer Satisfaction Index announced that the top restaurant brand for 2019-20 is Chick-fil-A. In FY2020, Chick-fil-A’s annual sales were approximately $11.3 billion, up 13% year-over-year.
To understand the popularity of Chick-fil-A, you need to know that Taco Bell has about 4,300 more units, but generates just under $11.3 billion. Chick-fil-A’s popularity makes it a worthy indirect competitor to Chipotle.
Founded in 1969, Wendy’s is a leading multinational fast food restaurant based in Ohio. It is one of the leading fast-food chains in the United States. Wendy’s has more than 5,500 franchised restaurants in the U.S. and operates more than 1,200 quick-service restaurants.
Its experience in the fast-casual food sector and extensive market presence make it one of Chipotle’s strongest competitors. Between March and September 2020, Wendy’s tripled in value and is one of the top five stable fast-casual restaurants with strong growth potential.
10. Burger King
Burger King is known worldwide and is second only to McDonald’s in terms of reputation. In October 2020, the company opened several stores with its new restaurant design focused on out-of-home consumption. The innovative designs make it easier for customers to order online with their cell phones and pick up their food right at the roadside.
Burger King will launch the first restaurants with these design features in Miami, the Caribbean and across Latin America in 2021. The stores will be 100% touchless and 60% smaller than a regular Burger King restaurant. The new design features for its restaurants will give Burger King an advantage over Chipotle and other competitors in the industry.
11. Shake Shack
Shake Shack is an American burger chain that operates only in urban areas. The crisis and the nationwide beef shortage in the U.S. led to a 39% decline in sales in Q2 2020. The company came back stronger in August 2020.
Operating profit increased to 14.8% in Q3 2020, compared to just 2.2% in Q2. Despite the challenges, Shake Shack opened 33 new locations in 2020 and plans to open 35 to 40 shacks in 2021. Shake Shack is the competitor to watch in 2021.
Kentucky-based KFC is known worldwide for its fried chicken. The company has over 4,000 restaurants in the U.S. alone and more than 20,000 worldwide. In 2020, KFC tested a new chicken sandwich and found that the product could nearly double its original sales projections.
The fast-food chain will offer the sandwich in select restaurants beginning in January 2021 and will be available in all 4,000 KFCs in the U.S. by the end of February 2021. The new sandwich on KFC’s menu increases its competitive advantage over Chipotle.
Iconic Starbucks is synonymous with freshly brewed coffee worldwide. It also offers other food items that may attract some of Chipotle’s customers. Starbucks revenue is up 18% from $22.4 billion in FY 2017 to $26.5 billion in FY 2020.
By comparison, Chipotle’s revenue has grown 25% over the same period. But Starbucks’ profit margin is always larger and was 14% in FY2020 compared to Chipotle’s 6%. As of June 2020, Starbucks had more than 320,000 restaurants in 83 markets worldwide.
Chipotle has 2,700 restaurants, more than 98% of which are in the US. The geographic diversification and number of restaurants make Starbucks a strong competitor to Chipotle.
14. Pizza Hut
Pizza Hut’s first location opened in 1962 and went public in 1984. However, it became a private company again in 2001. Pizza Hut is owned by NPC International, the largest franchisee of Yum Brands. NPC operates more than 1,200 Pizza Huts.
The company has become the largest pizza chain with more than 7,000 restaurants worldwide. Pizza Hut is one of Chipotle’s largest competitors.
15. Domino’s Pizza
Founded in 1960, Domino’s Pizza is a pizza delivery specialist that operates over 14,000 stores worldwide. It is the second-largest pizza chain in the world after Pizza Hut and has a large, cult-like following among pizza lovers.
Domino’s reported double-digit sales in 2020 compared to 2019, but Chipotle is outpacing Domino’s in digital sales and more than tripled its online sales in Q2 2020.
Chipotle is one of the most dynamic growth companies in the restaurant industry at the beginning of the 21st century. Chipotle is capitalizing on the growing influence of Hispanic culture in America and the nation’s growing appetite for fast-casual dining. After an initial plunge in response to the crisis, Chipotle’s stock hit new highs after rising more than 100% in just two months.
Chipotle, however, does not have a monopoly on Mexican fast-casual dining. The company has to contend with close competitors like Qdoba Mexican Eats and Moe’s Southwest Grill. For investors, the company’s structure could be key. Chipotle owns nearly all of its restaurants. That makes the company a volatile and aggressive play for investors in the stock market. However, anyone looking to open a franchise will have to look to its competitors.