Since its founding by Steve Ells in 1993, Chipotle Mexican Grill (NYSE: CMG ) has grown to over 1,500 locations, which includes several restaurants in Europe and Canada. While Chipotle has seen great success with its famous burritos and tacos (and bowls, of course), Ells -- who has stayed on as Chipotle's Chairman and co-CEO -- has big plans for the company that go beyond burritos.
Chipotle's growing restaurant concept portfolio
In 2011 Chipotle opened the first ShopHouse Southeast Asian Kitchen, which marked the beginning of Chipotle's experimentation with applying its fast-casual restaurant model to concepts other than burritos and tacos. Chipotle developed ShopHouse itself, and presently has six ShopHouse locations open in Washington D.C., Los Angeles, and Maryland.
In 2013 Chipotle announced its collaboration with Pizzeria Locale, a newly developed fast-casual pizza restaurant based in Colorado, like Chipotle. Pizzeria Locale offers its guests their choice of high-quality ingredients on pizzas that can be oven-baked in two minutes. Pizzeria Locale is in the midst of securing two additional new locations in Denver.
Both ShopHouse and Pizzeria Locale have engaged in slow, measured expansion. Neither concept will likely take off overnight, just as Chipotle itself patiently opened new locations. It took two years for Chipotle's second and third locations to open, and Chipotle waited six years before opening locations outside of Colorado. With this in mind, the expansions of ShopHouse and Pizzeria Locale are actually already ahead of Chipotle's early pace of expansion in the 1990's.
Beyond burritos: Chipotle as an idea
While the ShopHouse concept was still in the process of being developed, Steve Ells explained, "This cuisine gives us a great opportunity to prove the idea that the Chipotle model can work with other cuisines."
Just what is the "Chipotle model?" Chipotle's Food With Integrity is a critical component of the company's overall vision. "Serving high quality food while still charging reasonable prices," states Chipotle, "is critical to our vision to change the way people think about and eat fast food." To further this goal, Chipotle served an estimated 15 million pounds of local produce at its restaurants in 2013. Using high-quality ingredients while offering quick service and affordable prices sums up the Chipotle model.
With ShopHouse and Pizzeria Locale, Chipotle branched out its unique model into new concepts. In the company's most recent quarterly conference call, Steve Ells shared an important insight into what this means for the future of Chipotle:
Chipotle success is not dependent on serving burritos and tacos but rather is rooted in our commitment to finding the very best ingredients, preparing them using classical cooking techniques, welcoming our customers into a space that is thoughtful and that says something about the food we serve and developing teams of top performers that are empowered to achieve high standards and create a welcoming customer experience.
Developing top-notch restaurant leadership
Chipotle does not look to micro-manage its fledgling restaurant concepts. Rather, the company -- in the words of Ells -- has focused on "developing teams of top performers" who utilize Chipotle's restaurant model.
Tim Wildin has served as Chipotle's Director of Concept Development since 2009, and he plays a key role in overseeing the development and expansion of the ShopHouse and Pizzeria Locale brands. "We're never going to be that super-rigid corporate restaurant," says Wildin. "We empowered the management to create what ShopHouse is."
Similar things can be said for Pizzeria Locale, which Bobby Stuckey and Lachlan MacKinnon-Patterson co-own. Both Stuckey and MacKinnon-Patterson have received the James Beard award, and Ells calls them two "extraordinary restaurateurs who truly understand what it takes to provide an exceptional dining experience."
Stuckey explained why he sees Pizzeria Locale's partnership as a major plus for both companies:
I think it makes a lot of sense if you're partnering with someone who has the shared philosophy that you do. If you look at Chipotle, if you look at their whole mission statement -- Food With Integrity, using great ingredients, getting more people to eat sustainable products -- that really works hand in hand with how Lachlan and I think every day.
Foolish final thoughts
Chipotle's growth is far from over. The company continues to open more than 100 Chipotle restaurants per quarter, while practicing careful expansion with international locations, ShopHouse, and Pizzeria Locale.
Chipotle's future is very bright, particularly if ShopHouse and Pizzeria Locale can get off the ground in the coming years. This will be a critical item for investors to watch over the next decade. By working with proven restaurateurs and quality concepts, Chipotle aims to further transform the fast food market. Should ShopHouse and Pizzeria Locale see anything near the success of the Chipotle brand, Chipotle investors will be handsomely rewarded over the long haul.
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