Chipotle Goes East as Its Stock Goes North

Chipotle Mexican Grill (NYSE: CMG  ) is going to Washington!

The fast-growing burrito roller will be launching its new Asian concept in Washington, D.C., this summer, far away from its Colorado headquarters.

ShopHouse Southeast Asian Kitchen -- named after the multilevel residential buildings with street-level storefronts found in Thailand, Malaysia, and Vietnam -- isn't a surprise. Chipotle announced that it would be launching an Asian concept five months ago.

It also isn't really a shock to see Chipotle introduce the concept somewhere far removed from its Denver base. You want to have an unbiased audience kick the tires. Locals might warm up too easily to the home team.

Is it too soon for Chipotle to be thinking about a sister concept?

It obviously doesn't need a second growth engine at this point. Chipotle is coming off a stellar quarter where revenue and earnings climbed by 25% and 47%, respectively. It's not showing any signs of peaking. It may have more than 1,000 restaurants open, but former parent McDonald's (NYSE: MCD  ) -- as well as Subway and Burger King -- can tally up units in the tens of thousands.

It's never too early to begin thinking about the future. Shares of Chipotle hit a fresh all-time high this morning of $282.76, overcoming rising commodity prices, an undocumented-worker scandal, and valuation fears.

The time is also ripe to go Asian.

Darden Restaurants (NYSE: DRI  ) had to shutter its China Coast chain in the 1990s, but the success of Benihana (Nasdaq: BNHNA  ) (Nasdaq: BNHN  ) and P.F. Chang's (Nasdaq: PFCB  ) namesake and Pei Wei Asian Diner concepts open the door for a Chipotle-esque spin on Southeastern Asian cuisine.

Investor appetite for Asian dining even paved the way for China's own Country Style Cooking (Nasdaq: CCSC  ) -- a fast-growing chain of Sichuan-style eats in China itself -- to go public last year, though the IPO has had a rocky reception after its initial spurt.

The beauty of breaking in a new concept now rather than later is that the company can quickly recover if ShopHouse proves to be a dud. Again, it doesn't need a second growth engine -- and that's the point.

Can Chipotle make a second concept in an unrelated niche pan out or is it a dim sum? Check in on either side of the argument in the comment box below.

Country Style Cooking and Chipotle are Motley Fool Rule Breakers choices. Chipotle is a Motley Fool Hidden Gems recommendation. McDonald's is a Motley Fool Income Investor pick. The Fool owns shares of Chipotle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is glad to be living a couple of miles from a Chipotle. He does not own shares in any of the stocks in this story, except for Country Style Cooking. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 13, 2011, at 4:42 PM, pippinthedog100 wrote:

    I am a longtime Chipotle shareholder but have never eaten in a Chipotle restaurant, although there are a couple close at hand. The concept appeals to me but not the style of food. On the other hand, I'm eager for ShopHouse to bring Southeast Asian food to a spot near me, and I'm not alone in my preferences. My bet is that the new undertaking will prosper.

  • Report this Comment On April 13, 2011, at 10:28 PM, CapturingPenang wrote:

    I like the name. Since Penang, Malaysia has the most shophouses in Southeast Asia, and is famous for Chinese, Malay, Indian, and Nyonya dishes, maybe the new chain will bring more of these diverse flavors to the US market.

    Can't wait to give it a try.

    Here are Penang "shophouses" if anyone is curious:

    http://www.capturingpenang.com/

    Thanks,

    Reese & Mark

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