Some of the most interesting food franchises tend to be off limits or difficult to get into. Many brands fall into the difficult category. We see big brands like Domino’s and McDonald’s as pretty difficult franchises to break into. Other popular brands like Starbuck’s, Chick-fil-a and Chipotle are even more difficult.
Chipotle, even with a few thousand stores, the company has decided to maintain control of growth and operations in lieu of growing through franchising. A brand that franchises begins to give up control and quality of the stores. These stores can also begin to offer different store experiences based on the franchisee.
Your best bet at making Chipotle food is to watch some of their videos and make some guac at home!
Franchise Fees
Most restaurant concepts include an up front franchise fee to get into the business. Restaurant franchise fees for concepts like Chipotle typically range from $20,000 to $50,000 upfront before you even begin with your initial investment in a physical location.
Has Chipotle Ever Franchised?
Before Chipotle was an established and proven concept, the company did participate in some small scale franchising. Today, the company has become a chain of company owned stores, owned and operated by the parent company and located in Southern California.
Revenues and Profitability of Chipotle Restaurants
To see the revenues and store level profits of a Chipotle, you can look to their public filings. As a publicly traded company, the company reports quarterly sales and profits.
Recently, the average Chipotle restaurant has averaged around $2 million in sales. At peak, this number was closer to $2.5 million.
From a profitability perspective, Chipotle store-level profits have ranged around 20% of sales or $400,000 per store. At peak, this profit margin passed 25% of sales or $625,000 per store. The company is still working to get back to those revenue and margin targets.
Cost to Build a Restaurant
To see the investment necessary for a restaurant, we can once again look to company filings. In publicly released documents, the initial investment to open a Chipotle store ranges between $800,000 to $900,000. We can also see that other fast casual concepts similar to Chipotle have a similar upfront cost.
Is Building a Chipotle a good Investment?
Because Chipotle stores are typically not freestanding stores, the investment tends to be fairly low. At a $900,000 investment and $400,000 in store level profits, the return is north of 40%. A 40% return is toward the high end of returns for restaurant concepts. This is why Chipotle will likely continue building new stores into the foreseeable future.
Management Path in a Chipotle Restaurant
Even if you aren’t able to own a Chipotle franchise, there still is a very profitable path to managing a Chipotle restaurant and ultimately becoming a restauranteur. Check out the video below:
Maybe you won’t be able to become a Chipotle owner, but you can possibly feel good about eating there.
