Why Doesn't Chipotle Franchise?
I’m a huge Chipotle fan and I’m not ashamed to admit it. I love a big fat carnitas burrito with every possible topping (is that even the right word for what you put on a burrito?) on it, especially guac. But every time I’m outside of New York I wonder why there aren’t more Chipotles out there. Sure there are a bunch (at the end of 2014 there were more than 1,700) but their numbers pale in comparison to other “fast food” giants like McDonald’s or Subway (they have more than 36,000 and 43,500 restaurants respectively). So why hasn’t Chipotle followed suit and gone the obviously successful franchising route?
A Brief History of Chipotle
The first Chipotle was started in Denver, Colorado in 1993 and the second store opened two years later solely on the cash flow from the first restaurant. By 1998 they had expanded outside of Colorado and McDonald’s invested into the growing restaurant chain. Despite the franchising giant’s investment Chipotle never followed suit and continued to expand through their direct ownership model.
So Why Don’t they Franchise?
Even though they could likely open many more restaurants, the reason Chipotle doesn’t franchise is pretty simple. Chipotle just doesn’t think they need to. In fact, they think that it would non-beneficial for them to franchise. They have traditionally maintained tight control over their restaurants and franchising would limit their ability to control the operations of all their locations. From a financial perspective, they also don’t have a pressing need to, with an operating income of nearly a half billion dollars.
Going Forward
Sorry to all of you barbacoa-loving franchise hopefuls out there but Chipotle doesn’t franchise now and it doesn’t look like they are going to anytime in the near future. They’ve stuck by their model for the past two decades and have been very successful in doing so. But the good news for you is that they aren’t the only options for food franchising out there. There are a ton of great restaurants that are looking for franchisees. If you’re interested, check them out here!
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Even the most honest and forthcoming franchisor can’t tell you what it’s like to be a franchisee. You should take the time to call existing franchisees and get some candid answers to your questions. Be careful that you don’t get a limited list of hand-picked contacts. It would be a waste of time to talk only to the most successful operators or those who are coached to give the “right” answers. Calling franchisees at random will give you the clearest picture of what you’re getting into. Here are some questions you should ask.
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