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How much is a Chipotle Franchise? – Cost, Revenue & Profit Potential

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Chipotle Mexican Grill restaurants are mostly company-owned and are no longer being offered as a franchise. While a few franchises were sold, Chipotle’s franchising plan has changed. Explore other food franchises available on Franchise.com.

How much is a Chipotle Franchise

Are you wondering how much is a Chipotle franchise? Well, that’s exactly what we’ll be talking about today.

Apart from knowing how much chipotle franchise costs, we’ll also be discussing the following:

  • What is a Chipotle franchise?
  • Are Chipotle stores franchised?
  • Where can I find Chipotle business opportunities?
  • How much does a Chipotle store make annually?
    And many more…

Let’s get started.

What is Chipotle?

Chipotle Mexican Grill Inc. is a fast-food chain of casual restaurants in the United States that specializes in Mexican dishes like tacos, burritos, and bowls.

A chipotle, or chilpotle, is a smoke-dried ripe jalapeño chili pepper used for seasoning. It is a chili used primarily in Mexican and Mexican-inspired cuisines, such as Tex-Mex and Southwestern United States dishes. It comes in different forms, such as chipotles en adobo.

A chipotle pepper is a dry, smoked jalapeno pepper. They are most commonly made from red jalapenos. However, you can also use ripe green jalapenos as well. Chipotle peppers are added to any dish that could use a smoky flavor with a little heat.

Are Chipotle Stores Franchised?

Sadly, Chipotle’s stores are not franchised!

Instead, all of its stores are owned corporately by the company. The field teams are employees who are hired to work closely with but not directly within specific restaurants of the company.

The field team may include any of the following job positions:

  • Apprentice team leaders
  • Area managers
  • Team leaders and directors
  • Regional directors

Thus, whenever the company is in the process of launching a new location, it’s the field team that are in charge of hiring new general managers and training them at a current location in order for them to be ready for the new location when it opens up for business.

The corporate office is in charge of finding and funding new Chipotle store locations as well.

The reason why Chipotle has chosen not to franchise is that they want to have quality control of the company.

Chipotle spokesperson Chris Arnold said:

“The reason we don’t franchise is that we don’t need to. Companies tend to franchise because they need money to grow and/or operators to run their business. We have plenty of money for growth (more than $1 billion in cash on our books) and don’t have trouble attracting great people to run our restaurants.

When you franchise, you give up control over how restaurants are run and that can compromise the experience. What’s more, our business model is so strong, we would rather not sell off our revenues to franchisees in exchange for only a small percentage of that.

Because of our food culture we tend to have the highest (or among the highest) food costs in the industry as a percentage of revenue. That very much flies in the face of conventional industry wisdom, and it can be hard to do things like that if you have franchisees that don’t agree with those decisions or fall out of favor with them for some reason.

Finally, we want to maintain tight control over its food sourcing, without facing any potential pressure from franchisees.”

How Much Does a Chipotle Store Make Annually?

By choosing not to franchise may just be the best decision that Chipotle ever made. The decision to keep its stores company-owned has enabled top-notch operations and increased profits per store for the company.

Chipotle’s store growth has been modest though, at about 10% yearly.

Looking at sales on a system-wide basis and comparing Chipotle’s profits to that of McDonald’s, Chipotle could match McDonald’s total profit with just half its stores.

McDonald’s seems to be giving away even more of its profits with a total of $87.8 billion in sales at all of its restaurants, both franchised and company-owned, which means its net margin on system-wide sales was just 5.4%, half of Chipotle’s 10.8%.

Related Post: What It Costs to Open a Subway

Not only is the Chipotle Mexican Grill Inc. company-owned model more profitable than McDonald’s, but its individual stores also have a higher profit margin than McDonald’s.

There is one important category that gives McDonald’s an upper edge. The average sales at McDonald’s restaurants last year were $2.45 million, slightly higher than $2.43 million at Chipotle.

However, same-store sales at Chipotle which soared by 17% last year, fell by 1% at McDonald’s. Given those trends, Chipotle is likely to rank higher than McDonald’s in average restaurant sales.

Chipotle’s chain stocks soared by over 63% in 2019.

The company reported its fiscal first-quarter net income of $88.1 million, or $3.13 per share, up from $59.4 million, or $2.13 per share a year earlier.

Excluding expenses related to corporate restructuring, restaurant asset impairment and other costs, the Mexican food chain restaurant earned $3.40 per share, topping the $3.01 per share expected by analysts surveyed by Refinitive.

Price hikes in the company at the end of 2018 helped lower beverage, food, and packaging costs but were partially offset by more demand for steak.

Chipotle at Memorial City Mall.

Chipotle doesn’t offer franchising opportunities to other business owners looking to invest, and at the moment, there’s not even room to run a licensed store the way you might be able to do with a company like Starbucks.

Here’s what you can do in the meantime…

The only alternative to this is to consider other alternatives that might make sense to you.

Some alternatives to Chipotle franchise include:

1. Qdoba

Qdoba and Chipotle are quite similar. They both are burrito restaurants that opened in the 90s – Chipotle was founded in mid-1993, while Qdoba was founded in 1995.

Both restaurants opened their first stores in Denver, Colo, and both companies have headquarters in southern California – Chipotle in Newport Beach and Qdoba in San Diego.

Both restaurants also have a history of investments from burger chains. McDonald’s invested in Chipotle, while Jack in the Box took over Qdoba in 2003.

CEO: Leonard Comma

  • Initial investment: $871,000 – $2,034,000
  • Initial franchising fee: $30,000
  • 1-year growth in new units: 40 units (5.8%)

Training: 37 hours in the classroom, 179 hours on the job
Marketing support: SEO, regional advertising, loyalty program/app, national media, website development, social media.

2. McDonald’s

McDonald’s is an outstanding choice for this list because:

According to Kate Taylor’s piece:

“McDonald’s early investment in the Mexican restaurant allowed Chipotle Mexican Grill Inc. to grow without franchising.”

McDonald’s investment in Chipotle helped provide much of the capital that would ultimately allow the company to set itself apart from traditional fast-food chains.

CEO: Steve Easterbrook

  • Initial investment: $1,008,000 – $2,214,080
  • Initial franchising fee: $45,000
  • New units in 2017: 507 units (1.4 %)

Training: 75 hours in the classroom, 6 to 24 months on the job
Marketing support: National media, co-op advertising, social media, ad templates, loyalty program/app, regional advertising

3. Moe’s Southwest Grill

Moe’s Southwest Grill might be the most similar to Chipotle Mexican Grill Inc. stylistically. The restaurant chain offers nachos, tacos, burritos, and quesadillas.

The cost to start a Moe’s restaurant tends to be more affordable than a McDonald’s, but that doesn’t mean it’s inexpensive.

Related Reading: What You Need to Know Before Opening a Franchise

The Focus Brands company still requires that you have a net worth of $1,500,000 and liquid cash upward of $500,000.

CEO: Bruce Schroder

  • Initial investment: $368,930 – $956,400
  • Initial franchising fee: $30,000
  • New units in 2017: 16 units (2.4%)

Training: 6 hours in the classroom, 125 hours on the job
Marketing support: Co-op advertising, social media, ad templates, national media, email marketing, loyalty program/app, regional advertising, website development, SEO.

In Conclusion

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