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Chipotle just raised its target for store openings, and your small town could be getting one soon

The fast-casual burrito chain sees a big future in towns with at least 40,000 people that are not huge cities.

Chipotle just raised its target for store openings, and your small town could be getting one soon
[Source Images: Chipotle]

After several years in the metaphorical fast-casual desert, Chipotle is back and growing once again. The burrito chain’s stock price has almost quintupled since 2018, after its high-profile food-safety crisis, and CEO Brian Niccol—lured away from Taco Bell that year to replace Steve Ells—suggested on the company’s earnings call yesterday that the reason is partly because of a shift in focus. The ideal version of Chipotle, for Niccol anyway, is no longer a strip-mall store catering to urban coastal elites. It’s a prototype in Cuyahoga Falls, Ohio, where everything is digital, and there’s a Chipotlane (Chiptole’s term for “drive-thru”).

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The brand currently operates 2,966 stores, but says it can reach 7,000 locations in North America by targeting small-town America with stores similar to the one in Cuyahoga Falls. That’s up from the projections it was giving last year of 6,000 stores.

On the call, Niccol explained this reinvention has effectively thrown the map wide open: These stand-alone small-town locations typically perform better, on a pure unit-economics scale, than their urban counterparts. Better still, they’re easier to outfit with Chipotlane pickup windows, which have proven to drive higher sales at their locations. Meanwhile, the startup costs are less because the leases are less almost 100% of the time. Niccol added there’s no trade-off in volume, and they’ve been pleasantly surprised to discover that these stores have less trouble staying staffed—it seems small-town folks see Chipotle as “an employer they want to be a part of.”

Luckily for Chipotle, North America boasts “hundreds of these” little towns. And by “small,” the company apparently means incorporated communities that have at least 40,000 people, although on yesterday’s call, CFO Jack Hartung clarified that they could go smaller if they started looking at, say, major highway-frontage roads. “The key,” he said, “is that these are restaurants that are not in a metropolis.”

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This plan is already fully developed: Company execs on the call explained these new stores won’t be in remote 40,000-person towns, but rather grouped into pockets or along a sort of trail that regional managers can travel over quickly. “A bunch of small towns” where “there is one that’s 50 miles away and another that’s 50 miles away” was Hartung’s description, so that a field leader “can, over a number of days, make sure that he gets touches with those restaurants, develops the leadership.” In their eyes that’s “a home run,” he added.

According to reporters who listened to the call, it doesn’t sound like Chipotle gave the year in which it expects to reach 7,000 total stores. It opened just 215 new restaurants in 2021 and believes it will add 225 to 250 this year, at least 80% of which will have their very own Chipotlane. “Challenges create opportunities,” Niccol told everyone who listened in, “and we are now in a much stronger competitive position than we were two years ago.”

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