How Much Is a Chipotle Franchise: Cost + Fees
EA
Summary:
Chipotle hasn’t offered franchise investment opportunities since 2006. The only way you can invest in a Chipotle Mexican Grill these days is to buy shares of their publicly traded stock, CMG. If you are a fan of Chipotle’s food and values, you can support the company by eating at one of its 3,000 locations. Or, if you would like to open a similar franchise, you will probably have to invest $250,000 to $1 million.
“Nope.” Unfortunately, that’s what Chipotle says to anyone wanting to open a Chipotle franchise. Chipotle Mexican Grill franchised until 2006 when they went public with equity and private with restaurant ownership.
Chipotle has been breaking new ground in the restaurant industry since 1993, and many other burrito and fast-casual chains have followed in their footsteps. Keep reading to learn more about Chipotle and the costs associated with similar franchise opportunities.
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What is a Chipotle Mexican Grill?
Chipotle is a nationwide Mexican food chain offering fast-food speed with fresh ingredients. Their fast-casual burrito-building style has attracted a huge base of Chipotle fans for almost 30 years. Although the company does not franchise anymore, Chipotle continues to expand to new levels of success year by year.
History of Chipotle Mexican Grill
Steve Ells is the father of Chipotle. As a recent graduate from the Culinary Institute of America, he wanted to start a casual Mexican restaurant from which he could channel profits from burrito sales to open a fine dining restaurant. He took a loan from his father to open the first Chipotle in Denver, Colorado in 1993. The success of the first Chipotle exceeded all expectations, so Ells decided to stick with it instead of pivoting to fine dining.
By 1998, there were 16 Chipotle restaurants. Then, McDonald’s invested. Over the next 7 years, 16 Chipotle locations turned into 500 Chipotle locations. In 2006, Chipotle Mexican Grill, Inc. went public, stopped franchising, and lost its largest investor. McDonald’s divested in 2006, but Chipotle had all the momentum it needed. The company decided that it would stop its franchise program and take ownership of all restaurants. This would allow the company to have better control and consistency of quality and operations.
Steve Ells stepped down as CEO in 2018. Taco Bell CEO Brian Niccol replaced Ells and has continued to guide Chipotle’s success. There are currently just shy of 3,000 Chipotle restaurants around the world.
What makes Chipotle special?
Chipotle is a fast-food Mexican restaurant, but it’s not like most fast-food restaurants. The company prides itself on ingredients that are good for people and the planet. They source non-GMO produce, whole food ingredients, and naturally raised meat from sustainable suppliers. Chipotle has made other eco-friendly efforts, including recycling programs, supply chain overhauls, and yearly sustainability reports.
Every Chipotle serves burrito bowls, burritos, crispy and soft tacos, salads, quesadillas, and more. Customers get to choose exactly what goes into their bowl as they move down the line of meats, veggies, and toppings. Its signature look is unforgettable and hard to mistake. Chipotle fans tend to come up with their own signature recipes.
The Chipotle Cultivate Foundation is Chipotle’s philanthropic organization. The mission of the foundation is to “make real food accessible for all.”
How to open a Chipotle Mexican Grill franchise
If you asked Chipotle if you could start a franchise or be involved in owning a restaurant in any way, they’d definitively say “nope.” Since 2006, they’ve held strong on their belief that the business is best operated when all restaurants are company-owned. You won’t find a Chipotle chain operated by any entity other than Chipotle Mexican Grill, Inc. itself. While there’s no way to open a Chipotle franchise today, you can invest in the company by buying shares of its stock — CMG — on the New York Stock Exchange.
How much is a Chipotle franchise?
While Chipotle no longer offers franchise opportunities, it is interesting to examine what it would look like to open a Chipotle today. Based upon current company data and past data from when Chipotle franchises existed, we can make estimates about what Chipotle franchise costs might be today.
An expansion cost for Chipotle is estimated at around $1.4 million. So you are looking at a pretty large sum to open a similar franchise.
Costs and fees
When you open a franchise, you have a long list of potential costs and fees associated with the restaurant. Here are some to consider:
- Franchise fees
- Development fees
- Building improvements
- Operating permits
- Furniture, fixtures, and other decor
- Signage
- Inventory
- Real estate or lease
- Promotions
Chipotle financial metrics
Chipotle is a successful chain of fast-casual restaurants. Here are some compelling metrics highlighting the company’s financial performance.
A single Chipotle makes an average of $2.2 million in revenue per year. The average store’s profit margin is about 22%. Of course, there are no guarantees, but this would put a hypothetical franchise owner’s profits at about $480,000 per year.
Pro Tip
When securing funding for a business, loans often come with collateral. This can be daunting, but there are a few ways to get a business loan without collateral. It just so happens that starting a franchise may allow you to get a loan without collateral.
Alternative franchise opportunities
The only entity that can open a Chipotle restaurant is Chipotle Mexican Grill, Inc. If you are looking for similar franchise opportunities, here are a few franchises you may be interested in. Each one has shown to be successful for franchise owners.
Keep in mind that every franchise has a different net worth, liquid capital, and restaurant experience requirement for its potential franchise owners. Business loans can be great options for new franchise owners. If you are interested in these franchise opportunities, visit their websites to learn more.
Qdoba Mexican Eats
Qdoba is another popular Mexican food restaurant chain whose convenient service style mirrors that of Chipotle. Qdoba does offer franchises. It’s estimated that opening a Qdoba franchise would cost anywhere from $251,500 to $1,095,000.
El Pollo Loco
El Pollo Loco is a popular drive-thru and dine-in Mexican fast-food restaurant. It’s a quick and cheap dining choice for families across America. Franchise owners benefit from a good cost-to-profit ratio. The initial investment for an El Pollo Loco restaurant can range from $505,000 to $1.1 million.
Subway
Subway is a submarine sandwich shop selling freshly prepared gourmet sandwiches. Subway is similar to Chipotle in that you customize your sandwich toppings down a line to create your ideal meal. The initial cost of opening a Subway franchise ranges from $167,550 to $476,900.
Wingstop
Wingstop is an aviation-themed chicken wing restaurant chain. The chain is popular for its flavorful wings and quick service. To open a Wingstop franchise, you can expect to front anywhere from $315,310 to $948,080.
Securing a business loan for a franchise
If you still want to open a franchise with another company, learn how to get approved for a business loan. It may be difficult to get a business loan with bad credit, but it is possible. Check out these comprehensive business loan reviews from SuperMoney to find the best one for you.
FAQ
Can I buy a Chipotle franchise?
You cannot buy a Chipotle franchise. All Chipotle restaurants are company-owned. You can buy shares in Chipotle’s stock, CMG, or open a similar fast-casual franchise.
How much is a Chipotle franchise?
While it’s impossible to purchase a Chipotle franchise, it would hypothetically cost around $1.4 million.
How much does a Chipotle owner make a year?
All Chipotles are company-owned. An average store brings in around $2.2 million per year in revenue and $480,000 in profit.
Is owning a Chipotle profitable?
Chipotle is a profitable business with about a 22% average profit margin. You cannot own a Chipotle, however. Only the parent company, Chipotle Mexican Grill, Inc. can do that.
How much do franchise owners make a year?
How much a franchise owner makes depends on a lot of factors, such as location, but an average franchise owner makes about $80,000 per year.
Key takeaways
- With a long history, Chipotle Mexican Grill continues to dominate the Mexican food industry across the globe. They offer sustainably-sourced foods in a fast-casual setting.
- Chipotle stopped offering franchises in 2006. The company took ownership of all locations to maximize the quality of operations, so you can’t start a Chipotle franchise.
- If you were able to open a Chipotle franchise, it would cost around $1.4 million.
- If you want to open a franchise restaurant, similar chains such as Qdoba or Subway may be good options for you. It’s estimated that opening a Qdoba franchise would cost anywhere from $251,500 to $1,095,000.
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