How Much Does a Chipotle Franchise Cost?

The Giant Foil-Wrapped Burrito…
… as big as your head.  Well, perhaps Chipotle’s signature menu item isn’t quite that large, but it is big enough to drive a hugely successful marketing campaign and turn this restaurant chain into one of the most successful fast food franchises to come along in many years.  Founder Steve Ells graduated from culinary school with a dream of opening his own fine dining establishment.  When he found his funds lacking to achieve that goal immediately, he started Chipotle Mexican Grill in 1993 with the expectation that money earned from this venture would go toward helping him open the restaurant he really wanted to run.  Based in Denver, Colorado, the operation soon won over a cadre of extremely loyal customers, attracting all sorts of attention and investment capital.  All these years later, Ells has still not opened that upscale restaurant, but he sits at the head of a vastly successful food-service operation.

Chipotle Franchise Review
As of this date, Chipotle has continued to avoid operating a standard franchise model.  As a result, there are no Chipotle franchises, no Chipotle franchises for sale, and no way to buy a Chipotle franchise – at least for now.  McDonald’s Corporation invested a significant amount of money in Chipotle in 1998, holding an ownership stake in the firm until Chipotle went through an IPO (initial public offering) in 2006.  The company has continued to be known for its high quality ingredients and amazing customer service, with an emphasis on all natural ingredients.  The lack of a franchise model surprises many, especially since McDonald’s had such a great deal of influence on corporate operations during the eight years it was involved financially – spearheading the expansion that today encompasses 547 stores in 26 states.  Ells has remained at the company’s helm through the transition from private enterprise to mega-restaurant sidekick to public corporation.  While he does not rule out selling Chipotle franchises at some future date, his continued interest in keeping things as they are revolve around a desire to exert more control over the entire operation as well as giving his workers a chance to become general managers whenever he opens new locations.  This promote-from-within culture is very strong at Chipotle.

Chipotle Franchise Information & Costs
Buying a franchise can be a very expensive proposition.  Parent companies charge an upfront franchise fee that can reach $25,000 or more, plus an ongoing royalty that takes a share – often from four to eight percent – of every net dollar that comes in the door.  Franchising is a great way for companies to raise capital while allowing others to run their own business with minimal everyday oversight, but the management team at Chipotle believes it has plenty of cash on hand to allow it to continue expanding without offering the opportunity to buy a Chipotle franchise.  Long-term expectations by management predict financial growth to continue at a 25 percent annual pace, with the expectation that Chipotle will open somewhere around a hundred restaurants a year over the next five years.  Because it is a public company, financials are readily available for analysis.  Market capitalization is around $1.8 billion, with annual revenue in the range of $775 million or so.  Net income is estimated at $34 million annually, with a profit margin of just below five percent – about average for the fast food industry.  The company carries a relatively small debt load – in the neighborhood of $4 million – which helps emphasize the company’s future prospects for continued profitability and prosperity.

Waiting With Baited Breath
Most franchising experts agree that the ability to buy a Chipotle franchise is at or near the top of every prospective fast food franchisee’s wish list.  In the event the company decides to start selling Chipotle franchises, don’t be surprised to see the flood gates open wide.  Of course, you have to open wide anyway to manage one of those giant burritos the company sells.

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4 Responses to “How Much Does a Chipotle Franchise Cost?”

  1. Cassidy Says:

    What is the needed net worth to own a Chipotle franchise?

  2. Vijay Says:

    Interested in starting a Chipotle franchise in Reno, Nevada and India as well.

  3. Lonnie King Says:

    Looking for Chipotle restaurant franchise in Port Clinton. Tourist area where the restaurant is located would be great.

  4. Molly Hudson Says:

    I am interested in purchasing a Chipotle franchise.

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