Chipotle Mexican Grill Inc. ( CMG) is an company that is a market leader within the fast casual restaurant industry. Restaurants like chipotle competing against five major rivals. It is comprised of Qdoba Mexican Eats, Moe’s Southwest Grill, Baja Fresh Mexican Grill and Rubio’s Coastal Grill. Chipotle is also competing in a more asymmetrical way with Taco Bell, the market leader in the Mexican-style fast-food industry.
The competition grew more intense after the industry faced unimaginable challenges during the 2020 economic crisis. Restaurant chains in industry continue to compete at many different levels. This includes menus, dining experiences as well as innovation and pricing in addition to scale, geographic reach, reputation and recognition, and appeal in the eyes of the investors. Chipotle’s competitors use a variety of approaches to boost their business.
Background of Chipotle Background on
Before you get into the specifics about the competition it is helpful to learn the details about Chipotle. Similar to other fast-casual restaurants, Chipotle tries to combine the convenience and affordability of fast-food restaurants with better meals and a more attractive setting. The meals are generally more expensive than a fast-food establishment. Food is prepared in-the-moment with healthier ingredients including fresh meat, poultry and meat items.
In 1998 five years after Chipotle’s establishment, Chipotle only ran 16 establishments, with all of them located in Colorado. The same year, fast food giant McDonald’s Corporation ( MCD) was an investor of major importance. In 2006, after McDonald’s had completed its sale from Chipotle Chipotle, the Mexican-style eating chain had grown to over 500 establishments. In 2021, the publicly traded Chipotle was operating over 2700 locations. 1
Qdoba Mexican Eats
Qdoba owned as well as franchised restaurants in more than 700 locations by the year 2021. 2 As the largest Mexican fast-casual chain of restaurants, it is among Chipotle’s major rivals. One of the major differences is that around half of Qdoba’s locations were franchises in the year 2019. In the wake of 15 years’ growth under the management by fast food giant Jack in the Box ( JACK), Qdoba was transferred in 2018 to Apollo Global Management in 2018. Apollo’s other restaurant holdings comprised Chuck E. Cheese’s and Peter Piper Pizza.
Moe’s Southwest Grill
Moe’s Southwest Grill, which is operated by Focus Brands, had more than 700 restaurants as of 2021. They are mostly situated to the east along the Mississippi River. 3 Moe’s Southwest Grill restaurants try to distinguish themselves by offering their fun and quirky atmosphere. The menus are named after movie and TV celebrities. Focus Brands emphasizes franchising. In the early 2020s their other brands were Auntie Anne’s, Carvel, Cinnabon, Jamba, McAlister’s Deli, Schlotzsky’s, and Seattle’s Best Coffee.
Baja Fresh Mexican Grill
MTY Food Group is a company that owns or operates Baja Fresh Mexican Grill, and also manages La Salsa Fresh Mexican Grill. Baja Fresh Mexican Grill introduced its new design for the restaurant in 2013 along with an overhauled menu that puts more emphasis on freshness and flavor. When MTY bought Baja Fresh Mexican Grill in 2016 the restaurant was operating more than 162 outlets. 4 Its subsidiary, La Salsa Fresh Mexican Grill has 23 locations in the time of purchase.
Rubio’s Coastal Grill
Chipotle isn’t the oldest Mexican fast-casual restaurant chain. Rubio’s actually started 10 years before. But, it hasn’t achieved the same geographic reach as Chipotle. While Rubio’s is primarily located in the West however, they expanded into Florida in the year the year of 2019. Privately owned by a private company Rubio’s owns businesses in more than 200 places. 5
In the year 2010, Rubio’s went private through an deal with the Mill Road Capital affiliate that was part of Mill Road Capital. Rubio’s is currently trying to differentiate itself from Chipotle and its rivals by introducing new fish products and offering certain of its California restaurants a beachy look.
Taco Bell
Chipotle is still a tiny fraction of the size of large fast-food chain Taco Bell, which had more than 7,000 restaurants at the time of its the year 2020. 6 However traditional fast-food chains aren’t growing as fast as the fast-casual sector. However, Taco Bell has made adjustments to accommodate changes in the preferences of consumers. They have introduced an Fresco menu with healthier options as well as increased food quality and ingredients over the past decade. Taco Bell is owned by Yum! Brands ( YUM) The world’s leading company of fast food chains. Yum! Brands also is the owner of Pizza Hut and KFC.
The Bottom Line
Chipotle is one of the most exciting growth companies in the industry of restaurants in the beginning of the 21st century. Chipotle capitalizes on the increasing popularity on Hispanic cultural influence in America and also the country’s growing desire for fast-casual eating. Following a crash in the initial reaction to the financial crisis Chipotle’s stock rebounded to new heights after it gained more than 100 percent within a mere two months.
But, Chipotle does not have an exclusive position in quick-casual Mexican food. Chipotle has to contend with competitors including Qdoba Mexican Eats and Moe’s Southwest Grill. For investors, the most important issue could be its structure company. Chipotle has majority ownership of its restaurants. It is a unstable and risky investment for investors who invest in the market. But, those looking to establish a franchise have to research rivals.
