All About the Chipotle Franchise
Article by Brian Ernst
The Famed Giant Foil-wrapped Burrito
Chipotle’s signature menu, the giant foil-wrapped burrito may not be that big but it surely is big enough to drive a massive success on its marketing campaigns and make the restaurant chain one of the most popular fast food franchises in the country today, and probably for the next decade. The Chipotle franchise founder, Steve Ells, was a culinary school graduate who dreamed of opening his very own fine dining restaurant. When Ells realized that he lacked enough funding for his goals, he established the Chipotle Mexican Grill in 1993, with high hopes that the money generated from this venture will help him open his ideal restaurant. The very first Chipotle location was in Denver. Surprisingly, many customers patronized its services and products, attracting the attention of aspiring entrepreneurs and investors. Years after the establishment of Chipotle, Ells has still not yet opened his dream fine dining restaurant. Though it’s not a bad thing, considering that he currently sits at the top of a highly reputed and successful fast food service venture.
Chipotle Franchise Review
As of today, Chipotle avoids operating a typical franchise system. Because of this, there are presently no Chipotle franchises, no Chipotle franchises for sale, and no way for any interested entrepreneur to buy a Chipotle franchise – at least for now. In 1998, the McDonald’s Corporation invested a large amount of money in the company, claiming an ownership right in Chipotle until the latter went through IPO (initial public offering) in 2006. Still, Chipotle continues to be a reputed fast food enterprise primarily because of its superior customer service and high quality ingredients used in its products. The company’s lack of solid franchise model came out a surprise to many, since McDonald’s had a huge influence on Chipotle’s corporate operations during the eight years of financial involvement and assistance, not to mention the former’s role in Chipotle’s rapid expansion to over 547 stores in 26 US states. Ells stayed in the company throughout the transition from private management to a restaurant supported by a public corporation. Ells has not dismissed the idea of selling Chipotle franchises in the near future to interested fast food franchisees, but for now, he still maintains the operations as they are. This gives him more control over the company’s processes and also offers existing employees opportunities to climb up the corporate ladder as store supervisors and managers when new Chipotle fast food franchises open. The company strongly values and believes in the “promote from within” culture.
Additional Chipotle Franchise Information and Costs
Buying fast food franchises can cost a lot of money. Most parent companies ask for an initial franchise fee that can go as high as ,000 and even higher. Ongoing royalty fees required from all franchisors, range from four to eight percent of the net profits. Companies raise capital in franchising, wherein they allow entrepreneurs to manage their own businesses with less supervision. In the case of Chipotle, it has enough cash to spend on continuous expansion without having the need to offer a Chipotle franchise to outside investors. The management’s long-term expectations include a constant financial growth of 25 percent annually, should Chipotle open more than a hundred fast food locations within the next five years. Financial sources are easily available since Chipotle is a public corporation. The market capitalization of Chipotle is over .8 billion, and it has yearly revenue of more than 5 million. Its net income is around million every year, with a five percent profit margin, which is the average in the fast food field. Chipotle also has a remarkably small debt, which indicates how promising the company is in terms of profitability.
Prospective Entrepreneurs Eager to Buy a Chipotle Franchise
Many franchising professionals agree that the chance to buy a Chipotle franchise is on top of numerous fast food franchisees’ must-buy list. When the company decides to offer Chipotle franchise for sale, many will surely grab their chance of a lifetime.
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