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Chipotle It announced on Tuesday that it had signed an agreement with Kuwait-based Alshaya Group, its first-ever franchise partner, to open locations in the Middle East next year.
Chipotle currently has just over 50 locations in Canada and Europe. It is all company owned and operated, as are its approximately 3,200 locations in the United States. The Alshaya agreement marks the first time Chipotle has recruited a local retail franchise operator as it moves into a new market.
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Chipotle CEO Brian Nichol told CNBC in an interview that the initial plan calls for two locations each in Dubai and Kuwait, with exact locations yet to be determined.
Alshaya Group working with other major brands incl StarbucksAnd Shake Shack And Texas Roadhousewas a perfect fit given its proven market expertise and commitment to Chipotle’s “Food with Integrity” proposition, Niccol said.
He added that keeping ingredients fresh and real, with local menu modifications that reflect the American experience will be key.
“They have great brands, great operations, and great people programs, which has given us confidence that they’ll be able to effectively execute Chipotle’s offering in the Middle East,” said Nichol.
In his assessment of the Middle East market, Nicol said it is important to partner to ensure success in everything from real estate to recruitment to supply chain.
Chipotle ad in Arabic announcing the company’s partnership with Alshaya Group.
Source: Chipotle
If the first few sites in the Middle East are successful, Nicol said, there are hopefully hundreds more in the region down the line. He added that the agreement could serve as a new model as the company looks to other markets.
“As we look around the world, we’ll evaluate all of the elements that make Chipotle great and if there’s an area where we think we need a partner, we’ll look at having one for it,” Nichol said.
While the brand has enlisted a franchise partner for this specific expansion journey, don’t expect the franchise opportunity to emerge in the US, as Nicol said there is “no intention” to pursue that path at this time.
“Our return on invested capital in the US is industry leading,” he said. “We have the balance sheet and capital available where we can handle growth on our own capital capacity, and I think we’ve demonstrated the ability to run the restaurants effectively.”
Chipotle stock is up more than 50% in 2023 and is one of the best performers in the restaurant business.
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