Chipotle is a well-known and beloved brand, it faces a great deal of competition, and there are several Chipotle competitors. Although it faces direct competition with other fast-food chains with a Mexican theme, Chipotle competitors also include other well-known restaurant chains. It is essential that before we invest in a stock, we must first research not only the company but also its industry and in this case Chipotle competitors.
Since its IPO at the beginning of 2006, Chipotle (NYSE: CMG) has had a stellar performance. Chipotle’s stock price increased more than 7,927% since its IPO was priced at $22.
The pandemic created several difficulties for the restaurant industry, and Chipotle is no exception. However, the company was able to overcome the obstacles, and the company continues to grow its sales despite the hurdles. Digital sales now represent ~42.8% of the company's revenue.
Management continues to focus on growth, and as of 3Q21, the company opened 41 new locations. Throughout 2021, the company continued to open between 40 to 60 new locations every quarter.
Additionally, and perhaps one of the most important operational metrics to look out for in the restaurant industry is the average restaurant sales. Chipotle has been able to increase its average monthly sales by 13% since 2020. Today Chipotle has 2,892 locations, and annual revenues are set to be over $8 billion in 2022.
- Number of locations: 7,143
- Average sales per location: $2.554 million
There is no doubt that Taco Bell is by far the biggest Chipotle competitor. Taco Bell is owned by Yum! Brands (NYSE: YUM), who is also the owner of well-known franchises such as KFC and Pizza Hut. Taco Bell has 7,143 locations worldwide, and nearly 6,926 locations just in the US.
In fact, the chain has nearly 2 times the amount of locations Chipotle has. However, both companies have been able to continuously grow over the past. Despite being the largest Chipotle competitor, Taco Bell has still managed to grow. Especially overseas, where the company continues to aggressively open new locations. Both companies have been able to pivot, and are now much more focused on generating digital sales.
Despite the higher number of locations Taco Bell does not seem to generate the same average revenue per location as Chipotle. The average Taco Bell store generates $1.650 million in sales, while the average Chipotle generates $2.554 million. This is a considerable difference and shows that consumers are more willing to spend money on Chipotle than on Taco Bell. Taco Bell generates over $12.5 billion in sales yearly.
- Market cap: ~$450 million
- Number of locations: 370
- Average sales per location: $830,000
Del Taco (Nasdaq: TACO) is also a well-known Mexican-themed restaurant chain in the US. Del Taco has 599 locations across the US, and it remains one of the largest Mexican restaurant chains, and one of the largest Chipotle competitors. It has most of its locations in California, where the company has 370 locations.
Del Taco tries to market itself as a QSR that offers higher quality food. The company’s concept has worked extremely well in the past, and this is one of the reasons for its continued growth. It was able to quickly adapt to the new reality of the pandemic. About 86% of the company’s total sales are in the drive-thru. It has also increased its efforts to generate digital sales, and although they only account for 7.1% of total sales, they have increased 6-fold since 2019.
Del Taco’s management remains focused on increasing its footprint in the US, and expanding overseas, where there is a large opportunity to grow its number of locations and increase its global presence. When we compare average sales with Taco Bell and Chipotle, we can see that Del Taco is on the lower end. Del Taco has an average of $830,000 in sales per location. Nearly half of the sales generated by Taco Bell, and a third of the average sales per unit in Chipotle.
Despite being one of the largest Chipotle competitors, Del Taco's operational metrics show that the company could hardly steal any market share from Chipotle. On average Del Taco needs to open three new locations, in order to generate the same amount of sales Chipotle can generate by opening one new location. Del Taco’s stock price has also underperformed recently, mainly due to the factors mentioned.
- Market cap: ~$580 million
- Number of locations: 96
- Average sales per location: $4.3 million
Chuy’s (Nasdaq: CHUY) is also one of the largest Mexican concept restaurant chains in the US. Chuy’s currently has 96 locations across the US, and the company has continued to expand rapidly since its inception in 1982. What sets Chuy’s apart from all of the Chipotle competitors mentioned in this article is the average unit sales, which is $4.3 million. This is even higher than Chipotle and shows how the company continues to be among consumers' preferred choices when it comes to Mexican-themed restaurants.
Chuy’s average unit sales are higher due to the higher average spending per customer. The average Chuy’s customer spends $15.74 on a meal. Although it competes directly with Chipotle, the company clearly has something that sets it apart from the rest of Chipotle competitors.
Chuy’s is on track to generate over $400 million in sales in 2022. Although the company has been expanding aggressively, over the last few years it has actually decreased its number of locations. As it tries to optimize its operations while keeping the most profitable units.
Other Chipotle competitors
Some of the main Chipotle competitors were all mentioned in this article, however, there are several other Chipotle competitors that should be mentioned and researched. Here are some of the smaller scale Chipotle competitors:
- Estimated value: $400 million
- Number of locations: 71
- Estimated sales: $300 million
Qdoba Mexican Grill
- Number of locations: +750 locations
- Estimated sales: +$900 million
Moe’s Southwest Grill
- Number of locations: +700 locations
- Estimated sales: +$750 million
- Number of locations: 166 locations
- Estimated sales: +$311 million
Cafe Rio Mexican Grill
- Number of locations: 133 locations
- Estimated sales: +$267 million
On the Border Mexican Grill & Cantina
- Number of locations: 150 locations
- Estimated sales: +$350 million
Other Mexican concept restaurants
There is no doubt that the competition in this restaurant niche is extremely fierce, we should also mention three more chains with a significant footprint: El Pollo Loco, Rubio’s Coastal Grill, and Baja Fresh.
Chipotle also competes with other restaurants
The competitive landscape is fierce in the restaurant industry, and especially when it comes to quick-service restaurants (QSR). Chipotle faces not only competition from Mexican-themed restaurants, but also from any restaurant. Although restaurant chains such as KFC might not be one of Chipotle’s direct competitors, they are certainly a choice considered by consumers when they make a decision on where to eat out. Some of the largest Chipotle competitors include Chick-Fil-A, which is one of the largest restaurant chains in the US.
Therefore, we should also account for that when we are trying to value Chipotle’s stock, and when we research the Chipotle competitors. Despite the high number of Chipotle competitors, the company is the 10th largest restaurant chain in the US. If the past growth continues into the future, there is no reason to not be in the top 5 in the next decade.