Chipotle Mexican Grill
Chipotle Mexican Grill
With its unique restaurant philosophy focused on healthy fast food, Chipotle Mexican Grill is known in the marketplace as one of the most innovative and progressive Quick Services Restaurants today. What’s not well known by the average consumer is how savvy Chipotle is about growing its business.
As of June 2014, Chipotle had 1,681 restaurant locations and a plan to grow its restaurant count by almost 200 new locations that year and 200 more in 2015. What’s more, planning the opening of two new store concepts with distinct menus to attract new communities of diners. These included the ShopHouse Southeast Asian Kitchen and Pizzeria Locale.
One community that is well aware of Chipotle’s healthy growth trajectory is the investment community. In mid-2014, The Motley Fool investment website reported:
- “The latest earnings results from Chipotle Mexican Grill confirm that the fast-casual restaurant company is the top growth story in the industry …
- “The most impressive aspect of Chipotle’s growth story is perhaps that it shows no signs of stopping any time soon, even though the company already has a rather large domestic presence. The larger and more important part of the Chipotle growth story is twofold: international expansion and growth via new brands.”
Chipotle’s Secret Weapon for Rapid U.S. Growth is PopStats
While the investors are well aware of Chipotle’s high-growth trajectory, what they may not know is that one of Chipotle’s secret weapons for choosing the best U.S. locations for all of its stores is STI: PopStats.
However, Ross Wootton, Chipotle’s Manager of Real Estate Strategy & Research, definitely credits PopStats data — along with the QSR’s unique approach to finding new locations for the new concepts, which includes even scouting locations at food courts, airports, and military bases.
The first step in Wootton’s market research is to find every possible location across the country for each restaurant concept. He accomplishes this by scanning the country using two hexagonal grid models to gain both long- and short-range views of location opportunities based on home populations, daytime populations, and trade area sizes.
Ross calls the scans the “20/20” and the “10/10.” The 20/20 scan includes home populations over 20,000, daytime populations over 20,000, and two-mile trade areas. Similarly, the 10/10 scan includes home populations over 10,000, daytime populations over 10,000, and one-mile trade areas.
“This scan netted 654 trade areas that matched the criteria: 244 in the west, 185 central, and 225 in the northeast,” Wootton said. “I presented the results to the company’s management team to help them determine the next best locations for the new store concepts. With that insight, they could select the markets they wanted to investigate further from the list.”
PopStats Data Fuels QSR’s Growth at Every Stage
Chipotle’s growth trajectory shows no signs of slowing down. Standing at almost 2,000 locations, the QSR is planning to hit 3,000 next. What’s more, the co-CEO Steve Ells stated in the press that Chipotle’s potential for growth is “4,000 units and likely greater.”
All of the new stores will not necessarily be the same size as its current restaurants. Chipotle is experimenting with smaller store footprints with limited seating. It is looking for those smaller opportunities now with the help of PopStats.
“Because PopStats provides demographic data at the block group level, it helps us zero in tightly on ideal locations for our new smaller storefronts,” said Wootton. “This has turned out to be a great advantage for our new direction.”
For the next stage of Chipotle’s location research, Wootton is using PopStats’ metro area populations and daytime estimates to help map out the chain’s future growth potential.
“Because our brand appeals to residents and workers during the daytime, this data helps us prioritize all of the markets we want to pursue, so that we can hone in on only those markets with the highest unit growth potential.”
Along with location selection, Chipotle also relies on PopStats for sales estimates. Once the company opens new stores in new locations, “We use PopStats on a daily basis to help estimate first-year sales at all of our new U.S. locations,” says Wootton. “This helps us not only track our success, but also build our confidence in our location decisions.”
Wootton said that he is anticipating continued rapid growth of the chain as the healthy food concept continues its rapid growth trajectory. He feels confident on making every new store selection thanks to having his decisions supported by PopStats’ pinpoint precision. “I feel like the data is the secret weapon to my success,” he concluded.