Chipotle Mexican Grill Inc is a fast-growing chain with thousands of new restaurants in the US, Canada, and Europe. With over 2,800 restaurants spread across these locations, Chipotle is renowned for its commitment to sustainability, customizable menu options, and fresh ingredients.
However, owning Chipotle real estate is more complex than finding an available property and signing the lease. Chipotle has laid down real estate requirements investors must meet before buying the property.
This expert guide explores the vital Chipotle real estate requirements and the lease rate to enable you to decide if Chipotle is a good investment option. Whether you’re a seasoned investor or a first-time triple net property buyer, this guide offers valuable insights to help you understand how to invest in Chipotle’s real estate. Read to the end!
A Brief Overview of Chipotle Mexican Grill
Chipotle was founded by Steve Ells 29 years ago in Denver before moving its headquarters to Newport Beach, California in 2018. Led by Ells, Chipotle opened its second store in 1995 using the first restaurant’s cash flow. The third store was opened with an SBA loan.
After Ell’s father supported the business with $1.5 million, he created a board of directors comprising 10 members which was subsequently reduced to seven after the CEO of Taco Bell, Brian Niccol, took over as Chipotle CEO in March 2018.
Although Niccol was Chipotle CEO, Ells retained the Chairman title until he left the company in 2020. Brian Nicool became the President and CEO of Chipotle after Ells’ departure in 2020, a position he has maintained to date.
Others in top management positions at Chipotle include Scott Boatwright, the Chief Restaurant Officer; Haris Khan, the Vice President of Operations; and Jack Hartung, the Chief Financial Officer.
Pizzeria Locale is the only surviving subsidiary of Chipotle Mexican Grill Inc after launching several other companies, including Tasty Made and ShopHouse Southeast Asian Kitchen.
The Chipotle menu consists of tacos, burritos, salads, and quesadillas. As a fast-growing brand, Chipotle has previously served and explored some menu items that weren’t successful with its consumer base, including the Chorizo and Mexican chocolate shake. However, the company has continued to maintain its quality, enjoying a loyal customer base.
How Chipotle Selects Their Site Location
Chipotle Mexican Grill Inc is a fast-casual restaurant that specializes in burritos and tacos. When choosing a location for a new Chipotle, the restaurant follows some criteria and requirements.
As a triple net property without landlord responsibility, Chipotle offers a 15-year ground lease with four five-year renewal options and a 7.5% to 12% lease increment every five years. Chipotle Mexican Grill Inc is found alongside local businesses, regional malls, and educational institutions.
One primary factor Chipotle considers when choosing a site location for a restaurant is population demographics, including age range, income levels, and population density.
Chipotle targets areas with many Gen Zers and Millennials, who are often interested in fast-casual dining while being health-conscious. In addition, Chipotle prefers highly visible and accessible locations, such as areas near thoroughfares and major highways, access to public transportation, and high foot traffic.
Chipotle prioritizes high-traffic retail areas, like strip malls and shopping centers. Another key consideration for selecting a Chipotle site location is competition.
This leading food brand avoids areas saturated with similar restaurants considering it might be challenging to attract customers. Chipotle’s site selection is highly data-driven and strategic. The company uses various analytic tools to analyze site locations to determine the ones likely to succeed.
By carefully choosing its site locations, this fast-casual brand ensures that each restaurant is profitable and successful.
Average Chipotle Lease Rates
The leasing cost for Chipotle Mexican Grill Inc varies depending on factors like the local real estate market, the size, and location. For instance, the average price for a Chipotle restaurant listing ranges from $1.58 million to $3.38 million.
Besides the lease rate, Chipotle’s new restaurants will pay additional expenses and fees associated with leasing a property, including common area maintenance fees, security deposits, and rent escalations.
Chipotle’s strong brand recognition and proven track record make it attractive for people looking to invest in the fast-casual industry. However, Chipotle doesn’t have franchises. All 2,800 restaurant units are owned and operated by Chipotle Mexican Grill Inc.
When looking at Chipotle real estate for sale, consider working with a reputable and knowledgeable triple net broker to help you throughout the transaction process to avoid mistakes.
Requirements Needed to Secure Chipotle Lease Agreement
Although Chipotle Mexican Grill doesn’t have franchises, commercial property investors can add Chipotle properties to their investment portfolios. Securing a Chipotle lease agreement requires careful preparation and planning. As a leading fast-casual restaurant line, you need to understand the company’s requirements.
One of the requirements is a detailed proposal with information about the lease agreement terms, property size, and restaurant location.
Add a budget and timeline for the property renovation or building and plans for staff hiring and training, business marketing, and equipment purchase. Aside from the proposal, the tenant might need to provide a credit report copy and financial statements to demonstrate a strong financial capability to meet the lease obligations.
Local government licenses and permits and proof of insurance should be included too. Demonstrating commitment to the company’s values and brands, such as understanding and adhering to the company’s operating guidelines and procedures and participating in the brand’s development programs and training, is essential.
Securing a Chipotle lease agreement requires a thorough understanding of its commitment and requirements. With careful preparation and planning, you’ll increase your chances of securing a lease agreement with a leading fast-casual restaurant chain like Chipotle.
Is Chipotle Real Estate a Good Investment?
As with all investments, conducting thorough analysis and research is crucial before deciding whether to add a fast-casual brand to your portfolio. Some factors to consider when checking if Chipotle is a great investment option include a loyal customer base and a strong brand presence.
The brand is renowned for serving customizable menu options made with fresh, high-quality ingredients catering to a variety of dietary preferences. This wide range of menu options has helped the company become a household name amongst health-conscious consumers and Millennials.
Aside from its strong brand presence, Chipotle has demonstrated consistent financial performance over the years. Chipotle has reported steady revenue growth with a significantly increasing stock price since 2006 when it went public. With over 2,800 restaurant units scattered all over the United States and beyond, the brand has been successful in its market penetration and expansion.
However, you should also consider the cons of a Chipotle real estate investment. For instance, the company faced some challenges in 2015, resulting in reduced sales. Consider brand recognition before deciding whether to add the restaurant chain to your investment portfolio.
The fast-casual restaurant industry is competitive, with new entrants and established players vying for market share. While Chipotle is a leading restaurant chain, whether it’s a good investment depends on your risk tolerance and individual investment goals.
As with every investment, consider conducting thorough analysis and research before deciding on a Chipotle real estate investment.
Acquire Chipotle With NNN Deal Finder
When trying to buy NNN properties for sale, few investment options stand out, especially restaurants like Chipotle. If you’re considering adding Chipotle to your commercial property portfolio, working with a leading triple-net real estate agency like NNN Deal Finder is best.
At NNN Deal Finder, we specialize in triple-net properties across various industries. We offer our clients customized services to help them own the best NNN properties in their preferred locations.
Whether you’re a long-term commercial property investor or a new investor looking for franchise opportunities, you’ll find triple net properties for sale at NNN Deal Finder when you scroll through our listings. Reach out if you’d like to further discuss Chipotle real estate requirements with our experts.