A:

Chipotle Mexican Grill Inc. (CMG), ae market leader in the fast casual dining sector, faces direct competition from four other companies. These include Qdoba Restaurant Corporation; MTY Food Group Inc.; Mswg LLC; and Rubio's Coastal Grill. Chipotle also competes on a less head-to-head basis against Taco Bell Corporation (YUM), the market leader in the Mexican-style fast food sector.

Companies in the restaurant chain business compete on a number of different levels, including menu, ambience, innovation and price as well as size, geographic reach, established reputation, and attractiveness to investors. Like other restaurant chains that adhere to the "fast casual" concept, Chipotle tries to combine the convenience and affordability of a counter-service, fast food eatery (McDonalds, Burger King) with higher-quality dishes and a more appealing environment. Meals are typically somewhat pricier than at a fast food restaurant, but food is prepared on the spot using healthier ingredients such as fresh vegetables, poultry and meat products.

As of April 2017, the publicly traded Chipotle owns and operates more than 2,250 restaurants. Mswg, which is owned by Focus Brands, operates more than 680 Moe's Southwest Grill eateries in 40 states, most located east of the Mississippi River. Meanwhile, under the ownership of fast food giant Jack in the Box (JACK), Qdoba operates and franchises eateries in about 718 locations. MTY Food Group Inc., a Montreal-based restaurant company, operates or franchises Baja Fresh Mexican Grills at over 162 sites, while also overseeing Salsa Fresh Mexican Grill and Canyons Burger Company. Privately owned, West Coast-based Rubio's runs establishments in nearly 200 locations.

Chipotle is still dwarfed in size by fast food giant Taco Bell, the operator of some 6,200 sites throughout the U.S. Taco Bell is owned by Yum Brands, the worldwide leader in fast food chains, which owns Pizza Hut and KFC, as well. However, while sales of fast casual food outlets in general, not just those with Mexican-style menus, have been slowing in the two years, Chipotle's have climbed, bouncing back from several food-safety crises in 2015. 

Chipotle, founded in 1993 by a cook named Steve Ells, is not even the oldest Mexican-style fast casual dining chain. Rubio's got started 10 years earlier. Rubio's, however, has not attained the same geographic footprint as Chipotle. All Rubio's restaurants are located in five western states.

As of 1998, five years after its establishment, Chipotle only ran 16 restaurants, all situated in Colorado. That same year, though, fast food behemoth McDonald's Corporation (MCD) became a major investor. By 2006, when McDonald's completed a divestiture from Chipotle, the Mexican-style dining chain had mushroomed to 500 locations.

Chipotle's direct rivals use various approaches to pursue their own growth. Moe's Southwest Grill restaurants attempt to differentiate themselves with a fun and offbeat environment featuring menu items named after TV and movie stars. Baja Fresh Mexican Grills introduced a new restaurant design in 2013, along with a revamped menu that places a bigger emphasis on food flavor and freshness. In 2010, Rubio's went private through a merger with a subsidiary of Mill Road Capital. Rubio's is now trying to set itself apart from Chipotle and other competitors by unveiling new fresh fish items and giving some of its California restaurants a beach-like look.

RELATED FAQS
  1. Does increasing health consciousness among consumers make investing in fast food ...

    Examine the effect of increased health consciousness on fast food companies, and learn metrics investors can use to determine ... Read Answer >>
  2. Are there leveraged ETFs that follow the food and beverage sector?

    Discover whether it is possible for investors to utilize leveraged exchange-traded funds, or ETFs, to access the food and ... Read Answer >>
  3. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon my ... Read Answer >>
  4. What countries are driving most of the growth of the food and beverage sector?

    Learn about the countries, primarily emerging market nations, that are currently driving most of the growth in the food and ... Read Answer >>
  5. How does the risk of investing in the food and beverage sector compare to the broader ...

    Find out why investing in the food and beverage sector is generally considered to be less risky than investments in the broader ... Read Answer >>
  6. What metrics are commonly used to evaluate companies in the food and beverage sector?

    Discover what some of the most commonly used performance metrics are that investors use to evaluate companies in the food ... Read Answer >>
Related Articles
  1. Insights

    Can Mcdonalds Survive Against Fast Casual?

    Can this fast food chain survive against fast casual competitors like Chipotle Mexican Grill?
  2. Investing

    Understanding Chipotle's Financials (CMG)

    Learn about Chipotle Mexican Grill and its financial statements, including metrics such as comparable sales, operating margin and returns.
  3. Insights

    Fast Food Versus Fast Casual: Which is More Profitable?

    Between fast food and fine dining lies the rapidly growing fast casual business sector. It's market share is growing. Are profits growing too?
  4. Investing

    Fast Food or Fast Casual: Which is the Better Bet?

    Fast food restaurants are slashing prices to compete with fast casual restaurants. Which has better long-term potential?
  5. Investing

    How to Invest in 'The Chipotle of Pizza'

    Americans love pizza. Here's why you should consider adding a slice to your portfolio via Chipotle Mexican Grill.
  6. Insights

    Top 4 Shareholders of Chipotle Mexican Grill

    Here are the top 4 shareholders of Chipotle, the Colorado burrito shop turned multi-billion dollar fast food chain founded by former line cook Steve Ells.
  7. Investing

    Chipotle's 3 Key Financial Ratios (CMG)

    Explore why some financial ratios are most helpful in analyzing Chipotle's business amid its food safety scandal and understand the stock's premium valuation.
  8. Investing

    Chipotle Stock: Capital Structure Analysis (CMG)

    Learn about the impact the foodborne illness outbreak had on Chipotle, how Chipotle operates with no debt, and details behind the company’s enterprise value.
  9. Investing

    Why Chipotle is Still a Good Bet (CMG)

    Does the slide in Chipotle's stock present a long-term buying opportunity?
RELATED TERMS
  1. Marketing Campaign

    Specific activities designed to promote a product, service or ...
  2. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade ...
  3. Food Industry ETF

    An exchange-traded fund that invests in food and beverage companies, ...
  4. Fast Fashion

    Definition of "fast fashion."
  5. Restaurant Performance Index - RPI

    A monthly index tracking the performance of the restaurant industry. ...
  6. Engel's Law

    An economic theory introduced in 1857 by Ernst Engel, a German ...
Trading Center