A:

Chipotle Mexican Grill Inc. (CMG), is a 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 restaurants, 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 for the past 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. Who are Whole Foods' main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon may ... Read Answer >>
  2. 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 >>
  3. What is the difference between fast and slow stochastics in technical analysis?

    The main difference between fast stochastics and slow stochastics can be summed up in one word: sensitivity. Read Answer >>
  4. Profit margin for food and beverage sector

    Learn which profit margin is common for a company in the food and beverage sector based on different statistical measures ... 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

    Analyzing Chipotle's Return on Equity (CMG)

    Learn about Chipotle's return on equity (ROE), read about restaurant closures and Chipotle's E.coli outbreak, and gain knowledge about the fast-casual food system.
  5. Investing

    Has Chipotle Hit Bottom? (CMG)

    Chipotle has suffered from a public relations nightmare. Can its stock recover?
  6. Investing

    Can New Ads Help Beaten-Down Chipotle Outperform?

    Bernstein Research is upbeat regarding a comeback for the Mexican restaurant chain.
  7. Investing

    Chipotle Seems Ready to Move Beyond E. Coli (CMG)

    With the company's food cost ratio declining, which helped with the Q4 earnings beat, CMG stock -- despite the 32% one-month surge -- may yet be a bargain.
  8. Investing

    Who Are McDonald’s Main Competitors?

    Find out which companies are McDonald's closest competitors. Learn about the largest fast food chains in the world and which companies compete indirectly.
RELATED TERMS
  1. Total Debt to Total Assets

    Total debt to total assets is a leverage ratio that defines the ...
  2. Restaurant Performance Index - RPI

    The Restaurant Performance Index (RPI) is a monthly index tracking ...
  3. Franchisee

    A franchisee is a small business owner that purchases the right ...
  4. Fast Tape

    A type of futures market that occurs when a single traded price ...
  5. Franchise

    A franchise is a type of license that a party (franchisee) acquires ...
  6. Menu Costs

    Menu costs is an economic term used to describe the cost incurred ...
Hot Definitions
  1. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  2. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  3. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  4. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  5. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  6. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Trading Center