Chipotle Mexican Grill, Inc. (CMG) Adds Spice to Its Restaurant Lineup

ShopHouse provides Chipotle Mexican Grill, Inc. (NYSE:CMG) another avenue to grow after it begins to saturate the U.S. market with Chipotle locations. Chipotle already dominates the fast-casual Mexican market segment, but it competes indirectly with other fast-casual restaurants such as Panera Bread Co (NASDAQ:PNRA). Plenty of customers want to vary their diet even if they like the “fast casual” concept, and so they might opt for Panera Bread Co (NASDAQ:PNRA) or Panda Express the day after getting lunch from Chipotle.

Creating a restaurant with a similar experience but a different type of cuisine, like ShopHouse, gives Chipotle an opportunity to capture more of the food budget from its core customers. If ShopHouse could eventually grow to the same scale as Chipotle, it would vastly increase the company’s overall long-term growth potential.

Foolish bottom line
ShopHouse Southeast Asian Kitchen will still be a small start-up within Chipotle Mexican Grill, Inc. (NYSE:CMG) even after its recently announced expansion, but its success could have big implications for the company. For shareholders, proof of the concept is more important than near-term growth. The potential game-changer is ShopHouse’s long-term growth potential, as it could one day take over as Chipotle’s primary growth driver.

Having two successful concepts would vastly increase Chipotle Mexican Grill, Inc. (NYSE:CMG)’s ability to grow beyond this decade. Clearly, the company likes what it has seen from the first ShopHouse restaurant, since it is signing leases for multiple new units before the second restaurant has even opened. If these additional locations perform just as well, shareholders should expect to see a nationwide rollout begin by the middle of the decade.

The article Chipotle Adds Spice to Its Restaurant Lineup originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Chipotle Mexican Grill and Panera Bread.

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