Should Chipotle Bet On Better Burgers?

On Wednesday, Chipotle confirmed that it may add a better-burger concept to its portfolio. The new addition would stand alongside Chipotle’s other fast-casual spinoffs, ShopHouse Southeast Asian Kitchen and Pizzeria Local, setting the stage for growth beyond Mexican food.

Despite its recent health-related setback, Chipotle continues to be a very successful company thanks largely to its strong brand awareness and committed fan base. With its company having matured in the U.S. and global expansion now well underway, diversification is a clear step forward for Chipotle. Although Chipotle has been slow to develop its current spinoff brands, single-focused menus are driving growth in the fast-casual segment. Burger concepts in particular grew 15% in 2015, outpacing fast casual at 11.5% growth and quick-service chain growth of 4.5%, according to the 2015 Top 500 Report. Consumer demand for better burgers has increased in large part due to interest in higher-quality ingredients and a narrow, specialized menu focus—areas that Chipotle has already mastered.

If and when Chipotle decides to enter the better-burger market, it will have a leg-up in an already competitive field; Chipotle carries strong brand recognition, which will lend credibility to the new concept. Additionally, it has already nailed down its signature assembly-line-style ordering system, which has now proliferated across several categories in the fast-casual segment. Therefore it’s reasonable to believe that this format of customization will translate to burgers.

But the big question is, is the timing right? Chipotle is still in recovery mode and has a lot of ground to cover before it’s close to where it was a year ago. In addition, Chipotle already has two spinoff concepts that have shown slow progress and limited indication of success. Why would this concept be any different?

And, despite the timing issue, if Chipotle decides to move forward with another fast-casual spinoff, it may lose focus of its flagship Mexican fast-casual concept. Take McDonald’s for example: In the 1990s and early 2000s, the fast-food giant made several moves to diversify through investments and acquisitions of brands like Chipotle, Donato’s Pizza and Boston Market. The chain ultimately lost focus of its core brand and eventually chose to get back to basics and divest other interests.

Before Chipotle makes any real moves to develop a new concept, the brand should work to regain its footing in the market it once dominated. At this point in the ballgame, Chipotle’s sole focus should be on Chipotle. Leave the better-burger market to those already at bat.

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Darren Tristano

Darren Tristano is President of Technomic Inc. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations.

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