Chipotle Mexican Grill Inc considers opening ‘Better Burger’ chain as it looks for ‘growth seeds’

Chipotle Mexican Grill Inc. may be engaging in the burger business.

Chipotle, that has already committed to two smaller chains, is considering opening another restaurant concept focused on hamburgers, said Chris Arnold, a spokesman for the Denver-based company. The organization filed a trademark application this month for the name “Better Burger,” based on the U.S. Patent and Trademark Office website.

“It’s a rise seed idea we are exploring,” Arnold said within an e-mail. “We’ve two non-Chipotle growth seeds open now — ShopHouse and Pizzeria Locale — and have noted before the Chipotle model might be put on a wide variety of foods.”

Even as it mulls expansion, the burrito seller is trying to recuperate from the food-safety crisis that erupted this past year. The company a break down series of E. coli and norovirus outbreaks, driving away customers and spurring an investigation by the Centers for Disease Control and Prevention. The fallout is ongoing: Same-store sales tumbled 26 per cent in February, and also the company expects to report a loss in the first quarter.

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Fresh Direction?



A burger chain would give Chipotle a method to expand within fresh banner. It also would continue its efforts to use the fast-casual model — fresh ingredients and customized menu items — to other cuisines. Chipotle opened its first ShopHouse Southeast Asian Kitchen in Washington in 2011. The noodle-selling chain has since expanded to La and Chicago. Chipotle also offers invested in Pizzeria Locale, a fast-casual restaurant that were only available in Colorado.

Burgers will be a potentially profitable position for Chipotle. Beef prices are falling and Americans are projected to consume more of the meat this year, based on U.S. Department of Agriculture. And the hamburger industry is far bigger than the Mexican-food business. U.S. sales at limited-service burger chains — restaurants without wait staff — rose to US$76.9 billion in 2014, compared with US$19.7 billion for Mexican fare, according to research firm Technomic Inc.

A new fast-casual burger chain will bring fresh competition to Five Guys Burgers & Fries, Smashburger and Shake Shack Inc.News of Chipotle’s “Better Burger” concept hurt shares of Shake Shack on Wednesday. After rising as much as 6.3 per cent to US$37.08, the stock retreated to US$35.77 by the close. Chipotle rose 1.3 per cent to US$466.15.

For now, the U.S. market probably isn’t saturated with a lot of burger chains, said Darren Tristano, Technomic’s president.

“The category keeps growing, and also the opportunity remains huge,” he explained. “If you’re Chipotle, you’re type of looking at it saying, ‘Wow, take a look at Shake Shack — they went from one to this type of large volume of sales.’”

Bloomberg News