Some of the best-known global brands are franchises. This includes burger chains such as McDonald’s and Burger King, coffee shops such as Starbucks and Costa, and Pizza restaurants such as Dominos and Pizza Hut, all of which follow the franchise model. In this blog, we examine how Chipotle has overcome adversity to enjoy success with its own unique franchise model.

In the US alone, there were 773,603 franchise businesses in 2019. This accounted for just over a tenth of all businesses in the country. In February 2020, the International Franchise Association predicted that franchises in the US would grow by 2.8%, adding 232,000 jobs in 2020, to give a total of 8.67 million employees. This underlines the importance of franchises in supporting economic recovery following Covid-19.

How Covid-19 affected Chipotle

While Covid-19 put a damper on some of those earlier predictions, many franchise brands actually thrived, including Chipotle Mexican Grill. Despite having to close restaurants due to lockdowns, 2020 was a blockbuster year for the Mexican food restaurant. Its strategy of embracing digital systems, such as an ordering app and social media, helped them earn $6.0 billion in revenue, a 7.1% increase – 5 percentage points more than comparable restaurants.

In October 2021, the company reported third-quarter sales of $2.0billion, putting Chipotle at $5.6 billion for the year with Q4 still to come. So, with another bumper year for Chipotle, how did they make their franchise model so successful?

How Chipotle found franchise success

A franchise can be defined as: “The right or license granted to an individual or group to market a company’s goods or services in a particular territory.” If it’s done right, the franchise model allows for rapid growth as the services can be replicated and multiplied far and wide. But it hasn’t always been smooth sailing for Chipotle.

Founded by Steve Ellis, who opened the first restaurant in Colorado in 1993, Chipotle rapidly grew through the 90s and early 2000s thanks to support and investment from McDonald’s. By 2005, there were 460 restaurants. However, a year later, Chipotle and McDonalds were forced to part ways due to different approaches to business, food, philosophy, and strategy.

After almost a decade of steadier growth, Chipotle suffered a setback. While having multiple sites and franchisees is one of the biggest sources of growth and success, it can also be one of the greatest challenges. With so many branches, it can become difficult to ensure quality and standards, and so it proved in 2015, when cases of E.coli and Salmonella meant the chain had to close 43 restaurants – damaging profits and reputation in the process.

However, the company bounced back by putting protocols in place, training employees, and ensuring best practices were followed across all its operations. Chipotle instilled a customer-focused approach throughout the entire business – placing it at the heart of the business model and marketing strategy.

While quick service, large portions, and low prices are key parts of the business model, reaching out and engaging with customers effectively was instrumental to recovery. Chipotle positioned the brand with transparency, told real stories about employees, and offered insights into one of the company’s unique selling points – fresh ingredients, something you might not always immediately associate with fast food.

They embraced social media to create content that reached customers on relevant platforms, presenting the brand as relevant, loved, and part of the culture. They used video content to deliver messages across social platforms and influencers to endorse the brand using the lid flip challenge on TikTok. Videos like this amassed over a quarter of a billion views and challenged preconceptions.

Moving forward, Chipotle is seeking to address environmental issues – something at the forefront of customers’ concerns – with ‘Real Foodprint’. This sustainability tracker allows consumers to track how much water they helped save when ordering via their mobile app.

As Chipotle looks to expand on its 2,500 locations worldwide, this ethos allows them to appear as both a reputable company, as well as a great place to get delicious fresh food. Because tacos taste good in any language, right?

How Albion Languages can help

If you’re an international franchiser / franchisee looking to start or expand an international franchise business, then Albion Languages can help. Our team can support you with in-depth market research, ensuring you choose markets and contractors that are the best fit for your franchise’s philosophy. We take the time and put in the effort to ensure we understand your business goals and work with you to deliver long-term, tangible results. To find out more, get in touch.