On Tuesday, Chipotle announced that it has signed an agreement with Kuwait-based Alshaya Group, marking its first-ever franchise partnership to expand into the Middle East next year.
Currently, Chipotle operates just over 50 locations in Canada and Europe, all of which are company-owned, as are its approximately 3,200 locations in the U.S.
The agreement with Alshaya represents the first time Chipotle has partnered with a local franchise retail operator to enter a new market.
Chipotle CEO Brian Niccol shared that the initial plan includes opening two locations each in Dubai and Kuwait, though the exact locations have yet to be finalized.
The Alshaya Group, which also partners with other major brands like Starbucks, Shake Shack, and Texas Roadhouse, was chosen for the deal due to its strong market experience and commitment to Chipotle’s “Food with Integrity” philosophy, according to Niccol.
Maintaining fresh and real ingredients, with local menu adaptations that reflect the U.S. experience, will be crucial, Niccol added.
“They’ve got great brands, great operations, great people programs, which just gave us confidence that they’d be able to execute the Chipotle proposition effectively in the Middle East,” Niccol said.
When considering the Middle East market, Niccol emphasized the importance of partnering to ensure success in areas like real estate, hiring, and supply chain management.
Niccol expressed hope that if the initial locations in the Middle East prove successful, there could be hundreds more in the region in the future.
He also mentioned that this agreement could serve as a model for the company’s expansion into other markets.
“As we look around the world, we’ll be evaluating all the elements of what makes Chipotle great and if there’s an area where we believe we need a partner, then we’ll consider a partner for it,” Niccol stated.
However, despite this specific franchising move, Niccol clarified that there is “no intention” to pursue franchising opportunities within the U.S.
“Our return on invested capital in the U.S. is industry-leading,” he said.
“We’ve got the balance sheet and capital available where we can handle the growth with our own capital capability, and I think we’ve demonstrated the ability to operate restaurants effectively.”
In 2023, Chipotle’s stock has risen over 50%, making it one of the top performers in the restaurant sector.
