It’s like Pizza Hut opening a new location in Naples. Or Nissin Cup Noodles opening a Ramen joint In Tokyo. Why is Chipotle opening a new ‘international’ location in… Mexico? Is it a serious marketing strategy? Or just another over-the-top promotional stunt?
Chipotle’s beloved Al Pastor Bowl: It plays in Peoria. But will it resonate in Puerto Vallarta?
Chipole has had its share of scares and slapdowns in the past 5 years or so. It’s gone from middle of the pack, to the dumps, then to the top tier of the growing Tex-Mex slice of the fast-casual / fast Food sector. But has the chain’s successful turn-around management team bitten off more than it can chew?
A long shot?
It would certainly seem so. At least that’s what my intuition tells me. Screams, actually. So… I’m itching to know why the chain would think about trying such a hing….
Turns out there are many logical, intertwined and, on their surface, good reasons. But the overall scheme requires that all the pieces of a complex plan fall into place, and the finished Rue Goldberg machine function as planned.
What they’re doing…
Chipoyte would truly have been nuts to try a Mexican invasion on its own. But it has a fourth-column friend to lean on.
According to a Chipotle announcement, it’s working closely with an established Mexican partner – Alsea of Mexico City. Alsea already operates Domino’s, Starbucks, Burger King, Chili’s and other American brands in South America and Europe. Alsea says plans to explore additional expansion in Mexico and other locations in the Central American sphere.
My observation: The announcement, introducing Alsea to North American audiences, avoids even hinting at how successful its efforts to take other US brands south have been.
Nevertheless..
“The country’s familiarity with our ingredients and affinity for fresh food make it an attractive growth market for our company,” Chipotle’s Chief Business Development officer, Nate Lawton, said in the official Mexico announcement. “The company is confident that its menu will resonate with Mexican diners,” he continued.
A logical assumption. But Chipotle will have win Mexicans’ hearts as well as their taste buds. And it remains to be seen if the chain’s take on Mexican cutore will resonate as well as its menu.
Why?
That’s the question that resonates in my skull at the moment. It turns out that Chipotle’s is hedging its bets against mid-and long-range negative effects of recently re-elected US president’s Trump’s ecnomic policies on its business.
In as much as Chipotle’s is a mexican-themed cncept, it gets a lot of its ingredients from Mexico. Trump’s tariffs on Mexican imports could increase costs for U.S. Chipotle locations.
“Last week, the U.S. Commerce Department said it plans to withdraw from a 2019 agreement suspending an anti-dumping investigation into fresh tomato imports from Mexico,” ABC News points out. That move, now set to take effect July 14, means most tomatoes from Mexico will be subject to a 20.91 percent tariff. Chipotle also gets ‘about half’ of its Avocados from south of the border, among other ingredients.
And there’s no guarantee that the Trump tariffs won’t climb even higher.
A broader strategy
Th Mexico gamble is actually just past of a broader strategy to lessen Chipotle’s reliance on the volatile home market for overall corporate stability and continued profitability.
The company currently has more than has 3,700 restaurants world-wide. And it announced recently that it plans to open and plans to open up to 345 new locations, in the US and abroad, this year.
International pilot projects already include three locations in Kuwait and two in the United Arab Emirates – in partnership with Ashaya Group. Alshaya currently operates approximately 70 well-known consumer retail brands across the Middle East, North Africa, Turkey, and Europe.
My take
It sounds as if Chipotle is more than satisfied with its Alshaya experience in the Middle East, and hopes to duplicate that success with Alsea in Central and South America. Maybe the notion of a US Tex-Mex chain expanding into Mexico isn’t as crazy – much less suicidal – as it first sounded…
~ Maggie J.