In the sandy, windblown southeastern corner of California, roughly 10 miles from the Mexico border, a Chipotle Mexican Grill opened at the end of March.
The town of El Centro seems like the middle of nowhere. The next closest Chipotle is about an hour’s drive away, in Yuma, Ariz.
Yet opening sales in El Centro—and other smaller-town units just like it—have been among the best the company has seen.
In fact, the 2,325-square-foot drive-thru unit—one of a growing number of Chipotlanes—represents a development strategy for the fast-casual chain that is proving immensely profitable as the 3,000-plus-unit Chipotle pushes to more than double in size.
People think of Chipotle as being a big city brand, and it is.
Chipotle's number of units in the top 5 markets
More recently, however, Chipotle has also begun moving into smaller towns, or markets with a population between 10,000 and 40,000. Think towns like Bristol, Tenn.; Calhoun, Ga.; Tehachapie, Calif.; or Poughkeepsie, N.Y.
And El Centro.
Some of these smaller markets have become “barn burners” that have wildly beat sales projections, former Chief Development Officer Tabassum Zalotrawala said in an interview shortly before she was recruited to lead U.S. development for McDonald’s in March. In her roughly 4.5 years at Chipotle, Zalotrawala helped open about 750 restaurants, including 550 of the drive-thru units. She also helped shape the smaller-town strategy for growth.
It's a plan that company officials say will remain in play as they search for Zalotrawala’s replacement, because it’s paying off.
Last October, Chipotle CEO Brian Niccol noted how well the small-town strategy was performing. He pointed to a then-new unit in San Angelo, Texas, which debuted in September 2022 and broke opening-day sales records for the company.
In fact, the success Chipotle has seen in smaller towns helped bump up development goals announced in 2021, when the chain upped its original target of reaching 6,000 North American units to 7,000.
“If sales are sustained and the population continues to grow, we might do a second one in the town.”
Average unit volumes are the same, if not higher in many cases, than units in established markets, and sometimes even higher than the company’s national AUV of $2.8 million, Zalotrawala said.
What’s more exciting, she added, is that these small towns become “connectors,” or a bridge between cities.
“If sales are sustained and the population continues to grow, we might do a second one in the town,” she added. A second unit has already opened in San Angelo, Texas, for example.
Chipotle has projected that 255 to 285 units will open this fiscal year, and about 5% of those restaurants will be in these small-town markets.
That’s not a huge shift, Zalotrawala said. It’s not like Chipotle is abandoning growth in big cities.
Chipotle units as of the end of 2022 in southern California and southwest Arizona
“Our focus will be on proven, established markets,” she said. “After that, we will also have newer markets and developing markets that, over time, will graduate to proven/denser markets.”
But as Chipotle moves into these smaller towns, she said, “We’re seeing demand is there.”
“These people know the brand well. They would have traveled 100 miles to Atlanta, Ga., as an example, from a city like Calhoun, Ga., to eat at Chipotle. Now they have one in their own little town, with a population of 16,000,” she said. “And we notice that these restaurants start to do really, really well.”
The middle of somewhere
El Centro, Calif., exemplifies the type of market Chipotle looks for as part of this strategy. It’s the county seat (of Imperial County), with a population of roughly 43,000.
It's also is the largest town in this dry desert region. Chipotle has a presence in Palm Springs, about 100 miles to the North, and also San Diego, about 100 miles to the West.
“These people know the brand well. They would have traveled 100 miles to Atlanta, Ga., as an example, from a city like Calhoun, Ga., to eat at Chipotle.”
El Centro is not often mentioned in California tourism guides, but it has some claims to fame. The singer/actress Cher was born there (though she grew up in L.A.), as was former Denver Broncos linebacker Glenn Cadrez, and the famed Blue Angels aerobatic team uses a nearby Naval air base as their winter training facility.
Surrounding the town are miles of sand dunes, visited by thousands each year looking for off-road joy riding. The dunes have also served as a backdrop for scores of films and TV shows, from the desert planet of Tatooine in “Return of the Jedi” to the opening sequence of the series “Kung Fu.”
It's also just south of the Salton Sea, a shallow, lithium-rich lake that has become a target for businesses hoping to develop the region for mining and geothermal power. The primary industry in the region is agriculture, but some are hoping (and maybe bracing) for an alternative-energy gold rush.
Shopping hubs
Chipotle likes to position these smaller-town restaurants near high-volume retail centers, college campuses or well-traveled highways.
El Centro is what Chipotle field leader Shahrooz Ahari calls “a drive-by town,” a place where drivers stop on their way somewhere else.
But it’s also a retail hub. The newly built restaurant sits across from a busy Target and Lowe’s, with a Walmart Supercenter, Costco and Imperial Valley Mall also nearby.
A fair share of chain restaurants are already in the neighborhood: Taco Bell, El Pollo Loco, Chili’s, Starbucks, Johnny Carino’s and Famous Dave’s. But restaurant listings in El Centro tend to favor mom-and-pop concepts, mostly Mexican.
And though there was some pushback to yet another chain concept coming to town, anticipation for Chipotle’s arrival had been building for months.
The whole valley crying about Chipotle coming to El Centro saying it’s “White Mexican” food, and I’m over here waiting like.🤷🏻♂️ pic.twitter.com/lXgTpa0GJu
— Isaac Vargas (@VaccinatedPapi) December 21, 2022
During a training week before the March 24 opening, customers stopped in to ask when the restaurant would open. And when opening day finally arrived, guests had been standing in line for an hour before doors officially opened at 10:30 a.m., said Ahari.
“Even before the grand opening, we had people say they would drive an hour to Yuma [Ariz.] to go to Chipotle,” Ahari said. “We already had loyal customers.”
By week three, Ahari called the response “amazing,” though he declined to share numbers.
The challenge for building in small towns is keeping an eye on those restaurants, said Chipotle CFO Jack Hartung in 2021.
It’s hard for a field leader to travel 300 miles to get to a remote small-town location, he said when reporting fourth-quarter earnings that year.
“But if you string a bunch of small towns together where there’s one that’s 50 miles away and another that’s 50 miles away, you stream these along so that a field leader can, over a number of days, make sure that he gets touches with those restaurants, develops the leadership in those restaurants from a financial standpoint and from a [standpoint of] bringing a special dining experience to small towns, it’s a home run,” Hartung said.
Angel Hernandez, director of community development for the city of El Centro, said he had fielded calls from residents asking for a Chipotle for months.
"People would just cold call me. They'd say, 'When is El Centro going to get a Chipotle?'" he said. "I've been in this job for eight years and even my friends and family would say we should have a Chipotle."
Now that the restaurant has finally opened, he said he hasn't yet visited because he hears it's too mobbed. But, for El Centro, it's a victory, he said. "People are really happy."