It’s happening. Chipotle Mexican Grill has launched franchising. At least internationally.
The company on Tuesday announced its first-ever development agreement to open restaurants in the Middle East in partnership with massive franchise company Alshaya Group. Alshaya plans to open Chipotle locations in Dubai and Kuwait early next year, with more growth planned for the region beyond that.
It’s a big step for Chipotle, which currently owns and operates all of its restaurants, including more than 3,200 across the U.S., as well as 33 in Canada, 15 in the United Kingdom, six in France and two in Germany. The company is pushing to reach 7,000 locations across North America, and 255 new systemwide locations are expected to open this year.
Chipotle CEO Brian Niccol said leveraging Alshaya’s market expertise will enable the Newport Beach, Calif.-based chain to quickly gain access to the vibrant economies in the Middle East region.
“We are excited to offer guests in the Middle East our responsibly sourced, classically-cooked real food, and look forward to furthering our purpose to cultivate a better world in this new territory,” he said in a statement.
The family-owned Alshaya Group has a long history in the Middle East that goes back to 1890 Kuwait. Its portfolio of restaurant brands, which extends through the Middle East and North Africa, Turkey and Europe, includes Starbucks, P.F. Chang’s, Shake Shack, Pinkberry, Blaze Pizza, Raising Cane’s and Texas Roadhouse.
And Alshaya builds quickly.
The Cheesecake Factory, for example, went international for the first time in 2012 with Alshaya Group, which first opened a 13,851-square-foot location of the casual-dining brand at The Dubai Mall. As of the end of the first quarter, The Cheesecake Factory had 30 licensed restaurants internationally, with multiple units in the United Arab Emirates, Kuwait, Saudi Arabia, Qatar and Bahrain operated by Alshaya.
The franchisee also operates a multitude of other American-born retail brands in the Middle East, from Disney and Victoria’s Secret, to Foot Locker and Pottery Barn.
In making the announcement, Chipotle said the company is open to exploring new opportunities for growth via outside partnerships through its newly formed business development group led by Nate Lawton, Chipotle’s chief business development officer, who has also led the test of the new Farmesa concept.
But that doesn’t mean Chipotle is looking to franchise in the U.S.
Chipotle plans to continue owning and operating its own restaurants in the U.S., Canada and Western Europe, a company spokesperson said.
“We are fortunate to have very strong returns and a balance sheet with zero debt, which gives us the ability to fund our own growth,” the company said in a statement. “In some markets, it is apparent that we’re best suited to leverage a partner with local expertise and the Middle East is one of them.”
Mohammed Alshaya, executive chair of Alshaya Group, said in a statement, “We are proud to be Chipotle’s first and only franchise partner, as we continue to enhance our portfolio by bringing world leading brands to our customers across our markets.”
Alshaya is Chipotle’s first and only international franchise partner so far, but the fast-casual chain has attempted franchising before, if reluctantly.
McDonald’s was once a major investor in Chipotle, beginning in 1998, when the young chain had only 16 units. The fast-food giant later divested in 2006, when Chipotle went public. But during that time, McDonald’s reportedly pressured Chipotle to attempt franchising, though it was not a model Steve Ells, Chipotle’s founder and CEO at the time, chose to pursue.
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