It’s fair to say Chipotle (NYSE:CMG) anticipated a struggle in its attempt to expand operations with six locations in London. Yet the U.S. burrito maker probably didn’t see a local turf war erupting in England’s capital, which is now the case as local Mexican spots vie for the space dominated in the U.S. by Chipotle.
Did everyone get the memo about Chipotle’s sustainable ingredients? Apparently not in London, where local taquerias and other casual Mexican spots are eschewing local sourcing and authentic ingredients in favor of hip atmospheres and bubbly personas. The formula is working among Londoners who appear unimpressed with the ambiance and — perhaps more importantly — the price point of Chipotle burritos.
Bloomberg reports that the U.S. burrito maker, which has enjoyed so much success for its fresh approach to fast food, has seen an overall sales slump in London, while its competition has grown and thrived in the overseas market. In other words, it might not be the food or the location but rather the Chipotle system that is a bust in London. The company spends little energy it its stores’ decor, preferring to focus on its strength — the quality of its burritos, tacos and other Mexican staples…
Co-CEO Steve Ells told Bloomberg that he never saw the designs of its stores as “a problem for [Chipotle] in 20 years and we don’t believe at all that it is an issue in London.” That assessment is reasonable, yet descriptions of other vibrant Mexican joints city-wide would point to the belief that exciting themes do play well in England’s capital. A festive Mexican experience seems to be attracting customers as much as the food itself.
Of course, the prices are a key of concern. Chipotle burritos are more expensive than the competition, which makes the decision an easy one for consumers unconcerned with the source of their burrito’s ingredients. On the bright side, Chipotle exceeded earnings forecasts for the quarter and continues to see its stock value grow. Its Asian-concept ShopHouse is now operating in several locations in the U.S., with more to come. Stock prices have risen more than 20 percent in 2013.
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