April 04, 2016

Could Better Burger Be Chipotle’s New Flag?

Chipotle Mexican Grill Inc. may be diversifying its business and launching a new burger restaurant chain. The company has stated that it has applied for ‘Better Burger’ as a trademark which has been confirmed by the official website of the U.S. Patent and Trademark Office. Chipotle has already diversified into 2 smaller restaurant chains featuring different cuisines. A spokesperson for Chipotle, Chris Arnold, said that it was now time for the Denver-based company to open a restaurant chain in Chipotle style with hamburgers as the main focus of the menu.

160330171517-chipotle-better-burger-780x439[1]Arnold has further elaborated that the idea about a new burger chain is still in the conceptualization phase. The 2 new non-Mexican Chipotle ventures, i.e., Pizzeria Locale whose specialty is wood-fired pizza, and ShopHouse, a Southeast Asian cuisine restaurant chain, have been successful. Hence, it was time for the company to apply the Chipotle model into a wide variety of cuisines, including burgers.

Current Problems Associated with Chipotle

Chipotle emphasized the use of naturally bred meat and organic produce to raise its sales and popularity since it was founded in 1993. However, last year the Mexican food giant suffered a serious case of food safety issues last year. There were many norovirus and E. coli outbreaks at varied Chipotle outlets which drove away customers. It also lead to an investigation by the CDC or Centers for Disease Control and Prevention.

The food safety crisis did adversely affect the sales of Chipotle; in Feb same-store sales plunged by 26 percent. Subsequently the worst quarterly outcome was reported by the company since it became a publicly traded unit. The net income for the 4th quarter fell to $67.9 million which is equal to a fall of 44 percent year-over-year.

Expansion into the Burger Business

A burger food chain would allow Chipotle to expand as a new banner and thus offset the negative publicity of last year. It would also allow the burrito seller to apply its fast-casual restaurant model, with customized menu and fresh ingredients, to America’s favorite cuisine.

Better Burger could turn out to be very profitable for the company. As beef prices keep falling, the U.S. Department of Agriculture has projected that more Americans will end up consuming beef. Also, as compared to Mexican cuisine, the burger industry is substantially larger in terms of size and sales. It was reported that limited-service burger food chains in the US had sales that surged to $76.9 billion in 2014 as opposed to Mexican food with just $19.7 billion in sales for the same time period. Burger Business, a trade publication, stated that burger food outlets account for nearly 8 percent of all restaurants in the US nationally.