A Look At Chipotle's Efficiency
Chipotle has somehow managed to attract a seemingly endless stream of traffic into its restaurants, despite the presence of numerous competitors and long lines. But a deeper look into the company's sales numbers show exactly how good it's been at this.
Consider: Last year, the company's locations averaged $2,169,000. As it is, that's a phenomenal number—consider that it's nearly twice the unit volumes of Burger King, which is more established, has drive-thru windows and is open at breakfast.
But Chipotle's restaurants are actually quite small, 2,580 square feet.
In other words: The burrito chain averaged $840.69 per square foot in sales last year.
That is unbelievably efficient. Compare this with other restaurant chains for which we could get both unit volumes and average restaurant size. The aforementioned Burger King generates $392.27 per square foot. A better comparison is Wendy's, which like Chipotle doesn't serve breakfast. Its locations generate $504.67 per square foot.
But even other fast-casual brands can't keep up. Panera Bread's locations average 4,500 square feet and its unit volumes are a robust $2.46 million, or $548 per square foot. Noodles & Company, which like Chipotle has no breakfast, averages $453.46. And the recent IPO, Zoe's Kitchen, does $534.54 per square feet.
To be sure, check averages and other factors influence these numbers—fast-casual restaurants in general will generate higher sales on less traffic because their prices are higher. And again, a chain that has breakfast should also generate higher sales because they're simply open longer.
On top of that, some units can generate profits on smaller volumes than can others—and ultimately, a chain's ability to expand depends heavily on its ability to generate profits.
But Chipotle is perhaps the most profitable concept among publicly traded restaurants, precisely because it is so efficient at generating sales. The company has lured people with its quality products and good messaging, and then manages to serve them quickly at all times of day even when there are long lines.
Fast casual restaurants have demonstrated that a good concept can generate considerable sales at in-line lease spaces, compared with the stand-alone locations, primarily on owned space, that quick-service restaurants have traditionally used. Yet Chipotle is far and away the best at sales efficiency—proving, once again, that there probably isn't going to be a "next Chipotle."