Thread: Chipotle Plans Asian Restaurant Chain For This Summer Rea

Chipotle Plans Asian Restaurant Chain For This Summer


NEW YORK -(Dow Jones)- Chipotle Mexican Grill Inc. (CMG: 274.30, +5.89, +2.19%) is planning to open its first Asian restaurant chain, ShopHouse Southeast Asian Kitchen, in Washington, D.C., this summer.

The restaurant will take on the same concept and business model that have been so successful for Chipotle over the past 18 years. Touting its fresh, sustainable ingredients, simple menu and customizable format, the specialty burrito chain has come to lead the quick-casual dining sector, carving a niche between quick-service and casual-dining categories and growing faster than competitors in either one.

Investors have been anxious to hear details of the company's new Asian brand. Chipotle's shares rose 2.3% to $274.56 Tuesday morning following the news of ShopHouse's summer launch.

"I have always believed that the Chipotle model would work well with a variety of different cuisines," Chipotle Chief Executive Steve Ells said in a press release. "Chipotle's success is not necessarily about burritos and tacos, but rather about serving great, sustainably raised food that is delicious, affordable, and convenient."

ShopHouse's food will primarily be inspired by that of Thailand, Malaysia and Vietnam.

The name of the restaurant comes from the term used in the region to refer to traditional two- or three-story buildings where families live upstairs and run restaurants or markets on the ground level, Chipotle said.

Chipotle will also be a stakeholder in the winner of the reality show "America's Next Great Restaurant," which currently airs on NBC Universal's NBC, according to its proxy statement filed last week with the Securities and Exchange Commission. NBC Universal is 51% owned by Comcast Corp. (CMCSA: 24.31, -0.24, -0.98%) and 49% by General Electric Co. (GE: 20.01, -0.17, -0.84%).

Chipotle founder Ells is one of four judges and investors for the program, and a company called ANGR Holdings LLC calls Chipotle's Denver headquarters its home and has trademarked the names of several of the restaurateur aspirants' concepts. In its proxy, Chipotle said it is contributing $2.3 million to ANGR, which will operate the restaurants awarded as a prize, in exchange for an equity interest in ANGR, and it will buy Ells's stake in ANGR sometime this year for $220,000, the amount of cash originally contributed to ANGR by Ells.

Spokesman Chris Arnold declined to disclose what its ultimate stake in ANGR will be, nor would he disclose specific investments made by anyone other than Ells and Chipotle. NBC discloses at the end of each episode that the restaurants given as a prize will be owned by the contest winner along with "various investors," and notes that the timing of the store openings may differ from the countdown clock on the show that will expire at the end of the final installment on May 1.

The winning contestant on the show will be rewarded with three restaurants, slated to open in New York, Los Angeles and Minneapolis in less than three weeks when the winner is expected to be announced. The five remaining concept hopefuls are: Spice Grill, fast-casual Indian food; Soul Daddy, soul-food creations; Harvest Sol, healthy Mediterannean-inspired food; Grill'Billies, which bills itself as a new-American grill; and Brooklyn Meatball Co., an Italian-themed chain which will live or die by the meatball.

Chiptole is scheduled to announce its first quarter earnings results next week. The company will go into the call with positive momentum from the ShopHouse unveiling, which could help buffer any less-than-optimistic first quarter results.

Some analysts have expressed concern that the ongoing probes over the immigration status of Chipotle's employees will take a hit on the company's bottom-line, as hiring and training new labor is expensive.

Chipotle also faces inflation over rising food prices and will likely be forced to raise its menu prices in the second half of the year to help offset the costs.

Tougher year-over-year comparisons for the rest of 2011 will make it difficult for Chipotle to keep up its level of earnings growth going forward.

The chain blew away analyst expectations with fourth quarter profits up 47% on improving same-store sales and consumer traffic coupled with new restaurant openings.

Chipotle had 1,084 restaurants the end of 2010, and expects to open another 135 to 145 this year, in addition to the ShopHouse launch.

Copyright © 2011 Dow Jones Newswires

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They need someplace for their illegal employees to work, now that Chipotle has been audited.