This past week, the WSJ used our visitation data to examine Chipotle’s small market strategy. This is a topic we’ve touched on in the past, looking at visitation data in smaller markets to support Chipotle’s claims that it can ultimately expand to 7,000 locations in the U.S. (a target that was raised on the company’s Q4 2022 update because of the success of stores in smaller markets). As we’ve done in the past, we’ve compared visit per location trends for Chipotle in the Top 25 most populous markets during 2022 to non-Top 25 markets (below). Like our initial analysis, we found that Chipotle’s visits per location in non-Top 25 markets exceeded Top 25 markets by almost 19% last year.
For the article, we expanded our analysis to look at the ripple effect across other restaurants when Chipotle enters a market. We analyzed recent Chipotle openings in five smaller markets–San Angelo, TX (opened December 2022); El Centro, CA (March 2023); Pasadena, MD (April 2023); Riverside, OH (May 2023); and Covington, LA (May 2023)--compared the top 5 restaurants that the visitors of the new Chipotle locations also visited over the last twelve months. We also looked at the year-over-year foot traffic impact on the most-visited competing quick-service and full-service restaurant chain. For the two locations recently opened in May (Riverside and Covington), the data is still a bit early to make definitive conclusions (although it did look like there may be some early signs of impact). However, for the locations that have been open longer, it does appear that the existing restaurants see a decline in visits when the new Chipotle opens up.
Interestingly, the visitors to the new Chipotle locations tend to frequent full-service restaurants more than QSR locations (which aligns with Chipotle management's statement about catering to a more affluent audience), but the new Chipotle had a greater impact on visits to QSR chains (meaning that visitors likely swapped out QSR visits when Chipotle arrived in the market). Below, we've presented average year-over-year visit trends for the most-frequently visited QSR location in the smaller market where Chipotle opened over the past year and then the year-over-year visit trends during the next two months. There certainly could be other variables impacting visitation trends in these markets, but it does seem that Chipotle creates a meaningful ripple effect when entering a new smaller market.