Chipotle Spin-off ShopHouse Looks Like A Winner

By Jonathan Wee

shophouse southeast asian kitchen

ShopHouse is a Southeast Asian restaurant concept developed by Chipotle Mexican Grill (CMG). It adapts the foundation of Chipotle’s business to an Asian cuisine. The principles are the same: source responsibly raised ingredients, cook food in front of the customer in an interactive format and offer a unique dining experience.

This concept began with the first restaurant in Washington DC in 2011. Now ShopHouse is taking off, resulting in an expansion to a second store in D.C. and two more stores in Los Angeles.

A few days ago, Chipotle announced four more leases for additional locations. Two of the locations are planned for Maryland, one in DC, and one in Westwood, California. All these stores are expected to be opened by late 2014.

Let’s compare this rate of growth with Chipotle’s original stores. The first Chipotle opened in 1993 with the second and third locations appearing in 1995. By 1996, there were eight stores. It wasn’t until 1999 that Chipotle opened outside of Colorado.

This was also the beginning of Chipotle’s decade-long evolution to offer all natural ingredients including meats, zero trans-fat frying oil, organic beans, and rBGH-free cheese.

It took Chipotle three years to expand to eight locations and another three years to begin opening outside its home state. I believe ShopHouse is on track for follow the same growth trajectory as Chipotle, even as the parent company reiterates that its plans for the concept are not accelerating and will focus its growth on its core business.

If ShopHouse continues to grow at this rate, by 2017 it will begin expanding outside of Maryland, the District of Columbia, and California, followed by a decade of operational and cultural refinement.

Steve Ells, the founder, chairman and co-CEO even hinted at the parallels between the two restaurants himself: “The response we have seen to ShopHouse reminds me very much of what I saw when I opened the first Chipotle.”

The ability for a restaurant chain to maintain its core business while cultivating a child-chain of stores at the same historical rate as the original restaurant gives me confidence that ShopHouse might be just as successful - and a driver for ongoing growth for Chipotle.

Happy 20th anniversary, Chipotle.

Image: ShopHouse

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Jonathan Wee

Jonathan Wee

I’m a growth investor with a long-term view on macroeconomic trends. As a systems engineer, I use processes and tools

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