Chipotle Mexican Grill is expanding internationally with a location in Mexico that is set to open early next year, it said on Monday, bringing its tacos and burritos to the region for the first time.
The company will enter the country through a partnership with Mexican restaurant operator Alsea and will begin exploring additional expansion markets in the region.
Following the news, shares in Chipotle were down more than 3%, while Alsea’s rose nearly 3%.
Analysts warned of the potential pitfalls of operating a U.S.-based Mexican chain in Mexico, with Antonio Hernandez at Actinver Research citing Taco Bell’s previous failed attempts to enter the market.
Locals’ “familiarity with its ingredients does not necessarily predict success,” he wrote in a note to clients.
Chipotle signed its first international development agreement with Kuwait-based Alshaya Group in July 2023 to enter the Middle East market. The duo currently operates three restaurants in Kuwait and two in the United Arab Emirates.
The move into Mexico comes after the burrito chain said in February it was assessing the impact of U.S. President Donald Trump’s tariffs on the region and raw material costs this year.
Chipotle, like other restaurants and fast-food chains that rely on supplies from Mexico, also forecast tepid annual comparable sales growth, bracing for a hit from inflation.
Alsea operates chains such as Domino’s Pizza, Burger King, and Starbucks in a dozen countries in Europe and Latin America.
The move benefits Alsea’s strategy of diversifying its portfolio, analysts at brokerage Monex said, adding they were awaiting more details such as pricing and location plans.
Chipotle currently operates more than 3,700 restaurants and plans to open between 315 and 345 new restaurants this year globally.
Source: Reuters
