Chipotle Middle East locations coming next year via Alshaya Group deal

Chipotle It announced on Tuesday that it has signed an agreement with its first franchise partner, the Kuwait-based Alshaya Group, to open stores in the Middle East next year.

Chipotle currently has more than 50 locations in Canada and Europe. All stores are company owned and operated, as are approximately 3,200 stores in the United States. The Alshaya agreement marks the first time Chipotle has partnered with a local franchise retail operator as it expands into a new market.

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Chipotle Chief Executive Brian Niccol told CNBC in an interview that initial plans call for two locations each in Dubai and Kuwait, though exact locations have yet to be determined.

Alshaya Group collaborates with other major brands including Starbucks, shake house and texas road houseNiccol said it was the perfect candidate for the deal given its proven market experience and commitment to Chipotle’s “Integrity Food” proposition.

Keeping ingredients fresh and authentic, and making local menu adjustments based on the American experience will be key, he added.

“They have a great brand, a great operation, a great talent program, which gives us confidence that they can effectively execute on Chipotle’s proposition in the Middle East,” Nicol said.

Assessing the Middle East market, Nicol said it was important to collaborate to ensure success in everything from real estate to recruitment to supply chain.

If the first few locations in the Middle East are successful, Nicole said hundreds more could be opened in the region. He added that the agreement could serve as a new model for the company to pursue in other markets.

“When we look around the world, we’re going to evaluate all the elements that make Chipotle great, and if we think there’s an area where we need a partner, then we’re going to look for a partner,” Nicole said.

While the brand has recruited franchise partners on this particular expansion journey, don’t expect franchise opportunities to emerge in the US. Nicole said there was currently “no intention” to go down that route.

“Our return on invested capital in the U.S. is industry-leading,” he said. “We have the balance sheet and capital available to leverage our capital capacity for growth, and I think we’ve proven our ability to run restaurants effectively.”

Chipotle stock is set to rise more than 50% through 2023, making it one of the best-performing stocks in the restaurant industry.