Chipotle's Secret Ingredient: Green Papaya Slaw
I finally made it out to Chipotle Mexican Grill's (NYS: CMG) new Asian concept last week.
ShopHouse Southeast Asian Kitchen opened two weeks ago in Washington D.C.'s Dupont Circle. As the first concept that Chipotle has opened outside of its burrito-rolling chain, all eyes are on the company's attempt to turn its proven assembly line model into a sister franchise packing a more exotic punch.
I was there Wednesday, six days after its official opening.
I was a bit surprised to see how empty the place was at 11:50 a.m. There were maybe a dozen diners eating, and I was able to walk right up to the counter. Then again, this is also a location that lives and dies by the lunch rush. By the time I left some 20 minutes later, the queue was out the door.
The early reviews have been mixed. Purists argue that it's not authentic. Mainstream eaters contest that it's too exotic. There's a sweet spot in the middle that loves the unique combination of flavors, because it's not every day that one can have grilled steak on brown rice, topped by charred eggplant with Thai basil, coconut milk-based curry sauce, green papaya slaw, and crushed peanuts.
When it was first revealed that Chipotle would be opening an Asian quick-service concept, the easy road would have been to copy Panda Express or P.F. Chang's (NAS: PFCB) Pei Wei. Nobody figured that Chipotle was rolling the dice, willing to offer organic tofu spiced up with cumin, Thai chili, and turmeric on a bed of chilled rice noodles.
The end result here is that ShopHouse will have a radical following -- perhaps even more supportive than Chipotle regulars -- but it will be a thinner audience.
Chipotle doesn't necessarily need a needle-moving sister concept right away. Revenue surged 22% in its latest quarter, with nearly half of that gain coming from a 10% spike in same-unit sales. Margins had a rare slip, but that's an operational oversight. It's clear that the burrito haven still has legs from a consumer-facing popularity standpoint.
Chipotle learned well from its former parent McDonald's (NYS: MCD) , as the burger-flipping giant has come through with 100 consecutive months of year-over-year growth in global comps. Now it will be interesting to see how much of that magic rubs off on ShopHouse.
I recommended shares of Chipotle to Rule Breakers newsletter service subscribers at $60.60 four years ago. It's a five-bagger now, even though the S&P 500 has shed 20% of its value in that time. Kicking the tires of ShopHouse didn't temper my enthusiasm for the shares, though my taste buds are still tingling from the experience.
Chipotle is in no hurry to expand its Bangkok baby. This is strictly a test location, and no expansion plans have been made public yet. However, if the long lines that I witnessed on the way out Wednesday continue beyond the first few weeks of novel curiosity, it won't be long before you begin pondering if you should top your pork and chicken meatball bowl with a tamarind vinaigrette dressing or a spicy red curry sauce.
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At the time this article was published The Motley Fool owns shares of Chipotle Mexican Grill. Motley Fool newsletter services have recommended buying shares of McDonald's and Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.