Chipotle is partnering with Alsea, which operates Latin American and European locations of Starbucks, Domino’s Pizza and Burger King, among other chains.
The Newport Beach, Calif., company said it would open a location in Mexico by early next year and explore additional expansion markets in the region.
"We are confident that our responsibly sourced, classically cooked real food will resonate with guests in Mexico," Nate Lawton, Chipotle's chief business development officer, said in a statement.
"The country's familiarity with our ingredients and affinity for fresh food make it an attractive growth market for our company," he said.
Of course, Chipotle's timing may not be so good, given President Donald Trump's tariff plans, which would slap levies on a veritable laundry list of countries, including Mexico.
Earlier this month, Trump announced a 90-day pause on the tariffs.
Chipotle Mexican Grill says it would open a location in Mexico early next year. Photo: Luke Sharrett/Bloomberg via Getty ImagesBloomberg/Getty Images
Chipotle faces potential avocado, tomato tariffs
Avocados from Mexico were originally subject to a 25% tariff until Trump paused new duties on goods compliant with the United States-Mexico-Canada Agreement.
Chipotle has diversified its avocado sourcing in recent years, but the company still imports about half its avocados from Mexico.
Avocados are a staple ingredient in Mexican cooking, particularly in dishes like guacamole, and are used in a variety of other ways, including as a topping for salads and tacos.
In addition, the U.S. Commerce Department recently said it planned to withdraw from a 2019 agreement that suspended an investigation into whether Mexico was selling fresh tomatoes into the U.S. below its cost.
The termination is set to take effect July 14, meaning most tomatoes from Mexico will be subject to a 20.91% tariff.
Yum's Taco Bell tried to crack Mexico market
Chipotle will following in the unsuccessful footsteps of Taco Bell, which tried to crack the Mexican market on two separate occasions.
In 1992, the Yum! Brands (YUM) subsidiary launched a food cart in the country's capital, Mexico City, but it never caught on, according to Chowhound.
Taco Bell tried again in 2007, in Monterrey, a city close to the Mexican-American border, and tried to position itself as an American food brand with some Mexican-inspired items. But the location was open for only three years and closed in 2010.
The announcement was greeted with a healthy serving of snark on social media.
"This is akin to opening a Panda Express in Beijing," one person said on X.
But one person thought the restaurant chain's plan was a good idea.
"Chipotle's expansion into Mexico is a smart move, given the country's growing appetite for fast-casual dining and its proximity to the US market," the commenter said.
Analysts: Chipotle positioned for growth
Chipotle is scheduled to report earnings on April 23. The chain's shares are down 23% since January and off 19% from a year ago.
Analysts expect Chipotle to report profit of 28 cents a share, up 1 cent from the year-earlier period, while revenue is forecast to increase 8.7% to $2.94 billion.
Investment firms have been issuing research reports on Chipotle.
Bank of America lowered its price target on Chipotle to $64 from $71 and affirmed a buy rating on the shares.
"Our $64 price objective is based on earnings power," the investment firm said. "At the current unit growth rate, we think Chipotle should be able to reach its targeted 8,000-store count in roughly seven years."
At the end of 2024 Chipotle operated more than 3,700 restaurants.
B of A is fine-tuning its estimates for more than 20 companies across its restaurant coverage. And it's adjusting price targets to reflect estimate and market-multiple changes as part of its calendar-Q1 preview for the group.
On April 16, Raymond James lowered its price target on Chipotle to $60 from $66 and maintained an outperform rating on the shares as part of its Q1 preview for the restaurant group, according to The Fly.
The investment firm maintains a "selective stance" toward restaurant stocks heading into Q1 earnings. It expects "choppy" Q1 results from the group.
Raymond James said the sector results would reflect wider gaps between stocks that rise and those that fall; tariff updates reflecting a relatively low direct-cost and margin impact for U.S. domestic restaurants, and caution from most management teams regarding the U.S. macroeconomic outlook and international trends.
UBS analyst Dennis Geiger lowered the investment firm's price target on Chipotle to $65 from $70 and reiterated a buy rating.
Despite expected sales pressure year-to-date and a difficult setup into the Q1 earnings, Chipotle should see continued traffic and sales momentum longer term, with sales and margins positioned more favorably in the second half, the analyst said.
The company remains positioned for positive transaction growth longer-term and continuing opportunities to expand margins and speed up development of new stores, Geiger said.
