Chipotle Does Away With Its Farmesa Fresh Eatery Concept
After testing a secondary concept known as Farmesa Fresh Eatery in 2023, Chipotle Mexican Grill has jumped ship, closing its location in Santa Monica, California. The restaurant chain partnered with the United Kitchen network of ghost kitchens, also referred to as dark kitchens, which thrived as delivery and take-out enterprises during the Covid-19 pandemic years. With United Kitchen announcing multiple location closures, including the Kitchen United MIX on Third Street Promenade in Santa Monica, Chipotle has decided not to continue the concept elsewhere.
The name Farmesa reflects a farm-to-table approach, joining the words "farm" and "mesa," which in Spanish refers to a table. The earthy connotation continued to the menu, created by James Beard Award-winning chef Nate Appleman. Offerings centered on customizable bowls containing with proteins, greens or grains, sides, sauces, and toppings, in the price range or roughly $12 to $17. When Chipotle joined Kitchen United MIX in Santa Barbara, it was the ghost-kitchen chain's 24th nationwide location. As a collective of several eateries under the same roof, with no in-house dining, ghost kitchens allowed restaurants to test new brands or menu ideas without major risk factors.
It wasn't Chipotle's first dive into secondary markets, having previously invested in wide-ranging brands such as Shophouse Southeast Asian Kitchen, Pizzeria Locale in Colorado, and the Tasty Made burger concept. Now that Kitchen United MIX has closed, Chipotle has no immediate intentions for the Farmesa brand, telling CNBC it will instead remain part of Chipotle's Innovation Lab for new recipe creation.
Chipotle foot traffic and earnings on solid ground despite Farmesa closure
Despite taking a hit on the Farmesa experiment, Chipotle announced better-than-expected financial results in its earnings report for the first quarter of 2024. Based on factors such as revenue, same-store sales growth, and quarterly earnings, the company exceeded industry analyst projections, fueled partly by a high traffic increase of 5.4%.
Compared to the prior 2023 first-quarter earnings, total revenues increased 14.1% in the same period of 2024, reaching $2.7 billion. Chipotle credits that to new restaurant openings and higher restaurant sales, including digital sales. California's increase in the state minimum wage for fast food workers was offset by an increase in sales prices of about 7% in the state. Chipotle opened 47 new restaurants in 2024's first quarter and expressed intentions to expand further with up to 315 new locations for the entire year. It also received board approval for a 50-for-1 stock split (dividing each stock into 50 smaller units, making them cheaper and potentially more attractive to investors), putting it on target for continued growth.
As for Chipotle's foray into ghost kitchens and other secondary concepts, the company now intends to stay focused on its primary brand domestically and internationally. United Kitchen sold its remaining inventory of venues and intellectual property to Sam Nazarian, founder of the sbe hospitality group, which will incorporate it into a culinary enterprise known as Everybody Eats.