Chipotle Will Open Its First Asian Eateries. It Needs to Sell a Lot More Burritos Back Home, Too.

Investors remain cautious about the burrito chain’s sluggish U.S. sales. (David Paul Morris/Bloomberg)

Key Points

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• Chipotle will open its first Asian restaurants in South Korea and Singapore in 2026 through a joint venture with SPC Group.
• The expansion into Asia occurs as Chipotle grapples with decelerating growth in the U.S., as same-store sales have dipped 4%.
• Despite Wall Street’s bullish outlook, investors are awaiting tangible results amid a 35% year-to-date stock plunge.

Chipotle Mexican Grill continues its international expansion as it announced plans Wednesday afternoon to enter the Asian market for the first time. The move barely budged the stock, however, as investors remain cautious about the burrito chain’s sluggish U.S. sales.

Chipotle announced on Thursday that it signed a joint venture partnership with South Korean food company SPC Group to open its first restaurants in South Korea and Singapore in 2026.

Chipotle already has notable brand awareness among Asian consumers even though it doesn’t have any stores there yet, the company said. Many Korean consumers have developed a passion for the brand after trying its food while visiting the U.S., said the firm, citing a few public shoutouts from popular K-pop artists.

“Given the familiarity of this iconic brand among Koreans and Singaporeans, and their passion for exceptional culinary experiences, these two markets are ideal entry points for Chipotle in Asia,” said Heesoo Hur, executive vice president and owner of SPC Group.

Expanding into Asia presents an “incredible growth opportunity,” said Chipotle CEO Scott Boatwright in a statement, asserting that “real food prepared fast” is in high demand in these markets. “We see potential for strong adoption out of the gate,” he said.

The Asian expansion comes after the company announced in April that it will open restaurants in Mexico by 2026**.** It entered its first-ever international development agreement in 2023 to do business in the Middle East. It now has three restaurants in Kuwait and three in the United Arab Emirates.

Chipotle also runs about 100 restaurants in Canada, the United Kingdom, France, and Germany. Most of its more than 3,800 stores are located in the U.S.

Chipotle’s international ambition came as the fast-casual chain struggles with slowing growth in the domestic market. In the second quarter, same-store sales dropped 4% from the year prior, a significant pullback from the 7% to 8% growth over the past three years.

Management expects comparable sales to stay flat for the fiscal year. Investors are worried that the slowdown signals not only the challenging consumer environment, but also potential structural problems at Chipotle or waning brand appeal.

The stock has plunged 35% year to date.

Even if comparable sales stay flat, there is still room for growth. Chipotle is retrofitting hundreds of stores to improve efficiency and boost transaction volume. The company is testing chip fryers, jalapeño slicers, avocado prep machines, and an automated bowl-assembly line. Some stores have already installed new equipment.

The chain also plans to open 315 to 345 new restaurants in the U.S. and Canada this year and expand its North America footprint to 7,000 locations in the long term. International expansion, including entry to the Asian market, could give the company another catalyst for growth.

Wall Street largely remains bullish for now. The 39 analysts polled by FactSet have an average target price of $58, which is nearly 50% higher than the stock’s current level. Still, investors are waiting to see real results before giving the company more credit.

Chipotle stock barely moved on Thursday. Shares are now trading at 32 times projected earnings over the next 12 months, significantly down from the 50 times a year ago and at the lowest level in nearly 10 years.

Write to Evie Liu at evie.liu@barrons.com