Chipotle Mexican Grill said Wednesday it has applied for a trademark for "Better Burger" as part of a business diversification move to open a burger restaurant chain.
"We have two non-Chipotle growth seeds open now ― ShopHouse and Pizzeria Locale ― and have noted before that the Chipotle model could be applied to a wide variety of foods," said Chris Arnold, a Chipotle spokesman.
ShopHouse, a Southeast Asian food chain, opened in 2013. Last year, Chipotle began expanding Pizzeria Locale, which specializes in wood-fired pizza, beyond its initial locations in Denver and Boulder, Colo.
Shares of Chipotle fell 65 cents, or 0.14%, in after-hours trading to $465.50.
The expansion plans are drawn up as the burrito maker is struggling to recover from an E.coli outbreak and other health safety issues that slowed its business much of last year.
In February, Chipotle, based in Denver, reported its worst quarterly performance as a publicly traded company. Its fourth-quarter net income fell 44% year-over-year to $67.9 million. And same-store sales were down 14.6%.
Chipotle didn't elaborate on its plans. With Americans' everlasting love of burgers, the gourmet burger market has gotten crowded in recent years, with new competitors hoping to emulate the success of Five Guys Burgers and Fries and Shake Shack.
U.S. burger restaurants generated about $73 billion in sales in 2014, according to trade publication Burger Business, citing data from food industry research firm CHD Expert. Burger joints account for 7.4% of all U.S. restaurants nationally, it said.
Shake Shack, founded by restaurateur Danny Meyer, said earlier this month its fourth quarter sales rose 49.2% to $49.3 million. Same-restaurant sales, reported by the locations that have been open at least a year, climbed 11%.
By emphasizing its use of organic produce and naturally raised meat, Chipotle's popularity and sales have surged since its founding in 1993. But the company has been under investigation since October last year after an E. coli outbreak sickened more than 50 people in 11 states. A second outbreak of a different strain of E. coli in December affected five people in three states. Health officials also linked a Chipotle location in the Boston area in December to a norovirus outbreak in the region.
The outbreaks forced Chipotle to temporarily close multiple locations and implement new safety standards and food-handling procedures. The Centers for Disease Control and Prevention on Feb. 1 ended its investigation into the E. coli incidents at Chipotle, saying the outbreaks appear to be over.
