ShopHouse: A Hot Concept, Literally

Bob Krummert

Customers who dine at Chipotle Mexican Grill’s fledgling ShopHouse Southeast Asian Kitchen concept in Washington, DC say a lot of the food is too spicy. Chipotle founder Steve Ells says he’s not going to tone those aggressive flavors down. Our visit to ShopHouse makes us think both parties are getting it right.

ShopHouse has been serving hungry throngs out of its Dupont Circle location in Washington since September. It’s still too early to hazard a guess about how the concept will play out. No one knows whether ShopHouse might be scalable to the point where it would have a meaningful financial on impact on Chipotle’s overall revenue.

But that hasn’t stopped Yelpers, food bloggers and other opinion-sharers across the Internet from weighing in anyway. To synopsize their remarks, the food tastes good, but there’s often too much heat for American palates.

Chipotle boss Steve Ells isn’t listening to his customers on this one. He thinks spicy is the way to go. He addressed that point at the start of Chiptole’s 3rd quarter conference call with security analysts.
Here’s part of what Ells had to say:

“The restaurant has been open for about a month, and I'm very encouraged by the quality and taste of the ShopHouse Kitchen’s food, service and the overall customer experience. And the customers, so far, just love it. Some customers have commented that it's a bit too spicy, which is exactly what I heard when I opened the very first Chipotle 18 years ago. What I love is that these customers tell me that it might be too spicy, while they devour every bite of their meal.”

True enough. That’s what took place among diners at our table, widely experienced palates all. Several commented that their food had too much heat; all cleaned their plates. Our takeaway was that the problem might arise from the way the food is served.

“The ShopHouse menu includes a bowl of rice or noodles, a choice of meat or tofu, an array of vegetables, curries, sauces and various garnishes,” Ells said. “Additionally, we offer a delicious Banh Mi sandwich with freshly baked bread with your choice of meat or tofu. All of this is served in the Chipotle format, where food is cooked to the line and customized to each individual customer.”

Most customers we saw went for the bowl, where every ingredient is piled on top of hot rice (three options available: white, jasmine or brown) or cold rice noodles. It could be that diners have trouble figuring out which elements of their meal are supplying heat and which ones aren’t.

Our conclusion: ShopHouse, like Chipotle, takes a little getting used to. After all, the customer makes most of the decisions about what goes into his or her dish. When a meal is too spicy, it’s the customer’s own fault that it is. Expect people to figure it out over time.

The larger question about ShopHouse is “could it be scalable?” With lines out the door at its current location, it’s hard to get a true read on how well this concept would do elsewhere. All we’re learning for sure is that ShopHouse can handle crowds when it attracts them. If Chipotle decides to pass on this creation, let’s hope someone else jumps on the idea.

Ells played it coy with analysts when asked about the concept’s future.
“I'm convinced that Chipotle’s success is not necessarily because we serve tacos and burritos, but rather because of our commitment to making great tasting food with sustainably raised ingredients, using classical cooking techniques and in an open kitchen, and served in an interactive, customizable and very efficient way,” he said. “ShopHouse provides an opportunity for us to test this idea and see how our model works with another cuisine. We have no specific plans for additional ShopHouse restaurants at this time. We'll continue to perfect this restaurant, develop a strong team and assess its unit economics.”

We’re guessing unit economics are going to be favorable. ShopHouse price points are reasonable; a bowl with everything and a drink still gets you change from a $10 bill. But there seemed to be less meat than a Chipotle serving, and there’s no cheese or dairy. Our guess is that the food cost is going to be really good. Labor could come in high—a small army is staffing the first location—and the rent is likely stiff in DC.

We can’t say that ShopHouse as it is currently constituted is going to be the next big growth vehicle in fast casual. But while the future is murky, the present is crystal clear. If you want to see a brand-new concept that’s raking in money as fast as it can push customers through, ShopHouse is for you.