Chipotle Mexican Grill, Inc

Company Information

• Date Founded: 1993
• Industry: restaurant; fast-casual food
• Corporate Headquarters: Denver, Colorado
• Type: Public

Overview

Chipotle Mexican Grill, Inc. is an American fast-casual restaurant chain best known for selling custom-made burritos. Fast-casual restaurants are a mix of fast-food and sit-down restaurants. They allow customers to order food quickly and offer a sit-down atmosphere but without table service. Fast-casual restaurants usually offer better quality and sometimes healthier alternatives to fast-food restaurants. They also tend to focus on a particular type of food and offer limited choices. Other fast-casual restaurants include Panera Bread, Five Guys, Shake Shack, and Sweetgreen.

Chipotle Mexican Grill, Inc., called Chipotle for short, specializes in a simple menu that consists of burritos, tacos, burrito bowls, and salads. Some restaurants sell beer and margaritas. The concept began with foil-rolled burritos and expanded into a few other simply made menu items. Chipotle focuses on naturally sourced, "real" ingredients.

In 2023, Chipotle had more than 3,200 locations throughout the United States and in international locations including France, Germany, and the UK. It held the distinction of being the only company of its size to own and operate all of its restaurants.

History

Steve Ells, the founder of Chipotle, graduated from the Culinary Institute of America in Hyde Park, New York, in 1990. He then moved to San Francisco, California, where he worked as a line cook and sous chef for Jeremiah Tower at the restaurant Stars. The restaurant focused on fresh ingredients and had an open kitchen, which allowed guests to view the chefs as they worked. Ells noted these for an idea he was developing.

Ells was known for his background in fine dining. He threw elaborate dinner parties and focused on items such as braised meats, duck confit, and roasts. He had never really cooked much Mexican food. Ells began eating the huge burritos served at several of the taquerías throughout San Francisco. He liked that he could customize them to his own tastes, and he liked the way they were wrapped in foil instead of put on a plate and doused with sauces and cheese. Ells then had an idea for a new restaurant concept.

Ells had to convince his father of the idea. He wanted to open a restaurant that served made-to-order burritos. Customers got to choose the ingredients they wanted, and workers rolled them into a burrito and wrapped them in foil. Ells kept the concept simple. He wrote up a business plan that included the number of burritos he needed to sell per day to break even (107 to 114 burritos a day) and the cost of rent, electricity, utilities, and loan repayment terms.

Ells's father agreed and gave him an $85,000 loan. He needed a name for his venture and decided on Chipotle, the word for a smoked, dried jalapeño chili pepper. He opened the first Chipotle Mexican Grill, Inc. in 1993 in Denver, Colorado, near the University of Denver. He had planned to operate the venture until he paid back his father and garnered enough funds to open a fine-dining restaurant. The restaurant did not do well at first, and Ells worried that he had made a mistake. He did not have a menu on the wall, which confused customers. Eventually, the concept of designing your own burrito caught on. By the end of the first month in business, his restaurant was selling more than a thousand burritos a day. He abandoned his plans for the fine-dining restaurant and instead chose to focus on Chipotle and expand his brand.

In 1998, Chipotle had sixteen restaurants. That same year, McDonald's invested in Chipotle, which allowed the brand to quickly grow. Within three years, the fast-food giant was Chipotle's largest investor. Chipotle grew to more than five hundred restaurants by 2005. The following year, McDonald's decided to divest itself from Chipotle. Chipotle had become a huge brand by this time and decided to purchase back the franchises that it had sold. It did not want to worry about franchises and wanted its restaurants 100 percent owned by the company. Chipotle became a publicly traded company in 2007.

In the years that followed, the brand continued to focus on the freshness of its food. Chipotle began working with ethical small farms and locally sourced its food. The restaurant had high food costs, but it was determined not to compromise its quality for quantity. It adopted the slogan "food with integrity."

Chipotle continued to be successful into the 2010s, but it faced some challenges. In late 2015, a series of E. coli outbreaks were traced to several Chipotle restaurants, including eleven stores in Washington and Oregon. About three dozen people were sickened, some severely. Chipotle quickly responded to the incident and implemented new rules to ensure that the restaurants were safe. It deep cleaned the restaurants blamed for the E. coli outbreak, threw away all of their ingredients, and altered food preparation and food safety procedures. The company worked closely with health inspectors and investigators to supply all data related to the outbreak.

Despite all the safety measures and marketing campaigns to lure in customers, Chipotle saw its profits fall in the mid-2010s. It also faced other issues. In 2016, it was blamed for misleading customers about the healthiness of its food when it printed the wrong calorie count for a chorizo burrito on its menus. The brand continued to work on ways to attract customers, improve profits, and regain its former success. One way of accomplishing this was to hire a new CEO, Brian Niccol, in 2018, who quickly proved successful at turning the business around. He implemented many improvements, including expanding the menu and its rewards program. During his tenure at Chipotle, the chain's stock rose an impressive 800 percent. In 2024, he stepped down from his role to take on the position of CEO at Starbucks, another chain that was struggling financially.

Impact

Chipotle was one of the first fast-casual restaurants to allow customers to customize their food. Customers walk through a line of fresh ingredients and prepared foods and choose what they want in their burritos or other menu items. They can ask for extra salsa, extra rice, or less cheese, and employees accommodate most requests within reason. However, customers might be charged more for certain extra ingredients. The efficiency of the line at Chipotle helps to move customers through quickly.

Despite its setbacks, Chipotle is known for its successful food preparation model. The company helped to inspire other restaurants to use the same model. Many restaurants copied its policy of using fresh and natural ingredients.

Bibliography

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Valinsky, Jordan. "Starbucks' CEO Is Out. Chipotle's Brian Niccol Is Taking Over." CNN Business, 13 Aug. 2024, www.cnn.com/2024/08/13/business/starbucks-ceo-brian-niccol/index.html. Accessed 16 Aug. 2024.