It is safe to say that Chipotle founder Steve Ells has rewritten the rules of fast food. It turns out that you really can serve sustainably sourced ingredients en masse.Since 2006, Chipotle’s revenues have tripled to $2.2 billion. Today, there are more than 1,200 restaurants in the U.S., U.K., and Canada, with plans to open 165 additional outposts this year.
But long before there were billions in sales, or even organic beans, there was a guy from Boulder banking on the success of a small burrito shop.
Ells was an unlikely candidate to start a fast food empire. He was trained in classical French cooking at the Culinary Institute of America, and he had aspirations of opening his own fine dining establishment.
Post-culinary school, Ells moved to San Francisco to work under the tutelage of celebrity chef Jeremiah Tower. While living in the city, Ells was inspired by watching an assembly line of workers at a local taqueria, efficiently feeding hungry masses of patrons.
Ells thought that this model could prove to be very profitable, and opening a fast food Mexican restaurant could be the 'cash cow' he needed to fund his fancy establishment. He was confident that adding fresh ingredients would heighten its appeal, according to [email protected].
Ells took the entrepreneurial leap in 1992. He quit his job, went back to his home state of Colorado and searched for the funds to start his company.
He pitched his idea to everyone he knew, yet no one thought it was a viable plan. After unsuccessfully soliciting dozens of people, one real estate broker got behind him, according to Rocky Mountain News.
With an $85,000 loan from his father and the realtor's help, Ells found and renovated an old ice cream parlor near the University of Denver.
Only July 13, 1993, the first Chipotle was born, and was instantly a hit. Within six months, sales reached $3,000 a day and the restaurant's second Denver outpost opened in 1995, according to Rocky Mountain News.
Once the word on Chipotle got out (thanks to some rave restaurant reviews), people would flock from all over Colorado for the fresh burrito and taco experience. Lines snaked out the door and down the block, according to CNNMoney.
Chipotle went through a period of rapid expansion, but it still remained exclusively in Colorado. But once McDonald's got involved, it quickly became a national brand.
By 1998, Chipotle had 14 stores up and running and knew that there was serious potential for further growth. With that in mind, the company brought McDonald's on board.
Mickey D's became a minority owner in the growing brand and fuelled by their funds, Chipotle opened stores outside of Colorado, grew exponentially and became a national brand.
By 2001, McDonald's had a majority stake in Chipotle.
Ells was appalled by these 'confined animal feeding operations' that at the time, produced 99 per cent of pork eaten in the U.S. The founder knew that he did not want his success to be rooted in this inhumane practice, and decided he would enact a company policy ensuring all pork would be humanely raised.
The following year, Chipotle's menu featured naturally-raised pork. Today, all Chipotle pork comes from pigs that live on pastures and are never given antibiotics or feed containing animal by-products.
As Chipotle continued to grow, it maintained its mission of providing a simple menu with the freshest available ingredients.
The quality of the Chipotle burrito continued to rise as the company became even more committed to sustainable practices.
In 2002, Chipotle started serving naturally raised chicken, and continued their search to find a large enough supply of naturally raised beef to meet their demand. Today, 100 per cent of the chicken and beef served is naturally raised.
Chipotle went public on the New York Stock Exchange in 2006, and the stock went wild. Shares immediately doubled, prompting its ascent into the restaurant stock stratosphere.
As traditional fast food continued to take hits from the media, Chipotle became the leader in an emerging market: the 'fast casual' restaurant. The niche is fast food's more refined cousin delivering local, raw ingredients at recession-friendly prices (Panera Bread and Five Guys also fit into this category).
That same year, McDonald's and Chipotle parted ways as part of McDonald's strategy to focus on its own brand. According to Ells, the two companies 'just didn't see eye to eye.'
However, the Golden Arches had left an indelible impact on Chipotle, having poured $360 million into it during critical years of the burrito business' development, and setting it up for skyrocketing success.
There are many rules at Chipotle. There are only four items featured on the menu, and there is no coffee or dessert served. With one exception, breakfast is not offered. Ells believes these guidelines help Chipotle hone in on what it knows best, burritos and tacos, without distraction.
And by eschewing the franchise model, the company could easily streamline operations and stay in control of all of its locations.
Looking back at the early days of Chipotle, CMO Mark Crumpacker admitted that they overestimated how much people actually cared about animals and the environment. He had to shift its marketing.
'It turned out to essentially not be true,' Crumpacker said at a conference earlier this year. 'Only 20 to 30 per cent of those people actually care about that stuff.'
So, Chipotle had to revamp its marketing focus. Instead of only touting all the great stuff it's doing, it had to raise awareness for environmental issues and get people to care about making a difference.
The ad features an animated farmer and his wife, whose farm transforms into a factory farm before his eyes. At the end, the farmer decides to return his plot back to its original state, with space for his antibiotic-free animals to roam.
Ells is already delving into his next culinary venture: ShopHouse Southeast Asian Kitchen. Launched in 2011, ShopHouse is a Chipotle spinoff with Asian flair. Same menu simplicity, same minimalist decor.
With only one location in D.C's trendy DuPont Circle neighbourhood, ShopHouse is still testing the waters. Yet, if its older brother Chipotle is any measure of success, you might expect a ShopHouse in your neighbourhood in the not-so-distant future.
One columnist even compared the Chipotle burrito to the iPhone. Is Chipotle really the fast food chain all others will model themselves after?
Slate's Matthew Yglesias compared Chipotle's burrito to Apple's iPhone; though Steve Jobs didn't invent the cell phone, he substantially raised the quality of the existing model with the iPhone, and happily noted that consumers were willing to pay for a superior product. Same goes for Chipotle's burrito.
What do you think?
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