Look at enough billboards for Chipotle Mexican Grill Inc., and you’ll detect an omission: They never show a bare burrito.
Instead, Chipotle displays its signature item enclosed in foil.
“You can never make the perfect burrito for someone,” explains William Espey, the company’s creative-services manager. “If you keep it wrapped, it’s their perfect burrito.”
Denver-based Chipotle has arguably become the country’s most successful fast-food chain in recent years by rejecting almost every major technique on which the industry was built. Not only does it not show the product, it doesn’t advertise on television.
It doesn’t franchise. It has some of the highest ingredient costs in the industry. And its executives aren’t especially concerned that customers wait as long as 10 minutes in lines that routinely stretch out the door.
Nonetheless, Chipotle’s shares have more than doubled in the past year, making it the best-performing publicly held U.S. restaurant chain. And while traditional fast-food chains are posting same-store-sales growth in the low single digits, Chipotle has increased its same-store sales at a double-digit rate each year for almost a decade.
But Chipotle founder Steve Ells has a more ambitious goal as well. Ells, the company’s chairman and chief executive, hopes that, like Chipotle, other fast-food chains will pressure suppliers to raise animals more naturally and humanely and produce ingredients in a way that is more environmentally sustainable — an approach he calls “food with integrity.”
Ells opened the first Chipotle near the University of Denver in 1993, in an attempt to put a new twist on the taquerias he visited while working as a sous chef in San Francisco. To set Chipotle apart, he modified the burritos to include more upscale ingredients, such as rice with freshly chopped cilantro and steak marinated for 12 hours.
He set workers up in an assembly line so that customers can see the burritos being put together and order their own combinations. He gave the restaurants minimalist interiors with blond-wood tables and corrugated metal artwork.
In 1998, when Chipotle had 14 locations, Ells sold part of the company to McDonald’s Corp. It was an unlikely move given the disparaging things Ells says about mainstream fast food. (“Traditional fast food has become little more than fuel,” he says.) But McDonald’s had capital that would help Chipotle grow and agreed to give Ells autonomy. It invested about $360 million in Chipotle altogether.
Last year, Ells took Chipotle public, and McDonald’s shed its interest.Chipotle has about 670 locations and plans to add at least 130 next year. By comparison, McDonald’s has 32,000 outlets and Taco Bell has 5,600 U.S. locations.
