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Letter to the editor

Chipotle chalks up successby defying fast-food gospel

The chain has no franchises, no TV ads, no worries about the wait.

By Times wires
Published November 24, 2007

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."

Chipotle Mexican Grill 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.

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 in 1993 in an attempt to put a new twist on the taquerias he visited while working as a sous chef in San Francisco. Having trained at the Culinary Institute of America in Hyde Park, N.Y., Ells planned to use the eatery to make enough money to open a fine-dining restaurant.

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 now, and it plans to add at least 130 next year. By comparison, McDonald's has 32,000 outlets, and, in the Mexican arena, Yum! Brands Inc.'s Taco Bell has 5,600 U.S. locations.

[Last modified November 23, 2007, 22:34:14]