| BUSINESSWEEK ONLINE : FEBRUARY 22, 1999 ISSUE | ||||||||
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| THE CORPORATION
Mickey D Wakes Up and Smells the Cilantro You can find Steve Ells, a graduate of the Culinary Institute of America, zipping around Denver in a black BMW 540i. He likes to talk about cilantro, and he describes standard fast food as a warm piece of meat stuck inside a once-frozen bun. But when he names names, he's careful to talk only about Burger King Corp. (DEO) and Wendy's International Inc. (WEN) That's the first clue that Ells, 33, doesn't specialize in haute cuisine. In fact, he is the founder and CEO of the only restaurant company in which McDonald's Corp. (MCD) has ever invested. Named Chipotle Mexican Grill, it is a tiny but rapidly growing chain, which charges $5 apiece for enormous meat-, rice-, and bean-filled burritos that are made to order in not much more than a minute. The food is spicy and fresh, every restaurant is designed differently, and there is no kids' menu. ''This is not the typical fast-food experience,'' says Ells. ''This is something grown-up.'' That is exactly what McDonald's executives like about the place. For the past decade, they have awkwardly tried to boost the Golden Arches' appeal to adults--from the failed test of a Boston Market-like store to the disastrous Arch Deluxe ad campaign that depicted grimacing children. Early last year, McDonald's decided to look elsewhere for help and settled on taking a minority stake in Chipotle. The investment is a tacit admission that in today's crowded restaurant field, even the biggest player may not be able to appeal to everybody. McDonald's says that within a year, it will likely determine whether to offer Chipotle franchises to existing McDonald's store owners. In the meantime, McDonald's hopes to glean some insights about how to appeal to adults in its own stores, says Pat J. Flynn, a McDonald's USA executive vice-president for strategic planning. CROWDED FIELD. Chipotle runs 18 restaurants: 2 in Kansas City and 16 in the Denver area, where Ells launched the chain in 1993. Today, the outlets, with lines snaking out the door at lunch, bring in yearly sales of just above $1 million each--about 20% less than an average McDonald's. By yearend, Chipotle could be in a half-dozen more cities. It will face some tough competition. The restaurant industry has overbuilt in recent years, and a number of other ''fresh Mex'' chains, such as La Salsa, are expanding, too. But compared with the Arches' massive global operation, the bet on Chipotle is a small one. And both McDonald's and Ells are hoping it turns out better than their last linkup, when the teenage Ells quit his job serving Big Macs after less than two months. ''There was nothing fun about it,'' he says. Must have been the lack of cilantro. By David Leonhardt in Denver _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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