Food

Chipotle at 20: Burrito Boom Expands to Asian Fare


Chipotle at 20: Burrito Boom Expands to Asian Fare

Photograph by RGA/REA/Redux

On Saturday, assembler of oversized burritos Chipotle (CMG) will celebrate its 20th anniversary. Having led the establishment of 1,445 Mexican grill restaurants in the U.S., founder and co-Chief Executive Officer Steve Ells now credits the chain less for commodifying a Mexican-American staple than for pioneering a “new fast food system”—dishes prepared with better ingredients in front of the customer. As more people embrace it, he said at a recent conference, “traditional fast food becomes irrelevant.”

In fact, Chipotle’s executives are so keen on the “system” that, amid the chain’s two-decade birthday, they’re diverting attention to a younger sibling: the new Asian fast-casual brand, ShopHouse Southeast Asian Kitchen. “When I think about ShopHouse, in so many ways it’s exactly the same as Chipotle,” Ells said at the event. “It’s about showing that maybe Chipotle wasn’t successful because of burritos and tacos, but because of this new fast food system that we’ve invented.”

Whether it’s the system or burrito fatigue, the popular Mexican brand’s growth shows signs of slowing after 20 years—in the first quarter, same store sales went up only 1 percent, compared to 12.7 percent in the first quarter of 2012. According to spokesman Chris Arnold, the company’s next step will be developing Chipotle overseas and adding new ShopHouse locations. There are now five Chipotle Mexican Grills in Canada, six in London (which have gotten off to a slow start), and one in Paris. ShopHouse has just one location in Washington, which opened in 2011, and the company plans to open an additional outlet there and two in Los Angeles.

To celebrate Chipotle’s 20th birthday, here’s a look back at the chain’s development over the years:

1993

Ells opened the first Chipotle restaurant near the University of Denver on July 13. The pared-down menu offered large burritos, tacos, chips, and guacamole. (Sorry, the burrito bowl won’t arrive for a further 10 years.) The restaurant needed to sell 107 burritos daily to be profitable, but within a month it was selling more than 1,000 burritos a day, according to About.com. The assembly-line set up that today’s consumers know wouldn’t come about until a second restaurant opened in 1995.

Chipotle's first outletPhotograph courtesy of Chipotle Mexican GrillChipotle's first outlet

1996

Chipotle grew into a local chain of six restaurants “serving gigantic burritos stuffed with fresh ingredients,” as Colorado Business Magazine described it. “Sales have increased by huge multiples since we started in 1993,” Ells told the magazine. “Our per-unit stores do better than the average McDonald’s kind of store.”

Chipotle Mexican Grill Founder Steve Ells pictured in the early 1990'sPhotograph courtesy of Chipotle Mexican GrillChipotle Mexican Grill Founder Steve Ells pictured in the early 1990's

McDonald’s (MCD) took note. After a Chipotle board member sent a business plan to McDonald’s headquarters, the burger chain—which had been dealing with sluggish earnings growth—agreed to buy a minority stake in World Foods, which operated Chipotle, in February 1998. The chain had 14 restaurants in the Denver area with plans to expand in Kansas City, Mo. Each restaurant made from $1 million to $1.3 million in annual sales, reported Nation’s Restaurant News. An expert with fast food consultancy Technomic told the Denver Post that while the market for McDonald’s was relatively saturated, Chipotle “would give them a non-competing component that has good unit economics and that might make some sense.” McDonald’s eventually became a majority investor.

2000

An aggressive expansion phase began for Chipotle. McDonald’s bought the bankrupt Boston Market and converted some of those stores into Chipotle restaurants. By 2004, the pace increased to 104 new Chipotle stores just in that year. Amid the expansion, the chain developed Ells’s “Food With Integrity” program, which focused on using better-quality, sustainable ingredients.

2003

The chain added the burrito bowl—which would become its best-selling product. Salads would come in 2005. The company underwent its initial public offering in 2006. McDonald’s fully divested from Chipotle that year after expanding the chain to more than 500 restaurants in the U.S.

2008

The now-public chain was able to continue expanding rapidly reaching 837 stores, including its first international outlet in Toronto. By the end of March 2013, the company had 1,458 restaurants.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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Companies Mentioned

  • CMG
    (Chipotle Mexican Grill Inc)
    • $519.61 USD
    • -32.79
    • -6.31%
  • MCD
    (McDonald's Corp)
    • $100.25 USD
    • -0.58
    • -0.58%
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