Chipotle was founded in 1993 by classically trained chef Steve Ells, with its first location in Denver, Colorado (Walker and Merkley 2017). Soon afterwards, Chipotle realized success as a fast-casual, Mexican cuisine-inspired restaurant. Ells quickly recognized the popularity of a well-made burrito, selling an estimated 1,000 burritos per day out of his first Denver store. This far exceeded the carefully calculated 107 burritos it was required to sell daily in order for the pioneer Chipotle to be profitable (Walker and Merkley 2017; Chakravarty 2020). Given the unexpected sales volumes and cash flow, Ells turned his eye towards expansion. He carefully directed Chipotle towards rapid and substantial growth, establishing five additional Denver stores in three short years, becoming a 14-store chain by 1998, five years after its conception (Walker and Merkley 2017). 

Just then, fast-food giant McDonald’s took a vested interest in the new up-and-comer. In 1998, McDonald’s held a minority stake in the 14-store ‘chain that could’, shunting $50 million towards growing and expanding the infantile Chipotle (Jones 2021). By the following year, McDonald’s held majority control of the Chipotle company (Walker and Merkley 2017). McDonald’s offered substantial industry influence, monetary and executive support, along with a wealth of fast-food and marketing knowledge, while benefiting from a percentage of Chipotle’s profits (Jones 2021). Without hesitation, Chipotle took advantage of the opportunity, scaled up faster than anticipated and expanded to 500 bricks-and-mortar stores throughout the US by 2005 (Walker and Merkley 2017; Plowman 2019). The following year saw Chipotle Mexican Grill declare its first initial public offering (IPO). Consequently, Chipotle was the best US-based IPO for a restaurant at the time (Chakravarty 2020).

Fast-forward to a short while later, in 2006, when McDonald’s sold back its shares to Chipotle to the value of $1.5 billion, and the fast-food giant waved goodbye to its not-sonewbie partner (Alhadlaq 2016; Jones 2021). Different speculations were floated as to the reason for this strategic decision and the consequences for each party. Steve Easterbrook, former McDonald’s CEO, although not involved in this move, shared in a 2015 shareholders’ meeting that ‘Chipotle … had taken attention away from the core brand’ (that being McDonald’s) (Jones 2021). Presumably, this contributed to McDonald’s decision to divest from its short-term partner so as to focus all its attention, market influence, strategic innovations and, in no small part, budget, on its own restaurant chain. Chipotle performed well following the split from its largest investor, having gained substantial momentum in the fast-food sphere, with a presence on the New York Stock Exchange, and its continued pursuit of expansion (Alhadlaq 2016). As of 2021, Chipotle had a presence across the United States, Canada and Europe, with a whopping total of 2,966 stores (Statista 2021; Chipotle 2022b)...... 

Questions 

1. Evaluate Chipotle’s pricing strategy and the factors that could influence this strategy. 

2. Discuss how Chipotle employs the additional Three-Ps of services marketing. 

3. Briefly discuss the factors that Chipotle should consider when reviewing its positioning within the market.