CASE ABSTRACT

Founded by Steve Ells in $1993,$ Chipotle Mexican Grill quickly

became one of the fastest growing restaurant chains in US

history. People loved Chipotle because of the tasty and healthy

food as well as its edgy, trendy, cool brand image. Chipotle

established itself as a successful company practicing $$conscious

capitalism$$ by serving $$food with integrity$$its supply chain

and corporate culture were closely integrated from the time that

ingredients were farmed, raised, harvested, and shipped to

stores to the time the final product was placed on a customer$$s

serving tray.

By $2014,$ the fast casual food market in the US became

increasingly competitive and crowded with many new entrants,

especially traditional fast food players who were attracted by

the double$-$digit revenue growth. Being a public listed company,

Chipotle had to meet Wall Street$$s high expectations for growth

and earnings. Living up to analysts$$ expectations was becoming

increasingly difficult for Chipotle.

From $1993$ to $2014,$ Chipotle grew to over $1600$ restaurants in the

United States and eleven internationally. The first restaurant

opened its doors in Denver in a renovated Dolly Madison ice

cream shop. In $1995,$ the company added a second and third shop

in Denver and eventually expanded to sixteen restaurants in

$1998.$

Through luck and hard work, Chipotle attracted the attention of

MacDonald$$s Corporation whose investment of $$350$ million plus

expertise in processes, systems and real estate allowed Chipotle

to grow to over $500$ restaurants by $2006.$ Chipotle filed its

initial public offering $($IPO$)$ that same year. In $2007,$

McDonald$$s divested itself of Chipotle, resulting in an

impressive return of $$1\mathrm{.}5$ billion on its original investment.

However, McDonald$$s then missed out on CMG$$s huge growth in

share price after the divestiture.$[1]$

Beginning in $2000,$ Steve Ells made a concerted effort to serve

consumers $$food with integrity$$ utilizing a sustainable and

responsible approach to ingredient sourcing, production, and

service. For example, CMG began serving naturally raised pork in

some of its stores, highlighting the company$$s commitment to

transparency. By $2010,$ all of the pork served in Chipotle

restaurants was naturally raised. In $2002,$ CMG began serving

naturally raised chicken. By $2014$ the company sourced $100$

percent of its chicken product from farms that met that

standard. And as of $2007,100$ percent of its beef was naturally

raised and $40$ percent of its black beans were organically grown.

In $2009,$ Steve Ells testified before Congress to try to

eliminate antibiotics completely from farming$\mathrm{.}1$

Chipotle$$s brand power, customer engagement, and loyalty became

evident in the year $2000$ when Chipotle began to serve naturally

raised pork in its burritos. The company was forced to raise the

price of its carnitas filling by one dollar but was rewarded for

its efforts rather than punished: sales rose rather than fell,

fueling Chipotle$$s faith that customers would buy responsibly

raised food and even pay a premium price for it$.[1]$

DISCUSSION QUESTIONS

$1.$ How was the $$fast food$$ segment different from $$fast

casual$$ and $$casual dining.$$

$2.$ What was Chipotle$$s business level strategy?

$3.$ What was Chipotle$$s higher purpose?