Chipotle's Founding and Growth

Background Information

• Founded in 1993 by Steve Ells
• Ells graduated from culinary school in 1990
• Worked as a sous chef in San Francisco, inspired by local mission-style burritos.

Establishment of Chipotle

• 1993: Ells borrows $75,000 from his father to open the first Chipotle Mexican Grill in Denver.
• Initial Goal: Sell 114 burritos a day to break even.
• Success: Sells over 1,000 burritos a day by the end of the first month.

Expansion and Investment

• 1996: Ells' parents raise about $1.3 million for expansion, mostly from wealthy friends.
• Need for Capital: Chipotle seeks more funds for rapid growth.
• McDonald's Involvement:
  • Late 90s: McDonald's looks to diversify.
  • 1998: Invests about $50 million in Chipotle.
  • Over three years, McDonald's becomes Chipotle's largest investor, owning 90% of the brand and investing around $360 million.

Public Offering and Growth

• 2005: Chipotle has about 500 locations and is flourishing.
• Conflicts: Issues arise with McDonald's over menu, brand, culture, supply chain, and franchising.
• 2006: Chipotle and McDonald's part ways.
• IPO:
  • January 26, 2006: Chipotle goes public with an IPO price of $22.
  • Ends the first day at $44, marking significant growth.

Challenges Faced

• 2015: Outbreaks of E. coli, salmonella, and norovirus linked to Chipotle restaurants affect customers in nine states.
• After the IPO, Chipotle initially sees steady stock growth, but it drops significantly due to negative publicity from the outbreaks.
• Apology and Response: Ells issues a statement promising to take aggressive steps to improve food safety.
• February 8, 2016: Chipotle closes all stores nationwide for a staff meeting focused on food safety and best practices.

Conclusion

• Chipotle is recognized as a major success in the fast food industry despite facing significant challenges.
• The company aims to turn the controversy into a minor historical note rather than a detrimental mark on its reputation.