Chipotle's Journey: History and Challenges

Founding

• Year: 1993
• Founder: Steve Ells
• Background:
  • Graduated culinary school in 1990
  • Worked as a sous chef in San Francisco
  • Inspired by local mission-style burritos, known for their size and tin foil wrappers

Initial Launch

• Location: Denver
• Initial Investment: $75,000 loan from Ells' father
• First Chipotle Mexican Grill:
  • Ells calculated a need to sell 114 burritos a day to break even
  • By end of first month, sales exceeded 1,000 burritos a day

Expansion and Funding

• 1996:
  • Ells' parents raise $1.3 million, mostly from wealthy friends
• Need for Capital:
  • Chipotle requires more funds for quicker growth
• Partnership with McDonald's:
  • Late 90s, McDonald's seeks diversification
  • 1998: McDonald's invests $50 million in Chipotle
  • Over three years, McDonald's grows to own 90% of Chipotle, investing around $360 million

Growth and IPO

• 2005:
  • Chipotle has about 500 locations and is performing well
  • Conflicts with McDonald's:
    • Issues over menu, brand culture, supply chain, and franchising
• 2006:
  • Chipotle and McDonald's part ways
  • IPO:
    • Date: January 26, 2006
    • Initial price: $22
    • Price at end of first day: $44

Challenges Faced

• 2015 Issues:
  • E. coli, salmonella, and norovirus outbreaks in Chipotle restaurants affect customers across nine states
• Stock Performance:
  • Steady growth post-IPO until late 2015, followed by a significant decline due to bad publicity
• Response:
  • Steve Ells releases a statement apologizing and promising corrective actions
  • February 8, 2016: Nationwide store closure for a staff meeting on food safety and practices

Conclusion

• Chipotle remains a remarkable success story within the fast-food industry despite its challenges.
• The company's goal is to turn negative incidents into minor footnotes rather than defining moments.