Chipotle University Ave: A History of the Original Fast-Casual Mexican Grill
The story of Chipotle Mexican Grill began with a simple idea: to offer fresh, high-quality food, prepared using gourmet cooking techniques, served quickly in a cool atmosphere. Steve Ells, the founder and CEO of Chipotle, wanted food that he himself would enjoy, believing that others would share his taste. This vision led to the opening of the first Chipotle in 1993, and the restaurant has largely stayed true to that original concept.
The Birth of Chipotle: Denver, 1993
In 1993, Steve Ells, a Culinary Institute of America graduate with experience at the renowned Stars restaurant in San Francisco, opened the first Chipotle Mexican Grill at 1644 East Evans Avenue in Denver, Colorado. The location, a former Dolly Madison ice cream shop, was strategically chosen near the University of Denver campus. Ells secured an $85,000 loan from his father to fund the venture. The name "Chipotle" was inspired by the smoked and dried jalapeño pepper, a key ingredient in the restaurant's marinades.
Ells's inspiration for Chipotle came from his frequent visits to taquerias in San Francisco's Mission District. He was impressed by the large burritos made to order with fresh ingredients. His idea was to elevate this traditional Mexican fare by using his culinary expertise to create gourmet fillings.
Early Days and Rapid Growth
The initial setup of the restaurant had some challenges. The kitchen was located in the back, making communication between customers and employees difficult. Ells quickly redesigned the layout to feature an open kitchen, allowing customers to interact with the staff and customize their orders. The simple menu offered burritos, tacos, and fajitas with a choice of fillings, including steak, chicken, pork carnitas, and vegetarian options. Customers could then add various toppings as they moved along the serving line.
The quality and freshness of the ingredients set Chipotle apart. The burritos, weighing over a pound, were filled with rice, beans, and a choice of fillings, all wrapped in 14-inch flour tortillas. Ells added gourmet touches to everything, such as cilantro and lime juice in the rice, serranos and marinated red onions in the guacamole, and romaine lettuce in the tacos.
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The first Chipotle quickly became a success. Within a month, Ells's father recouped his investment. Over the next few years, more locations opened in the Denver area, funded by additional investments. By 1996, there were eight Chipotle restaurants. Ells focused on locating restaurants in trendy neighborhoods before expanding into the suburbs. A central commissary was established to prepare some of the ingredients, improving efficiency.
Chipotle was recognized as a pioneer in the fast-casual sector, offering a slightly fancier experience than traditional fast-food restaurants but faster service than casual-dining chains. Each Chipotle generated over $1 million in annual sales, with a clientele primarily composed of adults between 18 and 49. The restaurants featured a hip, urban design with halogen lighting, metal tabletops, wooden benches, concrete floors, and arched metal ceilings. Design and construction costs averaged $249,000 per unit. Notably, Chipotle relied on word-of-mouth marketing rather than traditional advertising.
McDonald's Investment and Expansion
As Chipotle continued to grow, Ells sought additional funding to accelerate expansion. In 1998, McDonald's Corporation made its first investment in a restaurant chain it did not develop itself, acquiring a minority stake in Chipotle. This investment provided Chipotle with the financial backing to expand beyond Colorado.
Following the McDonald's investment, Chipotle opened units in Kansas City in 1998. In 1999, the chain entered several new markets, including Chicago, Cleveland, Minneapolis-St. Paul, Phoenix, Dallas, and Washington, D.C. The restaurant count more than doubled in 1999, reaching 37. McDonald's increased its stake in Chipotle to more than 50 percent in 1999 and eventually to 90 percent.
The relationship with McDonald's also provided Chipotle with access to better suppliers and distribution systems. For example, Chipotle was able to leverage McDonald's industry clout to secure a better supplier of avocados.
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Menu Innovation and Continued Growth
In 2001, Chipotle dropped the phrase "Mexican Grill" from its name, reasoning that it had become too commonly used in the industry. Around the same time, the company made its first significant menu changes since opening, switching to free-range pork for its carnitas. The supplier, Niman Ranch, raised its pigs naturally and without antibiotics, resulting in better-tasting pork. Although this change required raising the price of pork burritos, sales continued to rise.
Expansion accelerated in the early 2000s, with the store count reaching 100 by the end of 2000 and 175 at year-end 2001. New markets included Baltimore, Houston, Los Angeles, and San Francisco. By 2003, the store count reached 300.
Celebrating a Decade and Beyond
As Chipotle celebrated its tenth anniversary, it ranked as one of the fastest-growing restaurant chains in the country. The chain entered the Las Vegas, Atlanta, and New York markets in 2003. Same-unit sales were growing at an impressive rate of 20 percent per year.
Ells continued to upgrade food ingredients, switching to organic white corn and organic beans. By mid-2004, Chipotle was offering naturally raised, antibiotic-free chicken from Bell & Evans in select restaurants.
Starting in 2004, Chipotle increased its growth rate to 100 new units per year, aiming to reach 500 restaurants by the end of 2005. The chain expanded into the Pacific Northwest and Florida. Chipotle also hired its first outside advertising agency to enhance its marketing efforts.
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In response to the low-carb diet trend, Chipotle began offering its burritos and fajitas in a bowl, without the tortilla. By late 2004, with the store count nearing 400, Chipotle's growth showed no signs of slowing down.
Recent Developments and the Original Restaurant
In September 2017, Chipotle reopened the doors of its first-ever restaurant on Evans Avenue in Denver after a summer-long renovation. The renovation included expanding the cramped basement to create additional storage and food prep space, making the open kitchen more efficient.
The original Chipotle remains a popular destination for University of Denver students, local residents, and tourists. The restaurant retains much of its original appearance, with a limited seating area.
Challenges and Changes
Over the years, Chipotle has faced various challenges, including foodborne illness outbreaks. The company has also undergone changes in leadership, with Brian Niccol replacing Ells as CEO in 2018. In May 2018, Chipotle announced that it would relocate its headquarters from Denver to Newport Beach, California.
Despite these challenges, Chipotle continues to innovate and expand. The company has introduced Chipotlanes for mobile order pickup and plans to expand to 7,000 locations.
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