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Tyler Wallace
Mr. OGrady
Economics
11 May 2016
Chipotle Mexican Grill
Chipotle Mexican Grill is an American chain restaurant with locations in the United
States, Canada, Germany, and France. This restaurant was started in 1993 by Steve Ells (CEO)
with its headquarters in Denver, Colorado. Founder, Steve Ells was born on September 12, 1966
and is 49 years old. He was born in Indianapolis, Indiana, and graduated from The Culinary
Institute of America. Ells had originally dreamed of opening a fine dining restaurant and his
purpose for Chipotle was to make enough money in order to open up his dream restaurant.
When he received an $85,000 loan from his father, he was not expecting the company to be as
successful as it became. Within one month of being open, the first chipotle store was making
more than 1,000 burritos a day and Ells decided to open up a second store. In 1995, Ells used
the profits he made from the first chipotle to open up his second and as equally successful
Chipotle. About 12 months later, in 1996, Ells received a SBA loan and his father invested
about $1.5 million to open a third store. It was around this time when Ells decided that he would
continue to open Chipotles and being a chain restaurant, instead of going back to square one in
trying to open a fine dining restaurant because of how successful his businesses were. Also,

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Steve wasnt the only one noticing how successful his once temporary business was, and by
1998 McDonalds invested $360 million into Chipotle. As a result, Chipotle expanded rapidly.
Three years later (2001), McDonalds became Chipotles greatest investor. By 2006, Ells felt it
would be appropriate to make Chipotle public and the stock rose 100% within the first day.
Along with that, McDonalds invested more than $1 billion that year.
Although Chipotle is a very successful company, it has had many setbacks too. In late
2015 into early 2016, about 500 people in the United States were infected with e coli from eating
at chipotle. Roughly 2,000 locations were forced to close until they got to the route of their e
coli problem. Within this short amount of time, Chipotle lost about 36.4% of their sales in
January and about 26.1% of their sales in February 2015. By March the trend continued and
sales were still down a whopping 27.3%. Because of this, Chipotle has lost a good $8 billion in
stock, about $53 million in sales and the trust of its once loyal customers. CEO Steve Ells,
along with the board of Chipotle trusties took responsibility for their actions and made a public
apology to everyone affected by the e coli outbreak and to those who were even hospitalized
because of e coli.
Compared to last year, stock is already down 20% and investors were not satisfied when
they learned that sales only grew 2.6% (the smallest increase since 2013) especially because last
year, same store growth grew almost 20% in sales. To ensure this doesnt happen again,
Chipotle has taken drastic measures and spent a couple million dollars on educating their
workers about food borne illness and the importance of preventing cross contamination and also

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how to safely store food . Chipotles competitors are receiving more business because
Chipotles customers are finding new places to eat. Specifically Taco Bell, whose same-store
growth has increased about 4%, and Moes Southwest Grill, whose same-store growth rose
about 5.8%. But, Qdoba, another Mexican chain restaurant (most similar to Chipotle), has had
an increase of 6.6% in sales. Analysts are predicting that there wont be much growth this fiscal
quarter, but is confident that Chipotle will be able to regain the trust from its customers and will
also be able to refocus on making up from the lost deficits during their troubling time.
The recovery process will not be easy for Chipotle, but its possible. As of right now,
Chipotle is trying its hardest to get back its most loyal customers. In the eyes of the consumers,
Chipotles reputation has taken a turn for the worst not because they closed once, but twice for
the same problems. In order to win back its customers, Chipotle has started a new campaign
whose message states that the Chipotle you know and love is back and safer than ever

(Fortune). CEO Steve Ells says that he is positive that this will not happen again and that they
are going to do and spend whatever takes to make sure everyone is in safe hands. Along with
that, Chipotle gave out coupons for free burritos or burrito bowls hoping that customers would
return to purchase its merchandise, but in the end they lost more money than they had wished to
gain, which lead to a three step plan. First, knowing that they were in the hot seat, Chipotle took
this time to focus on the good aspects of its company and culture. Secondly, unbeknownst to the
customers, Chipotle now provides fully paid sick days to their employees and an additional five
days off because they do not want anyone to contaminate the food. And last, as a thank you to

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their customers, Chipotle offered a free item to any participant who texted rain check. By
combining all three tactics, its safe to say that Chipotle is taking all the necessary steps to
success and gaining both only and new customers.
Should you invest? Yes. Although Chipotle went through a rough patch, investors and
brokers still agree that Chipotle stock will soon be well on its way to benefit those who invest in
it. Also, The Street agrees that odds are good that the worst of the news that can surface about
this company is already out. In other words, its only going to get better from here. Another
reason you should invest is because right now, their stock levels are the most oversold since late
2012. With that being said, the oversold stocks rally went from about $230.00 to almost $760.00

(a 325% increase) and is expected to rise from $35.00 to $435.00 (a 1,200% increase) within the
42 months. But, if youve already invested in Chipotles stock, you shouldnt sell yourself
short. Meaning that if youve been affected by the recent e coli happenings, your best bet is to
buy actions by trailing buy shops that are at the $429.00 level. In doing this, it will protect you
from losing too much profit and your short position will still continue to make money. If youre
already flat, these levels can secure or increase the long exposure so you can receive the
beneficial relief, of a stretch toward $600.00, which is expected to start this upcoming fiscal
quarter. The point is, this is not the time to try to sell your shares of Chipotle, but buying shares
would be very smart and beneficial.
Overall, the once temporary, Chipotle Mexican Grill, would make a great company to
invest it. Its focus is on valuing its loyal customers and to make everyone who walks through

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their doors a fan. Chipotle knows last year was the first time it had been hit with an actual
economic problem, but that did not stop them from trying. When they were at rock bottom, they
pulled together and regained strength to ensure that they will never hit another bump in the road.
Stock prices were down for a while, but are now on the rise again and are supposed to be higher
than theyve been in years past. Chipotle Mexican Grill would make an awesome investment for
first time buyers or those who are already familiar with the stock market!

Works Cited

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Barnett, Tyler. "Chipotle Knows What It's Doing By Closing Its Stores." Fortune Chipotle Knows
What Its Doing By Closing Its Stores Comments. N.p., 09 Feb. 2016. Web. 10 May 2016.
The Company's E. Coli Scare Hospitalized 22 People. "Chipotle Earnings Tank after E. Coli
Scare."CNNMoney. Cable News Network, n.d. Web. 10 May 2016.
"Free Burritos at Chipotle Didn't Help as Much as Expected." TheStreet. N.p., 16 Mar. 2016. Web. 10
May 2016.
Goldburg, Ken. "Why You Should Buy Chipotle Mexican Grill Stock Now." TheStreet. N.p., 08 Jan.
2016. Web. 11 May 2016.
Person, and Ria Misra. "Here's How Many People Stopped Eating at Chipotle During Their E. Coli
Outbreak." Gizmodo. N.p., 03 Feb. 2016. Web. 10 May 2016.