University of Northern Iowa

Meghan Thompson
Professor Brand
Advocacy Resource Assessment
COMM PR 3844/5844

Chipotle Mexican Grill is a billion dollar fast-casual Mexican grill that specializes in

tacos in burritos. The first store opened in Denver, Colorado in 1993. The fast-casual chain was
founded by Steve Ells who opened the store with a simple idea to have a fast-food experience

with high-quality raw ingredients. They pride themselves on their motto of food with

integrity. They wanted to show that they could serve good food without the fast-food aspect.

Ells took an $85,000 loan from his father in order to open the first store in Colorado. They

originally calculated that if he sold 107 burritos a day he would be profitable. Within a month

Chipotle took off and they were selling over 1,000 burritos a day. When the store was originally

opened Ells planned to use the profit that he made to open a fine-dining restaurant, but when they

began to see so much success they focused on open more Chipotles across the nation.

When Chipotle started they had nothing but success and the business took off with not

only its customers, but also with its investors. In an article done in February 2015 by Andrs

Cardenal, Rich Duprey and Bob Ciura they explain their viewpoints on Chipotle. Cardenal

talked of Chipotles success not only in finances, but that they changed the game of the fast food

industry and what it will be like in the future. Although have expanded only a small amount in

the international market, they continue to strive in the United States. He also talks of how he

thinks that Chipotle is competitive in the market because its hard to replicate what they do.

Rich Duprey goes more into the aspects of Chitoples cash flow. I think investors need to

manage their expectations for what Chipotle Mexican Grill can offer (Duprey). He describes

them as being a potent force when their revenues have jumped almost 27%. More fast-food

places are changing to this fast-casual type of atmosphere and even some high-end places feel

the need to change. When looking at Bob Ciuras opinion he feels that Chipotle is a fantastic

business with significant growth and success. One thing he states is that he thinks that Chipotle

essentially invented the fast-casual concept of people placing their own orders, receiving food

quickly and enjoying high-quality, fresh ingredients. While I absolutely believe Chipotle is a
great company, I also believe even great companies can amount to poor investments if an

investor pays too high a price (Ciura). Although he feels that they are very successful he also

thinks that they are a little over-hyped. Their sales, store count and margins continue to grow,

but with that rising food costs are likely to occur in order to keep the margins as wide as

possible.

Despite the fact that so many positive things could be said about this up and coming fast-

casual food chain, Chipotle Mexican Grill, they did take a hit in October 2015. Public health

officials in Washington and Oregon detected a possible food-borne illness outbreak and linked

that it was coming from different Chipotle Mexican Grill locations. Being that they pride their

company on having fresh ingredients it was rather ironic to discover this outbreak that drops

their stock market by 35% (Dalavagas). This E. coli outbreak was said to have infected a total of

60 people across 14 states (Stearns). The bacteria sent 21 people to the hospital who became

very sick, but they all recovered in time. The official conclusion of the outbreak was declared to

be unknown although the Center for Disease Control believes that it came from the produce.

While the CDC thinks that the outbreak may have come from the companies produce, the burrito

company itself thinks that the outbreak came from contaminated Australian beef and then spread

to other ingredients through the food being handled incorrectly. It wasnt until 2014 that

Chipotle began to try to import this grass-fed Australian beef in order to try something new.

Although it was discovered that some of the people who got the illness did not consume the beef,

they still believe that there could have been cross-contamination.

When the outbreak was first brought to the attention of the public Chipotle was very

forthcoming, concerned and apologetic. They accepted that this happened and were very

aggressive about figure out where this problem came from. The company began working
immediately to try to win back the publics trust. As of February 2016 Chipotle Mexican Grills

E. coli scare was said to be over and finalized. Although the CDC claimed the investigation was

over, Chipotles sales reflected that their customers were very hesitant. Chipotle took many

actions in trying to make the situation better including immediately closing all of their stores to

ensure that they all had a deep cleaning and developing new food safety procedures to show that

they were taking this just as serious as everyone else. When the scare was finalized Steve Ells

made a statement saying;

We are pleased to have this behind us and can place our full energies to implementing our

enhanced food safety plan that establish Chipotle as an industry leader in food safety. We are

extremely focused on executing this program, which designs layers of redundancy and enhanced

safety measures to reduce to food safety risk to a level as near to zero as is possible.

It definitely take courage for anyone to step forward when they known that they are in the wrong

and to admit something such as this. Chipotle took the right efforts in reassuring the public that

they were going to take all actions in making sure that this never

Although Chipotle did take this large hit from having not only one, but two E. coli

outbreaks they still had a lot of strengths that came from within their company. Chipotle grew

more rapidly then most businesss in history. The first store opened in 1993 and by 2006

Chipotle had almost 510 restaurants opened. Currently today the number of restaurants opened

has quadrupled and they are operating with great success. They have shown great success in

their annual revenue and significant gains in their yearly earnings. Even with the negative effect

of the E. coli outbreaks they still seemed to have decent growth rates. One great strength of

Chipotle is that all of the Chipotle restaurants are under the ownership of a company. This

means that none of the restaurants are a franchise and it shows that they have strong ownership.
Another strength that Chipotle shows is that they have good financial strength. As of January 1,

2016 Chipotle had an impressive amount of income of just over $1 billion. Even though this

awful event happened with the E.coli outbreak they are still sitting with enough money to be able

to pay off its creditors without hurting their business.

Quality of ingredients could be looked at as being a strength for Chipotle, but with the E.

coli outbreak it ironically turned to a weakness quite quickly. One of Chipotles core values that

they prided themselves on was the fact that they made all of their food with fresh and good

quality ingredients. With this outbreak most of their customers began to question if the company

really meant what they said and this can be looked at as a weakness. When operating such large

food chain like Chipotle, you have to have the trust between the company and the consumers that

their products are good quality and safe. Another weakness that can be determined when looking

at this food chain is that this food chain is quite dependent on the United States market.

Chipotle have many competitors when it comes to providing fast service, but they are

ahead of the game when it comes to the fast-casual experience. It is no secret that one of

Chipotles biggest competitors is Pancheros. There are many differences between the two

restaurants, but all in all they have just about the same concept when it comes to the food they

are providing for their customers. When reading a review done by Sydney Sek, a student at the

University of Iowa, she goes over the differences between the two and the pros and cons of each.

They both have their own original taste on their burritos. Pancheros is known for their fresh

pressed tortillas and queso and Chipotles with their super large burritos and fresh flavors. Some

of the things pointed out during the article about Chipotle was that although their burritos are

much larger than Pancheros, you sometimes dont get as even of a bite because everything isnt

mixed together like it is at Pancheros. When comparing the burritos side by side she found that
Chipotles burritos are much larger in girth then Pancheros which are more long and skinny. I

think at then end of the day its hard to say that one is better than the other because everyone is

going to have their own preference. In my opinion, I have tried both and I think that I look both

of them an equal amount and its nice to have a change between the two.

When looking at the current standings of Chipotle they definitely suffered with the strike of the

E. coli outbreak, but they are on the road to building their companies reputation back. Their

sales have finally started to get back on the right track and are increasing daily. With this growth

they plan to make 2017 their year with new changes that they hope will help their current

progress. The food chain has plans to develop a new marketing plan for 2017 which includes

possibly starting a kids TV series. With the new marketing plan they are planing to move away

from certain promotions that they have had in the past including promotions like buy one get one

vegan options or free burritos if you play a game (Wilson). Something else that the company

plans to do in order to appeal to customers is having an online tool in which customers are able

to get on and look at the calorie intake of the food they are getting from Chipotle and also

providing dietary facts. Lastly, the company has deciding to hopefully have desserts added to

their menu by spring of 2017. With doing all these things Chipotle is in the hopes that this will

increases their revenue, sales and loyalty with their customers and bring them positive results in

general.

Despite being put through these E-coli outbreaks, Chipotle Mexican Grills have bounced

back in the fast-casual business today and are striving. It takes a strong company to take hits like

this and to be able to learn from it and grow from it. After researching about Chipotle it is clear

that they have good morals and values when it comes to looking out for the needs of their

customers and the food that they are providing them with. When the business first started, Ells
would have never expected it to grow like it did. Chipotle is still a company today that has great

success and has done nothing but grow stronger and be very well known today.

Cardenal, Andrs, Rich Duprey, and Bob Ciura. "Chipotle Mexican Grill Stock: Overhyped or

Just Getting Started?" The Motley Fool. The Motley Fool, 01 Jan. 1970. Web. 07 Mar.

2017.

Daszkowski, Don. "How Did Chipotle Mexican Grill Get Started?" The Balance. N.p., n.d. Web.

02 Mar. 2017.

Free SWOT Analysis. N.p., n.d. Web. 09 Mar. 2017.

Kline, Daniel B. "Here's Everything Chipotle Has Done to Handle Its E. Coli Crisis; Is It Enough?" The

Motley Fool. The Motley Fool, 01 Jan. 1970. Web. 08 Mar. 2017.
Page, Vanessa. "Why Is Chipotle So Successful & Popular? (CMG, MCD)." Investopedia. N.p., 15

Apr. 2015. Web. 02 Mar. 2017.

Publishing, Value Line. "Value Line - The Most Trusted Name in Investment Research." Value

Line - The Most Trusted Name in Investment Research. N.p., 22 Feb. 2016. Web. 08

Mar. 2017.

Wilson, Rikkaya. "Chipotle Mexican Grill Looks to 2017 to Rebuild Reputation." CDA News.

CDA News, 16 Jan. 2017. Web. 09 Mar. 2017.