Chipotle Mexican Grill is a fast food restaurant that sells burritos and burrito bowls across the United States. The company started with a single location in Colorado and has expanded to more than 500 locations throughout the country. Chipotle's expansion was aided by using high-quality ingredients and receiving an investment by another popular fast food restaurant, McDonald's.
The First Chipotle
In July of 1993, the first Chipotle restaurant was opened by Steve Ells. Ells was 27 years old at the time and had graduated from the University of Colorado at Boulder five years earlier. Before opening the restaurant, he attended the Culinary Institute of America and spent two years working for Jeremiah Tower at Stars Restaurant in San Francisco.
Expansion
The single Chipotle restaurant remained in business until 1995. At that time, a second location was opened in February 1995. Steve Ells opened six more in 1996, concentrating his locations in the downtown area of Denver, before later expanding into the surrounding suburban areas.
Size of Chipotle Restaurants
Steve Ells' first restaurant was only 800 square feet. As he expanded the number of restaurants, he also made them larger. The average size of his expansion Chipotle locations was between 1,600 and 2,800 square feet. Even with the expansion in size, his average investment in equipment to get the restaurant running was only $249,000. Each location averaged a payroll of 17 employees.
McDonald's Invests
In February 1998, Chipotle had grown to a total of 14 locations in the Denver area. At this time, the company approached McDonald's about investing in Chipotle's expansion. McDonald's agreed and became a minority owner in 1998. Expansion became rapid for Chipotle after this investment. At the end of 1999, Chipotle had 37 restaurants with locations as far east as Washington, DC. Revenues increased to $31 million in 1999 compared with $13 million in 1997. McDonald's decided to increase its ownership to 50% of Chipotle by the end of that year and eventually owned 90% of Chipotle.
McDonald's No Longer An Investor
After the rapid success of Chipotle, one of their major investors removed its financing from the company. McDonald's sold all of its Chipotle stock that it owned in 2006 after the Chipotle franchise opened more than 500 locations. Chipotle continues to thrive without McDonald's investment because it has continued to open new locations across the country.
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