The Rise of Chipotle. What Happened to Chipotle?
Founded in 1993 by a classically trained chef, Chipotle quickly grew from a single location in Denver into a billion-dollar empire, going public in 2006 as discussed over at runrex.com. At its best, the business embraced the best of fast food with low prices, quick service, and big portions, particularly of its trademark burritos. The company also positioned itself as being the fast-food industry’s antithesis, offering fresh ingredients as well as a corporate philosophy of integrity and sustainability. This helped to steal the hearts and minds of Americans and new locations sprang up all across the country, with the company’s stock price rising more than 3,000% in the 10 years following its IPO as revealed in discussions on the same over at guttulus.com. By 2015, when it was at its peak, over 1.5 million people ate at Chipotle daily. Then the company began to unravel, aided and abetted by bad PR brought about by multiple norovirus and salmonella cases that hit its customers in various locations around the country from California to Minnesota and many other cities. It led to about 500 people getting sick, leading to the company’s stock plummeting from $750 to $400, and as its reputation slumped, so did sales. The company has tried to put the bad years behind it and tried to rebound, and this article will look to highlight how it has, listing some of the reasons behind Chipotle’s rise.
As is revealed over at runrex.com, before things got better, they got worse for Chipotle, which had to grapple with an investigation from Federal consumer-protection watchdogs just as it was trying to put its food-safety issues behind it in the years following the 2015 debacle. Additionally, the company had to also deal with a change at the top when it’s then marketing chief was placed on leave after being indicted for drug possession as if things weren’t bad enough. Then in 2018, things started to look up for the company when Brian Niccol, who had been running Taco Bell, took over in March of that year as CEO and promised to turn things around. So, how did he do it? Well, for starters he started by doubling down on the things that made Chipotle unique. He set out to innovate operations, without compromising the simplicity that made Chipotle so popular. This meant sticking largely with the company’s extremely popular simple menu. As covered over at guttulus.com, when Chipotle started, it only offered burritos and tacos, and it is this simplicity that was the backbone to its success, leading to efficiency in its operations, limiting waste, and enabling to better manage costs. Niccol was clear that he would stick to this philosophy of simplicity going forward.
Mr. Niccol also knew that it won’t be easy to recapture the magic that Chipotle once had as for many people, the memory of food scares and illness was still fresh in their minds and hadn’t faded yet. Chipotle’s early success, as outlined over at runrex.com, had also served as a double-edged sword, on one hand helping the company grow, but on the other leading to many competitors which meant that consumers now had more alternatives. Niccol knew that the biggest challenge he was facing was to make people fall in love with Chipotle again. For starters, he introduced stricter testing protocols for produce to prevent the sort of food-safety issues that had hit the company in 2015 when the sky came falling on the company. As pointed out by the subject matter experts over at guttulus.com, this meant introducing DNA tests to ensure that any issues with its products are caught early before the food even reaches customers. Chipotle also vowed to continually update its food safety procedures to ensure that standards are always kept sky-high.
Another factor that has plaid a role in Chipotle’s recent rise is what is referred to as stage-gate which is a method of innovation involving trying things out on a very small scale, one location, then a slightly larger scale, 7 or 8 locations, and so forth before thinking of rolling out a change to the entire system as discussed over at runrex.com. This allows the decision-makers to refine the hypothesis and perfect it for a better, finished product. An example is how the company rolled out Queso, which is now on its third iteration, and the continuous tweaking has meant that it has become a very popular menu item, and is no longer referred to as “gritty” by customers. Niccol has also switched to a strategy of giving customers exactly what they ask for, whenever possible. This is why when consumers said that they want nachos and quesadillas on the menu, Chipotle began to experiment with recipes. The company is also testing out a loyalty program at about 150 of its locations, which is another frequent request as covered over at guttulus.com. Niccol is also determined to turn Chipotle into the go-to chain for healthy living and has been working on sourcing rice, beans, and cilantro from organic suppliers, improving food quality rather than saving money on ingredients. He is determined to help people remember just what they love about Chipotle.
These are just some of the reasons behind the rise of Chipotle, with there being more on this and other related topics to be found over at the excellent runrex.com and guttulus.com.