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Despite the more than 1,450 Chipotle locations around the world, you've never franchised the concept. What's the reasoning behind that decision?

I think restaurants franchise for one of two reasons: one, they need capital to grow, or two, they need operators to run restaurants. We have a very strong economic model, and more than enough capital to fund our growth (which we have funded entirely through income from operations since going public), so we don't need that, and we are able to attract remarkable top performers to run our restaurants. Since we don't really need the things people look to franchisees to provide, I'd rather not give up the control, or the long-term return on investment, by franchising.

While most people would agree that Chipotle rules the world of burritos, you still have plenty of competition. How do you manage to stay relevant and at the top of your game?

All of our restaurants operate in competitive areas, and the nature of competition goes well beyond other burrito places. I'd suggest that we compete with a wide variety of restaurants — pretty much any place you'd spend about the same amount of money to get something to eat. But we don't really focus on that. If we run our restaurants the way we're capable of, we think we can do well anywhere that we're operating.

What would the world be like without Chipotle?

When I opened the first Chipotle, I had the novel idea of showing that food that was fast didn't have to be a typical fast-food experience — and over the years, we've certainly accomplished that goal. We're changing the way people think about and eat fast food, and we're reinventing a category that was really becoming characterized by cheap, heavily processed ingredients and a really unimpressive experience. We've turned that around and are serving great food, made with sustainably raised ingredients and prepared using classic cooking techniques, all in a way that's available and affordable for everyone. I'm not sure that would have happened without Chipotle. It might have, but nobody else is doing these things on the scale that we are.

When are you bringing ShopHouse, your Southeast Asian fast-food concept, to Denver?

We just opened our second ShopHouse in Los Angeles, and we're incredibly proud of the great dining experience that restaurant provides. The crew is terrific, and they're cooking delicious food and showcasing a whole new kind of cuisine to our customers. We think that ShopHouse continues to prove that Chipotle's success isn't just limited to burritos and tacos, but that it also emphasizes our focus on using excellent raw ingredients and cooking them using classic techniques in an open and transparent service format that allows people to customize their dietary and taste preferences. ShopHouse is a beautiful extension of our mission to change the way people think about and eat fast food, but we aren't getting into detailed expansion plans at this time. That said, we're excited about the prospect, as we think the people in Denver would understand and appreciate ShopHouse just like they do Chipotle.

Speaking of that concept, you were recently sued by British chef Kyle Connaughton, whom you hired — and then fired after he alleged that you ripped off the "intellectual property" of New York chef David Chang, who rose to fame with Momofuku, a concept similar to ShopHouse. Can you comment on his allegations?

It's very unfortunate that Kyle has decided to make these claims against us, as there is no truth to them at all. Kyle is apparently frustrated that we chose not to work with him, and unfortunately, the courts in this country are too often used as an outlet for that kind of frustration. I'm not going to get into all of the details of the case, but I will point out that David Chang has made no such claim himself. We have a lot of respect for what David is doing for food culture, and we hope he feels the same way about us. In the end, we are very confident that the courts will discover the truth about this — specifically, that Kyle's claims are entirely unfounded.

You were also in some hot water a few years ago for employing illegal workers. Clearly, you have thousands upon thousands of employees, so how do you ensure that you're only hiring people allowed to work in the United States?

We're proud to be a company that always tries to do the right thing — and our immigration compliance is no exception. In fact, we've really gone far beyond mere legal compliance with immigration laws, by going above and beyond what it takes to make sure we're diligent in employing only those people who are lawfully entitled to work in this country. In spite of that, we have found ourselves the subject of investigation by the government, and we've fully cooperated with these investigations and are confident that the investigators will eventually come to understand that we are — and always have been — a good corporate citizen. We try to hire only top performers, and our goal is to empower them to be our future leaders. Almost all of our general managers are promoted from internal crew positions, so it clearly doesn't serve us to hire people who aren't entitled to work legally in this country.

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10 comments
saltwater
saltwater

I liked Chipotle for a long time. It was reasonably priced, fresh and tasty. But when they crossed a certain price point it wasn't worth it anymore especially considering the many real Mex joints there are in the region I live (SoCal).

mcjesus
mcjesus

I can't believe it's been 20 years since I laid eyes on my first JUMBO BURRITO at Twist & Shout on South Pearl Street. I remember the open foil and porno-sized burrito with a couple of bites out of it, I blurted "WHAT IS THAT?" Went down the street to Evans and got my own.

Chipotle is still my favorite of the Big Burritos.

caseyryank9
caseyryank9

'All of Chipotle's locally grown produce comes from within 350 miles of the restaurants where it's served.'

While I commend Ells for his commitment to locally sourced produce, a 350 mile range is far, very far, from being truly considered 'locally grown'. 

ctoddelvis
ctoddelvis

What I love most about Chipotle is that the meat is from humanely raised animals.  It is the only place I will eat pork.  Factory farms are hell on earth for animals and I refuse to support them.  I think Chipotle should stress more often their choice of meat suppliers and why (I've seen it written on their paper cups and heard about it on Oprah's show).  Everything I've ever eaten at Chipotle is tops in flavor and freshness, and I believe a reverence for the life of the animals we eat plays a big part in this.   

AndyPudding
AndyPudding

I am proud of the success of home-grown Chipotle, and my wife, three kids and I eat there at least twice a month. And I believe Steve is a visionary. But he's a boring interview. 

I understand that "sustainable ingredients" is a Chipotle corporate key message, but using it in nearly every answer makes it just sound tired, and saps its meaning. I wish he had an interesting anecdote or two to share, specifically when Lori asked about the best customer feedback he's received, or what his worst trait is, or something he would have done differently. 

Although he was surprisingly open about the lawsuit and immigration questions.

jackg1
jackg1

Steve actually had a wonderfully creative(and trusting) contractor who found a way to get his first restaurant open on his $40,000 construction budget, coming up with quite a few of the solutions still carried out today: the corrugated metal, bare light bulb fixtures, plumbing pipes for counter legs, etc. It was exciting working with Steve and I was proud to be involved in the beginning of what turned out to be a  wonderful adventure for him. Still waiting for that bonus.

davebarnes
davebarnes topcommenter

"When are you bringing ShopHouse, your Southeast Asian fast-food concept, to Denver?"

He did not answer the question and you let him get away with that.

mcjesus
mcjesus

@caseyryank9 Considering how much corporate produce is brought in from Chile, 350-miles is getting closer to ideal.

LoriMidsonCafeSociety
LoriMidsonCafeSociety moderator editor

@davebarnesHe answered it when he said: "We aren't getting into detailed expansion plans at this time. That said, we're excited about the prospect, as we think the people in Denver would understand and appreciate ShopHouse just like they do Chipotle." 

davebarnes
davebarnes topcommenter

You asked "When?" and he said "aren't getting into".

I would have asked "when" over and over again until he caved. But, I am tenacious.

 
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