A Chipotle Off the Old Block
Can a burrito change lives?
Yes, if you're talking about the rice-and-bean monstrosities from Chipotle Mexican Grill.
Just ask Todd Galloway, Ryan Kohland and Andrew Kohari, college buddies who recently launched chipotlelovers.com, a website devoted to the fast-casual chain that has turned a smoked, dried jalapeño into a bona fide cultural phenomenon.
"I would say that we're a cult," Galloway explains. "But in the most positive sense."
The trio's first place of worship was the Chipotle outpost in Dayton, Ohio, which had opened across the street from Kohland and Kohari's apartment.
"We could see it from our window," Kohland says. "It was like it was always calling to us."
But their time of plenty was not to last. After the friends graduated from the University of Dayton in 2002, they all moved east, where they were devastated to discover that there were no Potles -- that's slang for Chipotle -- located in their new towns of Norwalk, Connecticut, and Boston. Faced with such deprivation, the three soon found their desire for foil-wrapped burritos bordering on obsession.
"We found that we were talking about Chipotle all the time, more than was natural," Kohari says.
"We started wondering if there were people that were as obsessed as we were," Galloway adds. "We felt like there must be a larger community out there."
After a year and a half of compulsive cravings, they went live with the chipotlelovers.com website in early January, calling it an "online community for lovers of the finest burritos in the world." In the first six months, more than 400 fellow fans registered as members, hungrily digesting all things Chipotle, from the chain's history and factoids to pictures, new locations and even a dictionary of terms:
Chomp v. - To eat a burrito, as in Are you ready to chomp?
The Baby n. - Slang for a full-sized barbacoa burrito. Name derives from the burrito's large size and its resemblance to a second-trimester fetus, as in Does anyone wanna get a baby for lunch?
Fake Potle n. - A competing burrito establishment with quality far less than Chipotle, as in I had fake Potle. It was foul.
Chipotlelovers.com also has online polls, which ask visitors to answer such questions as, "What's the longest you've ever traveled solely for a Chipotle burrito?" The longest the site's founding fathers have ever driven for some Potle is two hours, but Kohland and Kohari regularly make the 100-mile round trip into Manhattan to visit the closest Chipotle to Norwalk.
There is also the "Guac the Vote 2004" poll, which allows the website's more than 500 weekly visitors to vote on the next Chipotle market. The trio plans to tabulate the poll results in November and send them to Chipotle, but right now Raytown, Missouri, a Kansas City suburb of about 30,000 people, is in the lead with more than 40 percent of the votes; Philadelphia trails at just over 20 percent.
"I would go there everyday because all the other Chipotles are 20 min. away!!!!!!!!!!!!!!!!!!!! PLEASE RAYTOWN VOTE!!!!!!!!!!!!!!!! It will change our lives," writes one chipotlelover.
"I am a transplanted Texan who is used to at least 2 burritos a week," writes another, voting for Boston. "I could quite possibly die soon without one."
Beware the roasted chile-corn salsa: The cult of Chipotle is taking over the world.
1965-1988: The Beginning
Steve Ells is the man behind the big-ass burritos. The person responsible for sending relatively sane people off the deep end for his spicy barbacoa, zesty chiles and oversized tortillas. The man Chipotle lovers hero-worship.
But this local boy is no cult of personality. He's modest and self-deprecating. "There is no big story here," he says. "We got into the business of making burritos and tacos. People seemed to like it, so we built more restaurants. It's a pretty basic operation."
Ells is an unlikely candidate for creating the Next Big Thing in Mexican food -- well, in burritos, anyway. He didn't grow up in Texas or New Mexico or even California. He doesn't come from chef lineage. He didn't even study business in college. No, Ells is a 38-year-old white-bread boy from Colorado, born and raised in Boulder, a graduate of both Boulder High School and the University of Colorado at Boulder.
"Certainly, in college, I had no idea what I wanted to do," says the extremely private Ells. "I studied art history and had a great time, but I didn't have any sort of career aspirations."
So after graduation, he decided to stick with the long-held tradition of floundering undergraduates everywhere: stay in school. There would be no master's degree in thirteenth-century painting techniques, however. Instead, he headed to the Culinary Institute of America in Hyde Park, New York. "I was always interested in cooking; it was always a hobby of mine," he remembers. "When I was a little kid, I used to watch cooking shows instead of cartoons. Julia Child was probably the biggest influence."
Ells was notorious for his cooking in college, where he often used his friends as lab rats for his culinary experiments.
"One time he made this chile that was so hot it made my forehead sweat," says Joe Stupp, who met Ellis in a high school German class and went to work for Chipotle six months after the first store opened. "He's always enjoyed his food, for sure, and had a talent for it. But I never thought that he was going to go into the food business. He did it for fun."
Early 1990s: Flour Power
After graduating from culinary school in 1990, Ells headed to the left coast to be the line chef under Jeremiah Tower at San Francisco's renowned Stars Restaurant.
"I went to Stars thinking, 'I'm an aspiring chef, and this is a great place to continue my education,'" Ells says. "And it was. It was a really exciting place to be. I think that is where I really learned how to cook and really learned how to taste."
But his future didn't lie at Stars or other fine-dining establishments. It would come from the food he bought in the Mission taquerías and off the streets near his house in the Upper Haight. "There were a bunch of taquerías in the Mission where I used to eat; there was even a really good one in the back of a convenience store by the airport. They were all over the place," Ells says. "And they all used a giant flour tortilla, wrapped everything up on the inside and then wrapped it up in foil. That was the inspiration -- the inspiration was the packaging."
As he stirred and chopped through his days, Ells's mind kept wandering to the possibilities. "We were cooking great food at Stars," he says. "But all I was thinking was how cool would it be to have these really great quality raw ingredients with my own twist -- use some authentic ingredients like chipotle peppers and things like that, but then put a twist on it with things like cilantro-lime rice, really lighten it up."
So he packed his bags and moved to the Mile High City.
July 1992: Coming Home
When Ells got back, he hit up his father, Bob Ells, for $80,000 to launch his burrito stand.
"It was a little bit of a shock to him," Ells remembers. "He did not think it was the greatest idea; he didn't understand it. I think he said something along the lines of, 'I don't understand why after going to one of the best cooking schools in the country and working at one of the top restaurants, now you want to go sling burritos?'
"And I said, 'Well, it's not really like that. It's actually elevating the fast-food experience.' I argued that just because it's fast doesn't mean that it has to be fast food. I wanted to redefine that whole thing."
Bob decided to humor his son, and the former pharmaceutical executive became Chipotle's first -- and, at that time, only -- investor.
"My father is very supportive of anything that his kids want to do. We've tried a lot different stuff," says Ells, who is the oldest of four children. "This wasn't a huge investment, so I don't think he saw it as a huge risk."
July 1993: 1644 East Evans Avenue
Ells took his dad's money and went shopping for a location, finally settling on the former Dolly Madison ice cream shop just a few blocks from the University of Denver campus. It was a space that Starbucks had passed on, not thinking the neighborhood was ready for five-dollar coffee.
"I was so terrified that the business would not do well and that there would be no way that I would be in a position to pay my dad back this $80,000," Ells says. "At Stars, as a line cook, I think that I was making $10 or $12 an hour. So $80,000, to have to pay that back was incomprehensible."
Ells decided to keep things simple by creating a menu with only two basic choices: burritos or tacos filled with rice and beans. Customers could then customize with their choice of pork, shredded beef, chicken, steak or sauteed veggies, with four salsas, cheese and guacamole.
He also kept the architecture simple, designing an industrial-chic decor with friend and artist Bruce Gueswel.
"If you look at our food, it's made up of high-quality yet pretty simple ingredients: beans, rice, tomatoes, corn. It's the use of great cooking techniques and things like fresh herbs and seasoning with citrus that can elevate it to something more extraordinary," Ells says. "I think you can say the same of the building materials. They are simple -- plywood, steel pipe, exposed conduit and ductwork -- but we've brought architectural value to those things through the creative use of those materials."
With the menu ready and the store built out, the first Chipotle opened on July 13, 1993, at 6 p.m.
"I think that first day, we did $400," Ells says. "The next day might have been a little bit more than that. But I think it was on a run rate to do over $1 million by the end of the first year, out of only 850 square feet."
Apparently the neighborhood was ready; Starbucks eventually opened a location just a few blocks away.
1995: A Star Is Born
Ells quickly discovered that he wasn't satisfied with just one twenty-seat restaurant, so in early 1995 he opened a second location, at Colorado Boulevard and Eighth Avenue. This was a critical point in Chipotle history, because the assembly line was introduced. Initially the open-air prep area was incorporated because it was the best way to configure the space, but customers reacted so positively that it became a Chipotle standard.
"What you see is what you get," Ells says. "The customers can see the food being made; they know that it's fresh. They can see that the chicken and steak have never been frozen. They see fresh tomatoes, cilantro being chopped up, avocados being mashed. I think that gives people comfort that they're whole, unprocessed foods."
Fast burritos that weren't drenched in cheese and chile were a revelation to Tex-Mex Denver, and people clamored to check out the Chipotle experience.
"I remember paying back my dad's loan in just a few months," Ells says with a smile. "It was designed to be paid back over years, but business was good. They liked what I had to offer.
"My intention was not to create a chain," he adds. "I wanted to have one restaurant and have it be able to support my efforts to start a 'real' restaurant, whatever that may be. I never got around to that real restaurant. As it turns out, Chipotle is pretty real. I'm satisfied."
Ells may not have known his concept was destined for the big time, but Denver restaurant consultant John Imbergamo did. "I think that Steven knew from the day that he opened the first one that he was going to have many restaurants," says Imbergamo, president of the Imbergamo Group. "The whole concept and system, in my opinion, was designed to be replicated."
As it turns out, so was the marketing campaign. Chipotle has always relied on word of mouth more than advertising, but early on, the company did experiment with several different branding ideas. They all fell flat until Ells and then-marketing consultant/now-full-time "Keeper of the Faith" Dan Fogarty realized that simplicity -- like everything else at Chipotle -- was what resonated. So the foundation of Chipotle's image became a big, foil-wrapped burrito.
"You just look at it, and it's big," Fogarty says. "Now a lot of people recognize the image and associate it with Chipotle."
Of course, the big-burrito campaign wouldn't be complete without its signature irreverent messages, such as "Usually when something is this good, it's illegal," "Foil shizzle" and "The gourmet restaurant where you eat with your hands."
"What we try to do is just have fun with certain aspects of Chipotle and try to tell something about our culture or our brand," Ells says. "We try to say something about the Chipotle experience. We don't ever want to say we have the best burrito."
"My personal favorite is 'They beep when they back up,'" Fogarty says, laughing.
1998: Super-Size It
By 1998, the big-ass burrito craze had taken over Denver, and Ells began wondering if he could conquer the rest of the country. He decided to try Kansas City as a test market -- and was a success.
"I think we had maybe a dozen stores in Colorado when we decided to go to Kansas City and really prove that this wasn't a Denver phenomenon," Ells says. "And then we went to Minneapolis. Then we started to get into the coasts -- Washington, D.C., California..."
He had a little help from fast-food behemoth McDonald's, which provided the cash infusion for this growth just as Chipotle was considering a Kansas City restaurant. "We got involved with Chipotle at a very early stage and helped them to grow," says Mats Lederhausen, managing director of McDonald's Ventures, the division that manages the non-McDonald's brands of Chipotle and Boston Market. "We have a great partnership; it works really well. They run their business very much independently."
"McDonald's lets us operate autonomously," says Ells, who sold them 90 percent of Chipotle. "They've funded our growth now for the past six years, and we continue to run Chipotle out of Denver."
But as sales sagged at McDonald's in the past few years, rumors swirled that they were shopping Chipotle around.
"We never said that we would sell Chipotle," says Lederhausen, who is also chairman of Chipotle's board of directors. "We never engaged in that, because we love Chipotle; it's hard not to. I think that they're doing a lot of things -- if not everything -- right."
Chicago food-industry consulting firm Technomic estimates that Chipotle's 2003 sales were $321 million, up from $225 million in 2002 and $145 million in 2001. And Smith Barney estimates that Chipotle's same-store sales rose by 24.5 percent in 2003, helping the non-McDonald's brands to post $700,000 in operating profits in the first quarter of this year compared to an operating loss of $12.9 million in the first quarter of 2003.
"McDonald's has been investing in the non-McDonald's brands for five or six years now, and we've learned a lot," Lederhausen says. "We learned what worked, what didn't work.
"I think it's very important not to confuse size with success," he continues. "We want to grow Chipotle by being better instead of being bigger. The goal is to make Chipotle great. It's almost great now, but everything can be better. The world would be a better place if Chipotle is a success. Which is what it is really all about."
July 2001: Hog Heaven
One of Ells's favorite phrases is "Food with integrity."
That concept came to him in 2001, when Chipotle began buying pork from Niman Ranch, an Oakland, California-based company that sells only free-range, naturally raised pork from independently owned farms.
When Chipotle became a customer three years ago, the Niman Ranch co-op worked with only a handful of family farms across the country. Today that number is almost 400. "Because of them, we've been able to add a couple hundred family farms. Just keeping up with their demand is a full-time job," says Bill Niman, CEO of Niman Ranch. "Steve is so committed to this. They are the key ingredient to our growth."
Consumers have been committed, too, requiring Niman Ranch to provide more than 2,200 pigs per week just for Chipotle. "Customers love it," Ells says of the carnitas burrito. "I think that a lot of people are pleased that it's from family farmers, raised the old-fashioned way."
This year, Ells also began serving chicken from Bell & Evans, a Fredericksburg, Pennsylvania-based farm that prides itself on raising chickens without growth-stimulating hormones or antibiotics. "We want to have the very best available," Ells says. "It's not just about fresh; fresh is not enough anymore. You also have to have the kind of raw ingredients that you can be proud of. That's our direction."
And he isn't just talking meat. About 10 percent of Chipotle's more than 350 stores currently sell organic beans -- a number that is expected to rise to 25 percent next year.
Using these high-end ingredients has affected the price, however: Carnitas went up $1 when Chipotle started serving Niman Ranch pork, and the cost of chicken rose by a quarter at the approximately fifty restaurants serving Bell & Evans chicken. The organic beans, however, did not raise prices, leaving the average burrito price about $6. But with the add-ons -- extra cheese, organic beef, guacamole, etc. -- and a drink, the average ticket price is $8.
Other than these price increases and the introduction of the Burrito Bol, which was rolled out in January to feed the low-carb craze, Chipotle's menu has not changed much over the years. "We could add fish, we could add desserts, we could add coffee, we could add chimichangas, breakfast and late-night," Ells says. "But we're going to stay focused on what we do well. And hopefully, we'll continue with these outrageous same-store sales. I think that the changes that customers really want are already in place at Chipotle -- and that is that year after year, we'll continue to have better raw ingredients. We think that the customer cares about what they are putting into their bodies."
June 2004: The Present
In just eleven years, Chipotle has gone from one store to approximately 9,000 employees, and Ells expects to hire another 3,000 to staff the 100 stores being opened this year.
"There is still huge opportunity here in the United States," Ells says. "We've cracked the code in the U.S. in terms of real estate, demographics. And there continues to be consumer demand. There has always been more demand than supply at Chipotle."
But that doesn't mean Ells isn't considering following his parent company across the pond, introducing fajita burritos to Cape Town and barbacoa tacos to Tokyo. "Certainly we have looked at international expansion," he says. "I don't think that the timing was right a couple of years ago; I don't think that it's necessarily right today. But in the future, we'll definitely try some international markets."
Before that happens, Galloway, Kohland and Kohari would like to see a Chipotle in Boston and Norfolk. They're planning a road trip here to plead their case, pay homage to their king and visit the birthplace of their obsession.
"Who knows where this is all going, but we're hoping that someday Chipotle will give us 'Burrito Ambassador' status, which means free burritos for life," Kohari says. "We have gotten a good deal of free lunches out of it so far, which is pretty cool."
A burrito can change lives.
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