Chipotle Is Apple
Hunting for business success stories in a recession is a difficult (and sometimes depressing) task. coach outlet online Most of the feel-good stories seem to come from the high-tech world and the burgeoning app economy. One important exception is Chipotle Mexican Grill, a company that shows theres clearly room for growth and innovation in even the most basic sectors of the economy.
Anyone who has walked a city block (or driven a suburban one) in recent years knows that Chipotles have been springing up around the country. But the numbers need to be seen to be believed. They opened 67 new stores in the fourth quarter of 2011, growing by just over 5 percent to 1,230 total outlets. They opened the first Chipotle in London, and launched their second restaurant concept, the Southeast Asian-themed ShopHouse, whose initial location has quickly become a lunchtime favorite for those of us who work in the nearby Slate D.C. office. Chipotle stock is up 50 percent on the year and over 500 percent over five years, far outperforming the market as a whole or the restaurant sector in particular. They announced last week that revenue grew 23.7 percent in 2011, with an 11 percent increase in same-store revenues. Restaurant operating margins are more than 25 percent.
Yet the food service industry cant seem to get any respect. Politicians dont name-drop burrito innovators as examples of the kind of entrepreneurs they want to encourage, and despite foods ubiquity in our lives, culinary progress is slighted as a source of human progress.
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Chipotles growth since its 2006 IPO should be seen as a great American success story. Theres nothing new about fast food, of course. But its not as if Steve Jobs invented the cellphone.
In many ways, the Chipotle burrito is very similar to the iPhone. Founder Steve Ells invented a way to maintain the basic speed and experience of the standard fast-food experience and make the quality of the food a little better.* The better food costs a bit more money, but consumers turn out to be happy to pay a premium for a superior product. A similar insight is behind privately held Five Guys, a burger-oriented fast-food concept thats also grown rapidly over the past several years. At the other end of the health spectrum theres Chopt, the assembly-line salad chain thats taken New York and D.C. by storm but hasnt yet gone national. All three chains are, in their different ways, raising the bar for food buy coach handbagsquality in a quick-service setting.
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