As founder of Chipotle Mexican Grill, Steve Ells has never come across advice he couldn’t ignore, conventional wisdom he couldn’t flout, a rule he couldn’t break.
“I was always quite rebellious and did things my own way,” recalls Ells. “Friends said Mexican food is cheap-you can’t charge $5 for a burrito. But I said this is real food, the highest-quality food. Friends said you can’t have an open kitchen, but I wanted the restaurant to be like a dinner party, where everyone’s in the kitchen watching what’s going on. They said people have to order their meal by number. But I said no, you have to go through the line and select your ingredients. And everyone gave me grief over the name: Nobody’ll be able to pronounce it!”
Ells opened his first Chipotle (pronounced chi-‘poat-lay) in Denver 15 years ago. A graduate of the Culinary Institute of America, he had long dreamed of running his own gourmet restaurant but needed to generate fast cash. He figured he’d open a taqueria and reinvent traditional Mexican food-lighten it up, make it sexier.
“I wanted layers of bold flavors that had nuance and depth, not just hot, not just spicy: cumin, cilantro, cloves, fresh oregano, lemon, and lime,” says Ells. “It looked, smelled, and tasted different from traditional fast food. And it didn’t take long before there was a line of people waiting to get in! So I thought, Maybe I’ll open just one more.”
Ells’s father, an executive in the pharmaceutical industry, invested $85,000 in the first restaurant. The second was funded with the profits and the third with a Small Business Administration loan. By the time Ells had a dozen restaurants, he’d given up on the idea of a single high-end one. He got the money for expansion from a surprising source, McDonald’s, first as a minority investor and then three years later as the majority shareholder.
McDonald’s put in $330 million over seven years and made $1 billion on its investment. “They funded our growth,” says Ells, “which allowed us to open 535 restaurants.” Chipotle went public in 2006, and McDonald’s sold its stake in the fast-growing chain, which now has 775 restaurants and revenues over $1 billion. “We learned from each other,” Ells says of the partnership, “but we use different kinds of food, and we aim for a different kind of experience and culture altogether. So we ended up going our separate ways.”
Ells defied convention yet again when he decided the company would buy only pasture-farmed pork, raised on a vegetarian diet and free of artificial hormones and antibiotics. The price of the pork burrito went up a dollar-but its sales doubled, proving people were willing to pay more for a superior product.
Ells hasn’t changed the original menu. He just keeps adding more organic produce from more sustainable sources. His goal is nothing less, he says, than “revolutionizing the way America grows, gathers, serves, and eats food.”
And the dream of opening a gourmet restaurant? “That’s what I’m doing now!” Ells says, laughing. “Every week, we’re opening two more Chipotles. This year, we’ll open 135, and our first international Chipotle opened in Toronto in August. Instead of making great food for just a few people, now I get to be part of an organization that can give everyone access to sustainable, real food. That’s the high point of running this company.”
Q & A with Steve Ells
Where did your love of cooking come from?
As a kid, I liked being in the kitchen, cooking with my mom. I remember watching all the cooking shows-with the Galloping Gourmet, Julia Child-instead of cartoons.
What do you know now that you wish you’d known when you started?
In a way, I’m glad I didn’t know a lot back then. Ignorance is bliss. Knowing what a hard business restaurants are and the failure rate, I don’t think I would be as good at starting it now. I think it helps to be bold and unafraid.
How do you stay energized?
A lot of exercise-running or cycling. We’ve been sponsoring a cycling team, Garmin-Chipotle. In their first Tour de France, Christian Vande Velde placed fifth overall. That’s huge! And I cooked burritos for the team.
Are you a perfectionist?
Yes. Right now, if you want your meal wrapped in a tortilla, you heat it in a hot press first. But it doesn’t work well. An engineer friend came up with a brilliant design-it heats so evenly and precisely. But it’s still not finished after two years! He’s a perfectionist, and so am I. We are nearly there, but it just kills me that we are still buying old-style presses.
You’re an innovator, but are you a quantum leaper or an incrementalist?
Absolutely the incrementalist. I visited the commissary where we make our beans. They were washing the oregano and not drying it, so when they chopped it, it was clumpy. We need it to be dry and fluffy when it’s chopped. So we put together a drying procedure. Can the customer tell the difference? Probably not. But if you do a hundred things like this, they can tell the difference.
The fast-food industry has incredibly high staff turnover, but you don’t. How come?
Our culture appeals only to high performers. We want our future leaders to be among the ranks today, so we give bonuses to managers for empowering their people and for identifying members of their crew who have management potential. We also have another bonus for increasing sales above projection. We want our folks-all 25,000 of them-to think like owners.