SmartBlog on Food & Beverage Features The Chipotle Effect

How Chipotle tapped into a fast-casual goldmine

Paul Barron is founder and CEO of DigitalCoCo as well as founder of and Follow Barron on Twitter @paulbarron.

The following is an excerpt from his new book, “The Chipotle Effect,” slated for publication in 2012. Visit the website to get the full copy of “The Chipotle Effect.” Reprinted with permission by the author.

You may hate the title of this book, especially if you are involved with a fast casual restaurant that is not named Chipotle. It’s not especially politically correct of me to name my book after the booming fresh Mexican food chain, but I’ve always been a person who spoke his mind and pushed the envelope — even while others were getting comfortable and complacent. So this is no different.

The fact is that Chipotle remains shorthand for “remarkable success” in a segment of the restaurant industry that is growing at a dizzying pace, despite the tumultuous economic conditions of the past few years. In 2010, according to a report by Chicago food industry research firm Technomic, the top 100 fast casual chains increased sales 6% in 2010 to $18.9 billion. While that may not seem like a big jump, remember that during the same period most other players in the restaurant world were flat or watching sales crater.

In this book, I will make the case that a large part of that astonishing growth has been due to fast casual’s ability to adapt to the changing lifestyles of Americans, including our embrace of social networking and mobile technology. And whether you love them or hate them, no company embodies the strategic embrace and tactical engagement of the new consumer to fuel growth like Chipotle. Heck, in a July 29, 2011, article, even ran an article titled, “Who will be the Chipotle of the pizza industry?” So even if you don’t agree that this Denver-based company is the bellwether of change in our industry, you can’t ignore them. So let’s look at what Chipotle has done right and how it’s changed the restaurant business.

Chipotle may not have fired the first shot in the fast casual revolution, but the fresh Mexican chain is certainly the most famous of the founding fathers. Launched by Steve Ells in a space near the University of Denver in 1993, the restaurant grew quickly, opening its second location in 1995 and continuing its expansion — first with a loan from Ells’s father and later with a $1.8 million Small Business Administration loan. Ells, who had no business background, had clearly tapped into an unmet need among diners for healthful, fresh Mexican cuisine, and the Chipotle brand began to take shape: sustainably sourced ingredients, a simple menu, and impeccable quality. Read More

Posted on March 6, 2012 and filed under The Chipotle Effect.