95% after a series of food safety issues that sickened

hundreds of people and sent its stock price plunging.

E. coli outbreak that caused Chipotle restaurants to shut

down. Investors aren't the only ones steering clear of

Chipotle. I mean, it just keeps happening to Chipotle and

nobody else. Even if it's not associated with their food this

time...it's happened again.

They've had to close the store because customers get sick.

It had lost customers' trust and Wall Street's adoration.

Its future was uncertain.

Would Chipotle ever be able to return to its high-growth days?

But the Mexican-style food chain has come back from the brink

with the help of a new CEO.

Consumers are once again returning to the place that

popularized burritos the size of a baby and helped the avocado

become one of America's favorite fruits.

Analysts say that its food safety woes are now firmly in the

past, and its stock hit a new record in July 2019 and has kept

climbing, peaking at $857.90

on September 9th. Now, there's just one question for the

chain. How can it keep soaring and avoid another fall?

Chipotle was never supposed to take off.

Its founder, Steve Ells, only started the restaurant to make

some quick cash to pay for his real passion

project...launching his very own fine dining restaurant.

Ells got the idea for Chipotle from his time in San Francisco,

where he was working as a line cook for celebrity chef

Jeremiah Tower.

The Mission District in the California city is known for its

taquerias. That's also where the Mission burrito was invented.

The burrito is oversized, stuffed with rice and other

ingredients, and wrapped in foil.

Sound familiar? With a loan from his dad, Ells moved to

Colorado and opened the first Chipotle Mexican Grill near the

University of Denver campus in 1993.

I think one of the most amazing things about Chipotle is that

the stores today don't look that different from the original

location by the University of Denver.

Really, the structure is very much the same, customized,

assembly line process, very simple but aesthetically pleasing

locations.

Chipotle's now quintessential minimalist layout wasn't a

deliberate design decision.

It came from a need to be cheap.

In that very first Chipotle, the table bases were pipes and

the counter where you paid was made from barn metal.

Ells kept the menu and operations simple because Chipotle was

still his backup plan.

Chipotle

became profitable within a few months and Ells was able to

quickly repay his father's loan.

A year and a half after opening his first restaurant, Ells

opened a second, then a third in 1996.

In the early days, your options for Mexican food were so

limited and so to see this assembly line burrito company come

up and out of nowhere.

Yeah, it was amazing how quickly word spread among the Denver

market and how quickly this company really rose to prominence,

at least in Denver during the mid-nineties.

He kept going with additional funding from his dad and small

business loans. Then he got a little help from a name you

might recognize: McDonalds.

Under the leadership of longtime CEO Mike Quinlan, the fast

food giant started investing in Chipotle in February 1998.

Three years later, it was Chipotle's majority stakeholder.

The investment helped McDonald's branch out of burgers and

diversify its business.

It also helped the fast-food chain compete directly with a

rival on the rise:

Taco Bell. The money from McDonald's helped Chipotle expand

across the United States.

Most restaurant chains, including McDonald's, turn to

franchising for quick and widespread growth.

But Chipotle didn't want to.

Handing over the operations of its restaurants would have also

mean handing over some of its profits.

Ultimately, pressure from McDonald's led Chipotle to franchise

a few restaurants to several McDonald's franchisees at the end

of 2002.

In January 2006, the burrito maker went public.

Chipotle's IPO gave McDonald's the opportunity to refocus on

its core brand at the time.

McDonald's was in the middle of a turnaround after years of

turbulence that started soon after it initially invested in

Chipotle. After the IPO, McDonald's started selling off its 91

% stake in Chipotle.

By the end of 2006, it no longer owned a piece of Chipotle.

Just 8 months after McDonald's sold its stake in Chipotle, the

burrito chain killed the franchise model and took back control

of all restaurants.

The investment had paid off for McDonald's.

Investors loved Chipotle.

And the economy was booming.

By 2007, its annual sales were more than a billion dollars.

Then the recession hit.

Like most restaurants, Chipotle felt it.

In 2009, it held the second largest market share, 11% of the

entire Latin American limited service restaurant industry,

according to Euromonitor.

Yet the company had its slowest year ever of same store sales

growth that year, and its stock tumbled.

In 2009, Chipotle decided that it needed a change.

Besides building the company, Ells didn't have any business

experience. The company promoted Monty Moran, its chief

operating officer, to serve as co-CEO alongside Ells.

Obviously Steve was the visionary for Chipotle and had a very

much a culinary background.

But I think Monty brought more of a traditional restaurant,

you know, background to the equation.

And sometimes with the right mix of personalities, you

can make a co-CEO model work.

Chipotle started thinking up other restaurant concepts with a

similar set-up. It created ShopHouse, an Asian-inspired chain.

Soon after followed Pizzeria Locale and Tasty Made.

If those names sound unfamiliar, it's for a good reason.

Chipotle has since abandoned them after they failed to catch

on. It came down to just competition and lack

of simplicity and lack of brand messaging when it came to

ShopHouse. Even when experimenting with offshoots, Chipotle

didn't abandon its core business.

Between 2009 and 2015, the company more than doubled its

global total store count.

New stores meant new customers.

Unlike Taco Bell or McDonald's, Chipotle wasn't relying on

value meals or limited time offers to get them.

Instead, Chipotle rolled out a series of ads in 2012 and 2013

about how its sources ingredients from sustainable farms, an

initiative it started in 2001.

Investors cheered for Chipotle's expansion and the stock, hit

$758 .61

a share in August 2015.

But it would be years before it soared that high again.

In October 2015, food safety officials linked Chipotle to an

E. coli outbreak that sickened people across 11 states.

It was not Chipotle's first brush with foodborne illness.

Earlier in 2015, the chain had already been linked to

norovirus and salmonella incidents.

But it caught the public's attention.

22 customers were hospitalized.

The Centers for Disease Control traced 60 cases of E.

coli infection back to Chipotle.

In December, Boston health officials linked an area Chipotle's

to another foodborne illness outbreak.

At least 80 people had symptoms consistent with norovirus.

It started to seem like every time Chipotle reopened a store

after a food poisoning incident, it had to close another one.

Chipotle

co-CEO Ells apologized on The Today Show, but that wasn't

enough. Sales at Chipotle locations opened at least a year,

plunged. So did its stock price.

For the next few years, Chipotle shares were worth only a

little more than half of its all time high.

But more importantly, the incidents damaged Chipotle's

reputation with customers.

The company had long boasted about the quality of its

ingredients. Its meat was raised without antibiotics, its

produce was locally grown and organic.

Chipotle called this policy "food with integrity."

It had been part of its advertising and marketing for years.

Chipotle

sprung into action.

It changed its food safety protocols, it altered its sick

leave policy for employees, and it gave away many, many free

burritos. Still, despite its best efforts, revenue for

2016 declined by 13%.

Same-store sales plunged by 20 %.

Amid Chipotle's troubles, Pershing Square Capital Management,

a hedge fund managed by investor Bill Ackman, took a 9.9

% stake in the company.

In September 2016, the news lifted the stock temporarily.

Ackman is known for building a stake in a company and

instigating changes that will boost the company's stock price.

Ultimately, in December 2016, Ackman was able to make a deal

with Chipotle's management to name two directors to the board.

Chipotle's hand-picked an additional two independent

directors. Just two days before the board changes, Moran had

stepped down as co-CEO and left the board.

Chipotle's founder was now the only one steering the ship.

He was too much at the center of everything, whether or not it

was strategic positioning, operational decisions, media and

industrial relations. He was trying to cover it all instead of

bringing in delegated expert talent that you should start to

have in the later life stages of a business. That's a problem

we've seen a lot with Travis Kalanick or maybe Elon Musk.

The company debuted an ad campaign and rolled out two menu

additions, chorizo and queso.

It was hoping to find its footing again when there was another

food safety issue.

In July 2017, a Sterling, Virginia location was tied to an

outbreak of norovirus.

In November 2017, nearly a year after Ells became the chain's

sole chief executive, he stepped down.

And Chipotle started looking for its next CEO.

In this case, at least, the board took the time to try to find

somebody. Enter Brian Niccol in March 2018.

Before Chipotle, Niccol was chief executive of a rival

Mexican-food chain: Taco Bell.

At Taco Bell, he introduced popular limited-time offers like

Nacho Fries, as well as Taco Bell breakfast.

Niccol also pushed Taco Bell into the digital age.

As this company matures, it was always going to look a lot

more like a traditional quick service restaurant company.

And that's why I think that's somebody with that background

like Brian certainly helped to breathe new life into the

company. While Chipotle poses a threat to Taco Bell, the

inverse is not necessarily true.

Fast-casual chains like Chipotle appeal to more

health-conscious consumers who have a little extra cash to

burn. The fast-casual segment of the restaurant industry is

growing the fastest.

On the other hand, fast-food chains, such as McDonald's, are

largely using price hikes to boost sales.

And Chipotle was now betting that Niccol could do the same for

them. Nicole's primary mission was to bring back customers who

left during the foodborne illness scares.

So far, Niccol has taken some tried-and-true methods from his

Taco Bell playbook to make that happen.

He even moved Chipotle's headquarters from chilly Denver to

sunny Southern California, right in the backyard of Taco

Bell's own HQ.

Chipotle

has also recruited several executives with Taco Bell

experience, like its chief marketing officer and the head of

its digital marketing.

Brian is one of the most talented people I've ever worked

with. We have a good rapport.

We were friends even outside of work, and so having the chance

to work with him again was a great opportunity and being on a

great brand like Chipotle, that opportunity was hard to pass

up. But Chipotle is still a different company from Taco Bell.

I think people associate Taco Bell and Chipotle as they're

both Mexican, but that's a lot of where the similarities end.

I think Chipotle is much more of a food brand, Taco Bell was

much more entertainment. I mean, we had to come out with

something every four to six weeks and Chipotle isn't that way.

Niccol has also leaned into the food delivery boom.

Chipotle struck a deal with third-party delivery service

DoorDash. We're lucky at Chipotle.