Chipotle Mexican Grill is a 900 lb. burrito in the restaurant industry, with 1,755 stores and more than $4 billion in sales in 2014. In twenty years, founder Steve Ells grew a single restaurant into a market leader in the fast-casual and Mexican food categories. Millions of customers have loved his food for its taste and freshness and Chipotle’s use of minimally-processed and locally-sourced ingredients whenever possible.
But this market leader is now facing a tremendous challenge. “Market leaders are always tasked with providing clearly demonstrated proof of their transcendent wisdom and unique talents. Without it they simply cannot claim their rightful positions as the market leaders in their fields,” says author Bruce Wright in his upcoming book “Transcendent Thought and Market Leadership 1.0.”
Ells’ transcendent wisdom and unique talents are getting a workout now, thanks to recent incidents of customers in several states contracting serious food-borne illnesses from contaminated food served at Chipotle. The incidents forced the temporary closing of several Chipotle locations and made national news, which in turn battered its sales, brand image and stock value.
Chipotle has responded appropriately to the crisis, instituting new food testing protocols and cooperating with an investigation by the Centers for Disease Control. The company is also making major changes in how it prepares some of its ingredients, particularly the fresh vegetables believed to be the source of e. coli contamination.
As a result, Chipotle will now prepare more of its ingredients in large central commissaries instead of in the kitchens of its restaurants. That means a big change at Chipotle, which will now look more like other fast food purveyors that use central kitchens for prep and local stores for cooking and assembly. Marketing-wise that’s a big challenge, because it means moving away from the compelling “fresh and local” story that made the company such a success.
The extent to which Ells and company can transcend their challenges, restore confidence in their food and evolve their brand will have everything to do with Chipotle’s continued market leadership.