Today we will be diving into Chipotle, the fast-casual food chain known for its burritos. It was started in 1993 by Steve Els, an entrepreneur who is actually a classically trained chef and dreamed of opening a fine dining restaurant.    He started Chipotle to earn cash for that dream, but the well-known chain took off and made TexMex fast-casual food an American staple. Over the past two decades, Chipotle has expanded nationwide to over 2000 owned and operated stores. Its significant growth is tied to its simple restaurant decor and efficient operations. Nevertheless, the beloved fast-casual chain was plagued with a series of foodborne illnesses from 2015 to 2018. Since then, the chain has been adapting rapidly to regain the trust of customers nationwide.    In this breakdown, we discuss Chipotle's origin stories, its hypergrowth, its focus on simplicity and innovation. We'll also go into details around how they navigated COVID and their national food safety outbreaks.    To help me break down Chipotle, I'm joined by Zack Fuss, an investor at Continental Grain and an expert on all things food and restaurant-related.   For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Tegus. We created Business Breakdowns to uncover the lessons and frameworks behind every business, and that's what makes Tegus our perfect launch partner. Much of the foundational prep for these episodes starts with research on the Tegus platform.    With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 15,000 calls on Coinbase, Hinge Health, Farfetch, or almost any company of interest. All you have to do is log in. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.   ----- Business Breakdowns is a property of Colossus, Inc. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Show Notes [00:03:13] - [First question] - What is Chipotle [00:04:24] - Chipotle’s scale compared to its competitors [00:05:36] - The origin story of Steve Ells and Chipotle [00:06:47] - Carving out the fast-casual restaurant niche [00:09:02] - Unique themes that have been carried into today [00:10:22] - Unit economics in fine dining versus fast-casual dining [00:11:56] - Gross margins and their similarities across establishments [00:14:53] - An ideal payback period for a restaurant [00:16:00] - What allows for Chipotle to have such an optimized payback period [00:18:29] - Owned and operated versus franchised  [00:20:49] - Pros and cons to franchising or being an owner-operator   [00:22:11] - Key factors to consider when choosing to franchise or not [00:23:31] - Chipotle taking $350 million in growth capital from McDonald’s [00:25:58] - Differences between McDonald’s and Chipotle’s food [00:27:08] - The E Coli outbreak in late 2015  [00:28:17] - Sweetgreen, Cava, Zoes Kitchen, Noodles & Co. [00:30:09] - Pershing Square’s investment in Chipotle post-outbreak  [00:31:51] - Technology and its effects on the restaurant industry [00:33:39] - Digital orders and profit margin variance [00:35:53] - Launching a Digital-Only quesadilla menu item [00:36:33] - Internet aggregators, dark kitchens, and future food tech trends [00:39:52] - How Chipotle beat out Qdoba [00:41:32] - Blaze Pizza, Tasty Made, Panda Express  [00:43:38] - Dark kitchens and network expansion [00:45:01] - Lessons builders can take away from Chipotle’s story [00:45:01] - Lessons investors can take away