
Chipotle: The Definitive Oral History - tim_sw
http://www.bloomberg.com/graphics/2015-chipotle-oral-history/
======
patio11
I had a Chipotle burrito once on, if I recall correctly, a trip to Denver with
the college debate team. I liked it so much that I put the first $2k of BCC's
profits (2006 and early 2007) into Chipotle shares. Then I sat on them.

This was pure, unadulterated good luck, but the present value of those shares
approaches that of BCC as a freestanding business.

Fun story: back in the day, Chipotle had two share classes: CMG.A and CMG.B.
The B shares were what McDonalds had originally gotten, but they could be
bought and sold on the open market -- _if_ you knew how to ask your broker for
them. They had no intrinsic reasons to be less valuable than A shares -- they
had 5x the voting rights but were otherwise identical. And they traded at a
10% discount to A shares _for over a year_ , because Chipotle was growing
quickly, people were logging into their discount brokerage to buy CMG, and
their brokerages were giving them CMG.A.

After quite a bit of headscratching about this, I figured out the correct
series of incantations to get my discount brokerage to give me the B shares
instead. Two years later, larger investors convinced the board to approve
converting B shares into A shares on a 1:1 basis. Instant 10% ROI kicker if
you had been holding them.

(In a company which wasn't growing like wildfire you would have been able to
sell CMG.A and buy CMG.B to arbitrage this price difference away, but
apparently demand for shorting CMG.A was so high that doing this in quantity
was difficult.)

~~~
hkmurakami
I would posit that what you did wasn't just "dumb luck". You actually went
through the customer experience and tried the product, and enjoyed both
tremendously. Through that process you actually understood more about the
business than you're giving yourself credit for. If you read Peter Lynch's
books on how retail investors should pick stocks, this is exactly what he
recommends (ex: his wife loved l'eggs stockings, couldn't stop talking about
them, and the stock performed tremendously).

Now, I don't believe retail investors should be picking stocks at all, but if
you _are_ going to, then this isn't such a bad way to go about things. For
instance, I think it beats picking stocks based on what you read in the
financial news outlets any day of the week (which a lot of people do).

Source: _One Up on Wall Street_

~~~
enraged_camel
Not sure if I agree with your narrative. The first time I had a Chipotle
burrito, it was stuffed so full that it exploded onto my lap as I was taking
the first bite. I was thoroughly annoyed and didn't eat there for five years
(until I discovered their burrito bowls, but it was too late to buy their
stock by then!).

So I agree with Patrick that he got lucky. :)

~~~
delecti
One of the key "strategies" is that you leave it in the foil for structural
support. It makes a pretty huge difference in the overall experience.

------
JimmyM
This seems relevant to this post -
[http://stratechery.com/2013/obsoletive/](http://stratechery.com/2013/obsoletive/)
\- that's often been posted on Hacker News about obsoletive vs. disruptive
technology.

I see this as Chipotle offering what is effectively an obsoletive product -
fast food that's cheap but also has some valuable nutritional content -
compared with McDonald's, who were capable of offering a highly disruptive
low-end product in an environment where there was an information asymmetry.

I find this interesting because, to me, it's a demonstration that themes of
obsolescence and disruption can apply to much more than just pure tech
businesses.

I've never eaten at Chipotle myself (do we even have them in the UK?), but wow
this is some great PR for them. Reminds me of when everyone just happened to
start raving about Nando's a while back. Kudos to whoever set this up.

~~~
joezydeco
Remember that McDonald's was just as disruptive in the 1960s when they
introduced the quick-service model (what we call fast food today), replacing
the drive-in and diner. By standardizing ingredients, cooking methods,
presentation, menu, etc, the company was able to keep the product consistent
across an entire nation. That was revolutionary in itself.

But choices were simple in 1952. McDonald's original menu had, what, 4 items
on it? Burger, cheeseburger, fries, drink. People didn't want customization so
it was easy to assemble an order in a bag in under 30 seconds.

People want more choices now. It's why McDonald's is struggling to keep up.
Their systems, multiple generations more advanced than before, can handle it
but only to a certain degree.

Chipotle has found a way to address this desire for choice by bringing back
what really is a buffet line. The innovation is that they found a way to
streamline that into a fixed set of choices (Burrito or Bowl? Meat or
chicken?) that avoids the line turning into a slow moving nightmare of
indecisive lookers like you get at a typical wedding reception or church
dinner.

It was interesting to read in the article how McD's wanted to solve Chipotle's
problems with technology, when really those weren't huge problems at all. It
shows the difference in culture.

~~~
enraged_camel
>>People want more choices now. It's why McDonald's is struggling to keep up.
Their systems, multiple generations more advanced than before, can handle it
but only to a certain degree.

This narrative doesn't explain why In 'n Out is very popular. They have five
items on their menu. [http://www.in-n-out.com/menu.aspx](http://www.in-n-
out.com/menu.aspx)

(They also have a secondary menu, yes, but that's more for stylings and
extras.)

~~~
joezydeco
Then let's call it more customization options.

I would describe it as McDonald's offering a very wide and shallow menu, while
Chipotle/Five Guys/In-n-Out offer a very narrow but deep menu.

McDonald's is experimenting with touchscreen kiosks to let you decide from a
list of burger topping options.

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allusory
Whoa, is it just me or is this a blatant rip-off of
[http://grantland.com/features/boogie-
nights/](http://grantland.com/features/boogie-nights/)?

~~~
jacobolus
A copy but not as well executed.

The Bloomberg page is full of pointless and distracting names fading in as you
scroll. The name rollover effects on the Grantland page are carefully designed
to keep the content uncluttered, not just to be cool; I just noticed there’s
supposed to be a similar effect on the Bloomberg page, except it only works
when the name itself is rolled over instead of the whole box, the avatars
aren’t as stylish or consistent, and some of the the sub-descriptions are too
long and spill out of their space.

The overall typography and layout of the Grantland page is better designed; in
pretty much every detail where they differ, the Grantland page is done more
carefully and with more obvious adherence to a design vision. (As one trivial
example, the Bloomberg article uses a mix of straight and curly quotation
marks for no apparent reason.)

I’d say Bloomberg’s designers copied the idea and several specific elements
from the Grantland page (or another similar one), but ultimately either had
shittier design constraints imposed from outside, did a rushed job, or just
overall weren’t as skilled or tasteful.

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iamthepieman
I love the way this story is done. Just a bunch of quotes with minimal
exposition and some infographics and images.

