It's not a stretch to say that Chipotle changed the fast-casual restaurant industry. Sure, there are Mexican chains that have been around longer, but Chipotle caught people's attention (and wallets) in a way that other fast food chains hadn't before. If you're a Chipotle fan, you probably know a lot about the restaurant chain. But we bet you don't know the answer to this one question: Does McDonald's own Chipotle?
It might come as a surprise, but the answer was, at one point, yes. The two fast food chains have a history together, and the Mexican chain could have been very different because of it. Here's a little bit of Chipotle's history with the McDonald's brand.
How McDonald's and Chipotle Collided
Chipotle Mexican Grill was founded in 1993 in Denver, Colorado by Steve Ells. Ells was a graduate of the Culinary Institute of America in New York and then worked for Jeremiah Tower at Stars in San Francisco. The first Chipotle, located near the University of Denver, was wildly successful, with store sales of over 1000 burritos a day.
Ells had originally wanted to take the profit from the burrito shop to open a fine-dining restaurant, but when Chipotle did so unexpectedly well, he decided to focus his efforts on expansion. He opened 13 Chipotle restaurant locations in the Denver area in the first five years of the chain's operation.
Then came McDonald's.
In 1998, Ells was ready to grow some more. The company's board of directors, almost all family friends, had invested in the company but to really expand, they needed some serious money. According to a history of the McDonald's and Chipotle relationship put together by Bloomberg, one of the board members had a friend who worked for McDonald's as a business developer and he managed to get Ells invited to a McDonald's board meeting. Ells brought burritos and tacos, and the McDonald's board loved it.
That first year, McDonald's invested $50 million into the Mexican food restaurant. Over the next seen years, Chipotle opened almost 500 new restaurants, and by 2005 McDonald's investment had grown to 90 percent, basically meaning that the golden arches did own Chipotle.
But the story isn't as easy as that. McDonald's also offered the new chain access to its supply chain and gave them advice on running a larger chain. But they also brought ideas, which would have changed the Chipotle's we know today. First, they wanted to change the name to Chipotle Fresh Mexican Grill, thinking that would better let the chain compete with other Mexican chains like Baja Fresh. Then they suggested serving breakfast. They encouraged the chain to do drive-throughs.
McDonald's wanted Chipotle to change up their menu in different parts of the country, adding things like barbecue in Kansas City. And McDonald's wanted the burrito chain to allow franchisees to own Chipotle restaurants.
For the most part, Chipotle ignored all the advice and kept doing thing their own way. In 2006, McDonald's decided to get out of the Chipotle business and sold all its shares of Chipotle back to the chain. According to Steve Easterbrook, who McDonald's CEO from 2015 through 2019, the burger chain had decided to focus on its core business. Around the same time, McDonald's also divested from Donatos Pizza and Boston Market.
Chipotle bought back the eight franchised restaurants, and then in 2006 the company went public. The initial public offering was a huge success, doubling the Chipotle stockprice from $22 to $44 on the first trade.
Since then, Chipotle has had its ups and downs, including multiple issues with food safety and strong competition from other fast casual chains trying to replicate the Chipotle model. They've also had some management changes. Chipotle founder Steve Ells is now executive chairman of the board, while Brian Niccol, who ran Taco Bell for three years, is now the company's chief executive officer.
In spite of the challenges, Chipotle is still one of the most popular fast casual chains in the country. It ranks in the #12 spot on the Restaurant Business and Technomic report, and falls only behind Taco Bell in the Mexican food category. By sticking to their own vision, and not allowing McDonald's to change them, Chipotle has succeeded.
Enjoy Country Music?
Sign up for daily stories delivered straight to your inbox.
FAQs
In 1998, McDonald's made an initial minority investment in the company. By 2001, McDonald's had grown to be Chipotle's largest investor. The investment from McDonald's allowed the firm to quickly expand, from 16 restaurants in 1998 to over 500 by 2005.
What is the relationship between McDonald's and Chipotle? ›
Why McDonald's sold its stake in Chipotle. By 2005, the mammoth McDonalds owned a 90 percent stake in Chipotle and used that influence to spur growth to over 500 locations across the country. But just one year later, the connection was completely dissolved.
Does Mcdonalds still own Chipotle? ›
In 2006, McDonald divested its stake in Chipotle, allowing the company to operate fully as an independent entity.
Why do you think Mcdonalds became the biggest fast food company in the world? ›
McDonald's has been able to build a strong brand through consistent marketing and advertising efforts, including memorable TV commercials and sponsorships of major sporting events. This has helped the company to establish a strong emotional connection with its customers, which has contributed to its enduring success.
How did McDonald's get big? ›
1980s–1990s: Global dominance and diverse menu
Growth was so swift in the 1990s that it was said a new McDonald's opened somewhere in the world every five hours. It effectively became the most popular family restaurant by emphasizing affordable food, fun, and flavors that appealed to children and adults alike.
Is Chick-Fil-A owned by McDonald's? ›
Chick-fil-A, Inc. is a family-owned business, founded by S. Truett Cathy.
Who is owner of McDonald's? ›
The company was founded by Richard and Maurice McDonald. In 1948, they opened their first restaurant in San Bernardino, California. Ray Kroc became involved with the company in 1954 and he purchased the franchise from them in 1961. Today, McDonald's is owned by The Walt Disney Company and Berkshire Hathaway Inc.
Who is Chipotle owned by? ›
So, who owns Chipotle now? That is CEO Steve Ells. No doubt that you had seen the news about his restaurant and the various health violations they have received. Not to mention that he was subject to criticism in the past like how much he was making as CEO of Chipotle.
Why did McDonald's leave Chipotle? ›
In October 2006, McDonald's fully divested from Chipotle. This was part of a larger initiative for McDonald's to divest all of its non-core business restaurants — Chipotle, Donatos Pizza, and Boston Market — so that it could focus on the main McDonald's chain.
Is Chipotle better for you than McDonald's? ›
Your sodium intake can easily add up with just a burrito order, ticking toward the FDA's recommended maximum of 2,300 milligrams sodium per day. A McDonald's Big Mac, for comparison, contains 1,010 milligrams of sodium. But when you look at the ingredients, Chipotle is comparatively healthier than other to-go options.
Fast food tends to be high in salt, sugar, saturated fats, trans fats, calories, and processed preservatives and ingredients. A wealth of well-conducted research has proven the negative health effects of consuming too much of these food components.
Why is McDonald's so rich? ›
McDonald's is the most valuable fast-food chain in the world. The company makes money by leveraging its product, fast food, to franchisees who have to lease properties, often at large markups, that are owned by McDonald's.
What was the 1st fast food restaurant? ›
Most historians agree that the American company White Castle was the first fast-food outlet, starting in Wichita, Kansas in 1916 with food stands and founding in 1921, selling hamburgers for five cents apiece from its inception and spawning numerous competitors and emulators.
Does the first McDonald's still exist? ›
Not far off Route 66 in San Bernardino is a piece of American business history - the original restaurant of fast-food giant McDonald's. A local fast-food franchise company now owns this site and has turned it into a museum. Not actually part of Route 66 history, this is the site of the first McDonald's.
Where was the 1st McDonald's? ›
Synopsis. The world's largest chain of fast food restaurants that serve around 68 million customers each day in 119 countries began operation in 1940 as a barbecue restaurant, run by brothers Richard and Maurice McDonald at 1398 North E Street at West 14th Street in San Bernardino, California.
Did McDonald's change its name? ›
McDonald's is changing their name. But only temporarily. For the time being, McDonald's will take the risky chance of changing their famous “M” to a “W,” and will now be known as WcDonald's all over the United States. It lasted from February 26 to March 18.
Are Chipotle and McDonald's competitors? ›
Fast-casual restaurants are also close competitors, with names like Chipotle Mexican Grill (CMG), and Panera Bread Company. Starbucks (SBUX) is a specialty quick-service brand that has some offerings that overlap with McDonald's.
Who owns most of Chipotle? ›
The ownership structure of Chipotle (CMG) stock is a mix of institutional, retail and individual investors. Approximately 55.69% of the company's stock is owned by Institutional Investors, 19.99% is owned by Insiders and 24.32% is owned by Public Companies and Individual Investors.
Who does Chipotle compete with? ›
They include Qdoba Mexican Eats, Moe's Southwest Grill, Baja Fresh Mexican Grill, and Rubio's Coastal Grill. Chipotle also competes on a less head-to-head basis against Taco Bell, the market leader in the Mexican-style fast-food sector.
Who is McDonald's biggest competitor and why? ›
Burger King competes directly with McDonald's in the fast-food and quick-service restaurant market. Burger King offers a variety of burgers, fries, and beverages, directly competing with McDonald's in the fast-food segment.
