Holy Guacamole: Millennial Favorite Chipotle Turns Neurological Connectivity into Gastronomical Addiction

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\"RRMy 16-year-old son John’s idea of a gourmet meal is a burger and fries, so I was surprised one evening a couple of weeks ago when, after a busy day that left me no time to cook, I asked him where we should get takeout, and his answer was: “Chipotle.”

Caught off guard, I had to think for a minute. “I don’t think there’s one nearby.”

“Yes there is, in Yonkers,” he said, then added sheepishly,“ and you told me I could choose where to go.” Sighing, I grabbed my purse and keys for the 20-minute drive.

Chipotle (named after a smoke-dried jalapeno pepper) is the wildly successful chain of casual Mexican-style restaurants known for its overstuffed burritos made from healthy and natural ingredients. It was founded more than 20 years ago by Stephen Ells, a graduate of the University of Colorado and the Culinary Institute of America who,  with the dream of someday opening his own restaurant, moved to San Francisco to work for a famous chef . One day, he noticed an assembly line of workers at a taqueria in the Mission District  efficiently serving a crowd of hungry customers. He decided he could open a similar place to generate the cash needed to fund his fancy dining establishment. He quit his job, moved back to Denver and, after borrowing $85,000 from his dad, opened the first Chipotle in mid-1993. The restaurant, which from the start operated on the principle that fast food doesn’t have to be low-quality and that delicious food doesn’t have to be expensive, offered crafted-to-order burritos made from fresh, locally-sourced ingredients. Within six months, the restaurant was reportedly selling 1,000 burritos per day, 10 times the level needed to break even.

The Cross County Shopping Center in Yonkers is a huge outdoor mall located in a very densely populated corner of Westchester County (north of New York City) with a Macy’s, Old Navy, H&M, and hundreds of smaller specialty stores and restaurants. As my son and I entered the restaurant, we were met by a “Welcome to Chipotle!” personal greeting and the tantalizing aroma of herbs, spices and grilled meat. I was suddenly hungry. Dozens of young people milled about studying the menu sign or staring at their phones. Within a moment or two I realized they weren’t just hanging out or waiting for friends; they were on a line to place their orders. In other words, what I thought would take five minutes looked like it was going to take at least an hour.

During the late 1990s and early 2000s, Ells and his team added new items to the menu, including the now-best-selling Burrito Bowl (a burrito without the tortilla) and meal-sized salad, and began to source ethically-raised antibiotic-free meat, organic beans, and other sustainable ingredients.  Chipotle became known for being socially responsible, selling “food with integrity,” and for being the disruptive creator of what is now known as the “fast casual” restaurant sector, a club whose members include Panera (soup and sandwich), Five Guys (burgers and fries) and Panda Express (Asian).

Sales at Chipotle’s more than 1,700 locations, all of which are company-owned, are expected to top $4 billion in 2014. Revenue growth in each of the past four years has averaged over 20%. In the just-finished third quarter, sales grew 31% to $1.08 billion, with a same-store sales gain of almost 20%, blowing the competition out of the water. Net income surged by 57%, well above Wall Street expectations. Operating margins, the best in the sector, expanded by 250 basis points, thanks to an average 6% price increase that went into effect to cover increases in beef and other ingredients costs. This means that in an environment in which most consumer-facing businesses have to relentlessly discount to get people in the door, Chipotle has successfully raised prices– and its customers barely blinked! Though management expects same-store sales growth to slow from sizzling to simmering next year, it is likely that they are trying to manage expectations. The long lines and longing looks on the faces of customers indicate that this concept doesn’t show any sign of cooling off. About 200 new restaurant openings are planned for 2015, up slightly from the expected number for 2014.

Increasing throughput, or the number of people served per hour, is a management mantra. The fastest measured lunchtime rate is reportedly over 300, though average performance is apparently about one-third of that. An employee at the Yonkers location told me that their lines begin forming at about 11:30 in the morning when high school kids start arriving for lunch, and continue until the store closes at 10 at night.  Serving as many customers as possible, as cheerfully as possible, is a top priority, and the lines, though long, move relatively quickly. He also told me that Yonkers is Chipotle’s top store in the US and the number-four in the world. Paris is first, he said, followed by London and a store in Canada (unconfirmed figures, since the company doesn’t spill the beans on individual store performance).

We reached the front of the line in much less time than I had originally expected, and came face-to-face with the colorful array of ingredients that go into Chipotle’s handcrafted made-to-order items. John ordered a steak burrito. Spicy slices of marinated beef were placed on a huge and slightly warm flour tortilla along with the additional ingredients he selected: cilantro-lime rice, black beans, sour cream, cheese, fresh tomato salsa, and lettuce. He also ordered a soda, guacamole and chips. Beer and margaritas are on the menu, but neither dessert nor coffee is served. Although usually a salad eater, I decided to order a chicken burrito bowl to have the complete Chipotle experience. The bill came to $24 for the two of us–a little pricey for rice and beans, I thought, but the quality was genuine.

I looked at the expanding line behind us. Many of the customers appeared to be high school and college students (Sarah Lawrence College is about a half-mile away) and employees from the nearby stores taking their dinner breaks. Chipotle is a favorite among Millennials who are drawn to its cool, trendy image. My son had been hearing so much about the place from his friends and social media, he said, that he finally had to experience it for himself. The restaurants have an inviting, modern, minimalist décor of stainless steel and wood that is more coffee house than fast-food. Lighting is subtle, not utilitarian like at McDonald’s (interestingly enough, the fast food giant was a majority shareholder in Chipotle throughout its expansion until 2005). And equally important to young people, you can get your meal customized the way you want it–and then post a picture of it on Instagram or Pinterest!

Still, I wondered, with all of the less-expensive dining options nearby, why are these people willing to wait on such a long line for a fast-food meal? And why is a restaurant that features only four menu items (albeit in multiple variations) such a cult favorite? It just didn’t jive with what I knew about the increasingly demanding nature of today’s consumers.

One of the young women in line confessed to me that some days she wakes up in the morning unable to stop thinking about Chipotle, sometimes even finding her mouth watering in anticipation. My son told her that at his school, some kids are so obsessed with the place that if they have a free period before lunch, they place an order online, then drive to Yonkers to pick it up, essentially spending a quarter of their school day in search of a Chipotle fix.

Then it dawned on me that probably no one on that line was there because he or she was trying to eat more healthfully (a good thing, since according to Chipotle’s nutrition guide, John’s meal clocked in at 1,700 calories and 72 grams of fat), or because Chipotle serves only humanely-raised pork or locally-sourced raw ingredients. They were there because they were addicted to the experience. Chipotle had found the perfect mix of spicy culinary satisfaction, environment, and service. We marketing folks often talk about a brand’s ability to connect with consumers neurologically. Chipotle has managed to do just that and more, by elevating it to an almost Pavlovian level. And, at these prices, I wondered if some of its customers might even be skimping on clothes and other discretionary purchases to treat themselves to a deliciously-seasoned, satisfying comfort lunch.

In 2011 the company launched a Southeast Asian noodle concept called Shophouse, and this year is testing a pizza parlor called Pizzeria Locale, setting out to prove that its success is more about process than product. If making great meals from high-quality ingredients at reasonable prices cooked by friendly people in plain view of customers works for burritos, then why wouldn’t it work for other foods as well?

Forrester Research has estimated that by 2020, 30-40% of all consumer spending will be done by Millennials. Chipotle has singlehandedly disrupted fast food, long a teen stronghold, by elevating meals eaten out beyond just cheap-and-quick. The takeaway message for all retailers is clear: provide an irresistible combination of product, environment, and experience that will keep customers coming back again and again. In other words, get them hooked.

Last week I was chatting with a neighbor whose son, a junior at a college several hours away, took his car to school this year. I asked her if his classes were far from each other. No, she said, but having the car on campus makes it a lot easier for him to come home for weekends and breaks.

“Plus,” she added, “He needs it to get to Chipotle.”



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