The Surprising Relationship Between McDonald's And Chipotle
When it comes to fast food chains, it might seem like McDonald's and Chipotle couldn't be more different. The former is famous for its menu full of unhealthy, fried foods at low, low prices, while the latter focuses more on fresh flavors and unabashedly charges extra for guacamole. What you might not know is that McDonald's is the reason Chipotle is such a prominent chain today (via Taste of Home).
The connection started back in 1998, when Chipotle only had 13 locations, all in the Denver, Colorado area. A friend of a Chipotle investor was hired as a business developer at McDonald's, and that connection helped Chipotle's founder, Steve Ells, get an invitation to a McDonald's board meeting. In a stroke of genius, Ells decided to bring along some burritos for the board members and, according to Ells's father (another early investor in Chipotle), the board "savored them." In fact, they enjoyed the burritos enough to invest $50 million into the growing chain. Yet after eight years of assistance from the fast food franchise, which created the Chipotle chain we know today, that relationship ended rather abruptly.
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. The reason for the split depends on who you ask.
According to past McDonald's CEO, Steve Easterbrook, the company sold the shares in order to focus more of their energy and resources on their own "core brand" (via Entrepreneur). If you ask Chipotle's past COO, Gretchen Selfridge, the split was more to do with business suggestions from McDonald's that the executives of Chipotle disagreed with (via Business Insider). These included rebranding to the name "Chipotle Fresh," serving breakfast, adding drive-throughs, and franchising restaurants.
Regardless of the true reason, the decision to sell the shares was widely considered a poor move on McDonald's part, since Chipotle went public that year, quickly tripled its number of locations, and established itself as a fierce competitor in the fast food space (via Business Insider). The chain has continued to grow, and now has over 2,000 locations, including 29 outside the United States, with no signs of stopping (via Reuters).