3 Takeaways from a Fast Casual Chain's Success (and Catastrophes)
Posted: Apr. 15, 2019
The creator of fast casual dining set new industry standards over its 26 years in business. See the three takeaways from Chipotle’s success and apply them at your restaurant.
Steve Ells, the creator of the “fast casual dining” concept, was a classically trained chef before opening his first burrito shop, Chipotle. Of his model-breaking concept, Ells says, “When I created Chipotle in 1993, I had a very simple idea: Offer a simple menu of great food prepared fresh each day, using many of the same cooking techniques as gourmet restaurants. Then serve the food quickly.” Plenty of industry veterans thought he was crazy, but fast forward to 2019 and there are roughly 2,500 restaurants operating in the United States, United Kingdom, Germany, and France.
One must ask, what factors made such a simple concept rewrite the laws of the dining industry? The answers are as simple as “assembly-line service” and “reward programs.” Through its highs and lows (remember that E. coli outbreak in 2015?), Chipotle has remained true to its founding philosophy. Today, we explore the three main lessons we learned from the pioneering chain restaurant brand Chipotle.
Fresh Food is King, Never Lower the Food Quality at Your Restaurant
When Ells revealed a business model based on serving $10 “fast food,” he was called a fool. Variations of “customers will never pay so much” and “you’ll never turn a profit” were the general responses.
Chipotle proved the very opposite and revealed brand-new consumer behavior: Customers are happy to pay more for traditionally inexpensive foods, like burritos, when the product is made with high quality, delicious ingredients.
You might remember the explosion of “gourmet” fast food service operations that popped up in the early 2000s. Everything from gourmet ice cream to $15 cheeseburgers was being offered; all inspired by Chipotle, although many unconsciously so.
The Takeaway: Never sacrifice the quality of your restaurant’s food. To deliver “great food prepared fresh every day,” Chipotle defies the usual food preparation processes used by other restaurant chains. For example, freezing meat patties and french fries is an efficiency standard for most chains. Chipotle stores do not have freezers. Chipotle also has ingredients delivered fresh every morning to every store, and fillings are prepared onsite using time-consuming cooking techniques like braising.
In a 2010 interview, Ells claimed that 750,000 customers were served a day. There were roughly 1,250 stores open that year, which averages about 610 customers per storefront.
A Fast Company profile on Chipotle claims that “After the company bought hundreds of labor-saving onion-slicing machines, Ells ordered that onions go back to being hand-cut because he felt that made them taste better. Machine-cutting had left the onions a little dried out.”
Chipotle proves that higher production doesn’t equate to lower quality. As business thrives and more customers are taking seats, take a note from Chipotle’s founding doctrine: Ignore the temptation to save on costs when the product quality is diminished.
Lavu Pro Tip: In fact, no detail in the customer experience is too small. Consider this story: On a restaurant site visit, the stools were disturbingly loud whenever dragged across the floor, and Ells angrily shouted that he never wanted to see these stools again. It didn’t matter that a batch was recently ordered for 50 other locations.
Fresh Food Preparation and Assembly Line Service
Choosing an assembly line service was a trailblazing move in 1993. Before Chipotle, it was equated to school cafeterias or reserved for dining halls at amusement parks. For a restaurant, the service style was considered impersonal, too much work for the customer, and a sign of lowly foodservice operations.
Fresh food preparation is the heart of Chipotle’s assembly line service, and the reason it was so warmly received by customers. The stove is sizzling hot, so customers can peer through the hygiene glass and verify that yes, indeed, the affordable burrito fillings were freshly prepared. The tortilla press steams the delicate wrapping. These theatrics of Ells’ assembly line were enough to convince people that standing while ordering was a worthwhile dining choice.
The Takeaway: People are curious about their food and are actively educating themselves. The more information you give customers about the background of your menu, the more confident they are to eat with you and understand the prices.
Rewards Programs Breed Loyalty, Despite Catastrophe
After the E. coli outbreak in 2015 and a string of other food safety failures, Chipotle’s value dropped $10 billion. The public was suspicious of Chipotle’s fresh-food claims, and stockholders lost confidence in Ells and co-CEO Monty Moran. Sales dropped by one-third. At an investors meeting following the outbreaks, the pair were called to step down or “start considering resignations.”
Ells responded, “I think the best plan of action for us at this point is to focus like a laser on the things that have made Chipotle so popular over the years, most notably running terrific restaurants with great food and great customer service.” It was not a popular reply; however, their reaction to the chaos did work for the company.
To reverse halted sales, Chipotle released new menu items and a rewards program called Chiptopia.
The Takeaway: A restaurant rewards program is vital to remain competitive. Sporadic customers become loyal patrons, despite, as Chipotle showed, catastrophic, sales-impeding accidents.
Maintaining high food standards, explaining where the ingredients come from and why the menu prices are what they are, and installing a rewards program are the primary takeaways from Chipotles success that any restaurant can implement.
See how a restaurant point of sale system is the backbone of your restaurant.
Posted: Apr. 15, 2019 | Written By: Emma Alois
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