{"id":4961,"date":"2015-12-09T17:45:55","date_gmt":"2015-12-09T22:45:55","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/chipotle-the-birth-of-the-fast-casual-industry\/"},"modified":"2015-12-09T21:29:54","modified_gmt":"2015-12-10T02:29:54","slug":"chipotle-the-birth-of-the-fast-casual-concept","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/chipotle-the-birth-of-the-fast-casual-concept\/","title":{"rendered":"Chipotle: The birth of the fast-casual concept"},"content":{"rendered":"

Since its IPO in January 2006, Chipotle has experienced tremendous growth, going from 480 stores to around 1,900 stores, multiplying revenues almost ten-fold, from $469M in 2004 to $4,108M in 2014 and increasing share price even more than ten times, from $42\/share to over $550\/share. Such an impressive growth story was made possible largely due to a great business model that was well supported by cohesive operating practices.<\/p>\n

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Chipotle was founded in 1993 to bridge the gap between fast-food chains and more casual sit-down restaurants, giving birth to the now-famous fast-casual restaurant concept. Its original idea, preserved to this day, was to offer freshly prepared food with quality ingredients while keeping the “fast” part of fast-food. It caters to a public that values speed during busy times, but is more conscious about quality and willing to pay a bit more for that. To deliver such value, Chipotle relies on four main operating pillars: Processes, People, Location and Food.<\/p>\n

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Processes<\/span><\/p>\n

First and foremost, the company is obsessed with throughput. The more customers it serves per hour, the higher are its revenues and utilization of resources, lowering relative costs.<\/p>\n

The restaurants employ an assembly line like process, with each employee responsible for a very small portion of the process and that allows Chipotle to reduce cycle time and increase throughput rate. In peak hours, a Chipotle store can serve up to 300 people\/hour, equivalent to a cycle time of only 12 seconds per employee. Also contributing to increase throughput there are: (i) dedicated expeditors to get drinks, sides and bag to-go orders, (ii) dedicated linebackers, making sure ingredients are available at all times, (iii) clear rules for portion sizes and (iv) processes for having the best employees in each station during peak hours.<\/p>\n

Besides, Chipotle’s menu also adds to the efficiency. It only has four types of dishes and five types of protein, but allows consumers to add a number of extras, taking the total number of combinations up to 65,000 different options. That means that employees only have to learn to deal with a few types of ingredients, while clients have a seemingly enormous amount of choice.<\/span><\/p>\n

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