Why Chipotle is awful now

So 20 years ago, Chipotle was the staple

of what fast food should be where it

gave people a lot of food at a low

price. It had fast service and also use

fresh ingredients. But cut of the day

and the ingredients aren't so fresh, the

service isn't so fast, and the portion

sizes have definitely gone down and the

brand is fading. So I'm just wondering

why Chipotle sucks now. Starting this

off, we got to go back to the year 1993

where Taco Bell was huge having 7,000

stores, but there was a big problem

where people didn't think it was

authentic Mexican food and also at the

same time the main demographic going

there were kids and teenagers, but not a

lot of adults were that interested. The

most pitiful product that Taco Bell had

in the 90s was the burrito because there

was nothing customizable about it. And

also at the same time, it was very small

for burrito standards only being.3

pounds at the time. So because of that,

we got to meet this guy right here,

Steve Ells, where in 1993 he's this

recent graduate from culinary school.

And the thing about him is he goes to

these shops in San Francisco that are

selling burritos and he noticed just how

fast they are and how big the burritos

are. He's like, "Hey, this needs to go

to Colorado." He ends up taking out an

$85,000 loan to rent out an abandoned

Dolly Madison ice cream parlor in

Denver, Colorado. And there was the

first Chipotle. And there were two big

factors that led to Chipotle's growth

with the first one just being value.

Because even though their burritos were

$6 versus Taco Bell at $2.50, they

offered a lot more food to the point

they were only charging 20% more for the

amount of calories people were getting.

But they had way better ingredients, so

people didn't care. And then the next

one was actually McDonald's because in

1998, McDonald's decided to invest in

Chipotle. And by 2005, they invested so

much they actually own 90% of the

company. So what really helped Chipotle

grow is McDonald's was running all their

logistics and inventory. And the reason

why they did that was along with make

money, they wanted to start competing

with Taco Bell is that by 2006, Chipotle

was just living the dream where they

IPOed for $700 million, but they were

valued more like a tech stock. So they

end up being worth 1.3 billion. But once

that happened, problems began. The first

big problem being in 2006, McDonald's

decided to sell all their Chipotle stock

because the reason was the Chipotle

stock was so high. They thought they

were making this huge profit. But when

they left, all the logistics they

brought to Chipotle went with it. And

then what also happened was the 2008

recession. And the reason for that is

because the price of commercial real

estate dropped 30%. So rents across the

board went down massively. Reason that

became a big deal for Chipotle is this.

Because in 2006, before the recession

began, they had 500 locations. But then

after the recession in 2014, they're at

2,000. And the reason that's such a big

deal is because during the recession,

when real estate was cheap, they got all

these leases across the country in these

expensive areas because they thought

they were making out like bandits.

Problem with that long-term just became

the prices. Because when the recession

recovered, all those areas that they

bought, which were much more expensive

locations, had the rents go up massively

later on. So Chipotle had to raise their

prices which a lot of consumers were

pissed off about. There things only got

worse because in 2016 when they were

renegotiating a lot of their rent deals

they had a massive E.coli outbreak where

sales actually dipped 10% for the

company where before that they were

growing by 20% per year but that was the

first year ever they made less than the

year before. The big complaint about

Chipotle is they've cut the quality

where people are getting burritos and

they're largely just rice with a little

bit of meat. So because they're not

getting the same value that made them

really popular in the 90s and 2000s

going against Taco Bell. The reason is

just real estate because Chipotle put

themselves in these really expensive

locations to be more boutique. But the

problem is they can't keep up with that

because they're growing past inflation.

And with that, I'm Charles P.