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Good Taco, Bad Taco

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Chipotle
U.S stores: Over 1,500
Change in stock value since 2008: +594%
Revenue in 2012: $2.7 billion
Lesson: Ethically minded food sells.

Taco Bell
U.S. stores: 6,000
Change in stock value for its parent company since 2008: +90%
Domestic revenue in 2012: $7 billion
Lesson: Junk-food-minded food sells, too.

Ask Steve Ells, founder of Chipotle, how he went from one establishment in 1993 to more than 1,500 in 2013, and he’ll give a maddeningly simple answer: “Just because it’s fast food doesn’t mean it has to be the typical fast-food experience.” In two decades, Ells took the $85,000 borrowed from his parents for his first burrito restaurant and turned it into a $13 billion company. His formula offered customers higher-quality food—much of it locally sourced or organic—at lower prices, attracting a new kind of customer to fast-food dining. Every detail of the Chipotle brand is meant to telegraph its quality and wallet-friendliness, as well as a Gen-Y compatibility, from the open kitchens in view of all—“We don’t need to say ‘fresh’ or ‘in-house’ ”—to its preference for online over TV advertising.

Not that going highbrow is the only way to appeal to budget-conscious consumers. Once-floundering Taco Bell tried to mimic the Chipotle model with its more upscale Cantina Bell menu, but the real turnaround came with the launch of the Doritos Locos Tacos, an inspired pairing between Taco Bell and Frito-Lay. So far, more than 500 million have been sold, making it by far the company’s most successful product launch. Taco Bell chefs reportedly went through 40 iterations before landing on the final mix of processed Cheddar and beef. They are not made in an open kitchen.


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