A Burrito without integrity: Is this Chipotle for me?

Abstract

This case, developed primarily from secondary sources, describes the founding of Chipotle Mexican Grill (Chipotle, hereafter) in 1993 by Steve Ells and its rapid ascent to popularity as a fast-casual restaurant based on its unique socially responsible Food with Integrity strategy. Under the leadership of founder-CEO Steve Ells and co-CEO Montgomery Moran, Chipotle outperformed the S&P 500 as well as its rivals since its IPO in 2006.  However, in 2015, the multiple food contamination outbreaks reversed its course, plunging its stock price to an all-time low. In spite of the prompt actions taken by Chipotle’s leadership, the company’s stock price did not regain its pre-scandal highs in the stock market. However, on September 6, 2016, news of activist investor, Bill Ackman’s purchase of 9.9% of Chipotle’s stock gave a much-needed boost to Chipotle’s depressed stock. This case gives students the opportunity to step into the shoes of a young individual investor, Michael Jacobs, to assess the potential impact of Ackman’s investment on the company’s strategy and performance and decide whether or not he should divest his Chipotle holdings.