Chipotle CEO puts a wrap on fast-casual.

• Author: Taylor, Mike
• Position: ON SMALL BIZ - Company overview

Steve Ells sounds more like a chef than a businessman as he explains what drives the masses to Chipotle Mexican Grill. He's less apt to talk about profit margins or economies of scale than he is about food with "depth and character and nuance and flavor."

Chipotle began as one burrito shop Ells opened 14 years ago near the University of Denver campus with a loan of $85,000 from his father. It was supposed to end there. Ells planned to use his earnings to open an upscale restaurant. But then came lines of Chipotle customers out the door and around the corner. Once they tried them, people were smitten by these giant, foil-wrapped burritos.

"It was just designed to be a little cash cow, to help the 'fancy restaurant' through the beginning stages," says Ells, 42, who earned a degree in art history from CU in his hometown of Boulder and then attended the Culinary Institute of America in Hyde Park, N.Y.

Plans for the large-scale fancy restaurant he dreamed of in culinary school took a permanent detour. His father helped round up more investors for expanding Chipotle, and later a partnership with McDonald's provided an infusion of $360 million to help Chipotle grow from 18 restaurants to more than 500 in seven years.

The Denver-based chain is now up to 600 restaurants, revenues are up 31 percent in the last year, and the stock price has nearly tripled since the company's IPO in January 2006. McDonald's sold off all its shares in a spinoff about a year ago.

Besides the fresh ingredients and efficient food lines, what's further distinguished Chipotle is its commitment to using naturally raised meats and--in increasing amounts as suppliers are scouted out--organic beans, and sour cream free of synthetic growth hormones.

"It's understanding where all the ingredients come from, how the animals are raised and how the produce is grown," says Ells, the son of a pharmaceutical executive. He calls this company-wide ethos "Food With Integrity."

"This is an ongoing journey," he says. "We're not there yet. We'll never be there. But it's that quest for better-quality raw ingredients that not only makes the food taste better but makes it good for the environment, good for animal welfare, so you feel good about the eating experience."

He draws a distinction between sustainability and organic where his restaurants are concerned. "'Food with Integrity is not about being organic," he says. "Organic doesn't necessarily mean...