Pricing for High Quality - Burrito Fridays

In grad school I created a mock marketing plan for Chipotle. Through researching the company, I learned about the unique business practices that Chipotle used to make the restaurant chain so successful. I'm going through them in a weekly series of posts called Burrito Fridays. I'm in no way an expert about Chipotle, I simply see ways we can learn from the company. Let’s go.

Original photo by Javier Armendariz.

Original photo by Javier Armendariz.

When I was young, my mom told me not to jump on the bed. Despite her instruction, I decided it was an activity worthy of my time. One day while jumping on the bed, I fell and hit my mouth off of the footboard. The footboard tore into my gums, up into my permanent teeth. To this day I have a permanent white mark on one of my front teeth from the incident.

Sometime we receive instruction and advice because people care about us and know that what we’re doing is going to hurt us. But sometimes we receive instruction and advice because people want us to succeed and they incorrectly assume that the only way it can happen is if we do things the way they’ve been done successfully in the past.

When Steve Ells started Chipotle, there wasn’t really a perfect example of what he wanted to do. He wanted Chipotle to serve high-quality fast food. There wasn’t a proven market for it yet. There was no path. He had to go against the conventional fast food model and charge more for quality food.

Chipotle had no dollar menu. No coupons. The restaurant sent a clear message - we’re serving quality. The unequivocal commitment to quality, priced fairly, led to huge success. There was no need for Chipotle to try to compete with lesser-priced, lower-quality competitors. People saw the value in paying for quality. It started the entire fast casual industry.

Steve Ells didn’t let fear about pricing keep him from executing an incredible concept. Ells decided what he was going to do with Chipotle and he did it. It could have been a huge flop. Customers may not have deemed the fresh burrito price tag as worth it. He may have jumped and bashed his teeth on the footboard. But, he risked his dad’s cash anyhow and went for it.

I don’t know if Steve Ells received advice from an expert about how to succeed in quick-service food. If he did, they may have advised he follow the proven model of low-price, low-quality food. After-all, the billion dollar industry's method had worked in the past. However, the excitement of business (and why Shark Tank is so popular) is that the creative new concept has the advantage for growth.

If you have a concept that you’re excited about, that you think will work, but your one hang up is that you have to price it higher than your competitors - you should probably do it. It's likely that you have to price it higher for a reason. You may be using higher-quality materials, using ethical suppliers or have a unique, costly design. Customers may see the value in your quality like they did for Chipotle. There's a market for it. It could be me and most of my generation - turns out we're known for loving Chipotle for it.

Try it. It might flop. But it could start a whole new industry. Either way, you’ll learn something. Despite the permanent scarring, to this day I don't regret jumping on the bed. Learning that my mom had my best interests in mind was worth it and probably prevented me from making greater mistakes in the future.

Don’t look at the lower-priced competitors. Don’t seek to replicate them. The world doesn’t need another copy of a low quality, only profit-focused business. It needs your unique concept. Take the risk when it's worth it and blaze your own trail.