- [Narrator] Fast food is a trillion dollar juggernaut.
Over 100 million Americans make it a daily ritual.
From breakfast to a late-night snack,
whether it comes in a bun or on a tortilla.
- It's quick, convenient, and affordable
no matter where you go.
Fast food will always be part of our lives.
- [Narrator] But just over 40 years ago,
what defines the fast food experience
is completely different and surprisingly limited.
- There aren't any of the bells and whistles
we associate with fast food today.
- [Narrator] Until a small Mexican chain
ignites a colossal fast food revolution.
- We are not in the restaurant business.
We are in the fast food business.
- If Taco Bell is to ever expand nationally,
they have to completely reevaluate
the way they see themselves.
- [Narrator] Rewriting the rule book entirely.
- Free refills on sodas.
- McDonald's gets credit for a lot of innovations,
but so many great ideas came from Taco Bell.
- Sometimes David does lead Goliath.
- [Narrator] Forcing the biggest name in the industry
to fight back.
- You know that McDonald's is gonna come with a response.
- [Narrator] With some of the most legendary creations
fast food has ever seen.
- Want that super sized?
Of course.
- [Narrator] But when a fine dining chef
stakes everything on an unfamiliar Mexican dish,
he's swept into a war for the future of fast food.
- McDonald's is trying to take out Taco Bell.
- Gentlemen, thanks for coming.
- McDonald's and Chipotle.
- You really don't put those two brands
together in your head.
- McDonald's is putting millions of dollars into burritos?
- [Narrator] Their cutthroat battle
won't simply evolve the way fast food looks.
- In this business, image is everything.
- [Narrator] Or what it offers.
- No other fast food item
has ever competed with the Big Mac.
- Until the Crunch Wrap Supreme.
- [Narrator] But the entire fast food experience forever.
- They are Mexican inspired chains
that ultimately remade the fast food industry.
[intense music]
[intense music continues]
- [Narrator] It's the dawn of the 1980s
and the fast food industry has spread across America.
- [Adam C.] It's in all the major cities, suburbs,
everywhere you go, there's fast food
and McDonald's is the biggest fast food chain
by a long shot.
- [Bobby] McDonald's have over 10,000 locations
and they have over a quarter of the market share
for all of fast food.
- When McDonald's came out, they were the pioneers.
Cut to the 1980s, and every fast food chain
is basically working with the same model:
the convenient, simple, affordable way
to get food on the go.
- [Narrator] While it's grown in scale,
fast food is still defined
by its original simplistic approach.
- [Adam] Fast food was pretty basic.
Go in, order what's on the board, and go on your merry way.
- The fast food industry at that time is still pretty young.
McDonald's and Burger King
only just recently opened their first drive-through windows.
- [Narrator] After only three decades,
the rules of fast food are still being written.
- [Kate] Fast food started out as a burgers and fries business,
and in the early 80s,
it still really is that type of product.
- [Chirag] Today, when we think of fast food,
it's not just one thing,
but back then when you thought of fast food,
you thought of a burger, fries, and soda,
and maybe the occasional chicken sandwich.
- And that's what people assumed
a fast food restaurant was gonna be,
so there's still room for innovation.
- There's still a lot of places for it to go
and oh, the places it will go.
- [Narrator] In 1983, the board
of America's second largest soda conglomerate,
PepsiCo is struggling to grow
one of its subsidiary restaurant chains: Taco Bell.
- [Erin] Taco Bell was not as big as it is today.
It was a growing restaurant business
and it was mostly in the Western states.
- [Bill] The way Taco Bell operates, it's as if
they're competing with mom and pop Mexican restaurants,
not the big players in the fast food industry.
They don't have drive-throughs.
The people at the counter take your order by hand
and they write on a plexiglass board
for the people in the kitchen to see.
Everything is cooked on site,
which makes it incredibly slow.
- Taco Bell's menu back then
looked nothing like it does today.
They had about six items on the menu
including rice and beans and tacos.
- [Brooke] Five years after PepsiCo has bought Taco Bell,
they've expanded by 600 new locations,
but they aren't making much money.
- [Narrator] To save the troubled brand,
the board brings on a new president: John Martin.
- John Martin is someone who industry people would say
had ketchup running through his veins.
He starts off as a district manager at Burger King
and eventually becomes the president
of its rival Burger Chef.
- Let's start with a question.
What is Taco Bell?
- John Martin was innovative and passionate.
He was seen as a shark.
- It's a Mexican restaurant chain.
- No, not exactly.
- [Adam] John Martin believes that if Taco Bell
is to ever expand nationally, they have to figure out a way
to pivot the public perception of Taco Bell,
and they have to completely reevaluate
the way they see themselves.
- Gentlemen, we are not in the restaurant business.
We are in the fast food business.
I believe the taco can be the next great American food.
- [Adam] What John Martin saw
was that even though they're serving tacos,
they have to think and behave like McDonald's.
- [Erin] He believes people need to look at Taco Bell
and see fast food, just as they do with burger joints.
So he decides he's going to start
by updating its appearance.
- [Narrator] Martin puts his reputation on the line
with a high stakes multi-million dollar brand overhaul.
- [Adam C.] To reshape Taco Bell
in the image of big fast food restaurants like McDonald's,
he does what those other restaurants do:
streamlines the operations, puts in drive-through windows,
even introduces a new logo, the Bell,
which is now an iconic piece of American iconography.
- [Narrator] Martin accelerates
Taco Bell's growth threefold,
aiming to make it as recognizable as McDonald's
in every region of the country within just a few years.
- I didn't interact with a Taco Bell
until my mid to late teens.
That's when it finally hit our neck of the woods.
And at that point,
for kids who were raised on McDonald's and Burger King,
it was exotic eating.
- [Narrator] As Martin works to model Taco Bell
in the familiar fast food image, McDonald's executives
are trying to write fast foods next chapter.
- Unlike modern McDonald's,
which have a variety of menu items
beyond burgers and fries like salads,
back in the day, the menu was much more streamlined.
- [Adam] But after McDonald's experienced two incredible
decades of rapid growth,
sales are beginning to stagnate.
- [Erin] McDonald's sees that it might be smart to diversify,
to stay ahead, so they come up with a non-burger menu item,
the McNugget, and it's a huge success,
bringing in $700 million the following year.
- [Narrator] The man behind the menu expansion
is senior chairman Fred Turner.
- Fred Turner started as just a line cook
and moved his way all the way up.
- Fred Turner is there
as McDonald's introduces the drive-through, the Big Mac,
and becomes an integral part of McDonald's rise.
- [Narrator] Turner pushes his team
to explore how far they can take fast food.
- So first off, we have the Mcpizza.
- [Chirag] His idea was that if McDonald's
could define the category at one point,
why can't they redefine it
by adding more things to the menu?
- A salad?
- People want a healthier option.
- They're trying all kinds of stuff
because you never know what the next big hit is gonna be.
- [Narrator] With Turner's blessing,
McDonald's releases the Mcpizza, Chicken L.T. sandwich,
and a variety of salads.
- [Bill] This had never been done
and there was no telling how people would take it.
It's really all about someone with the right idea
breaking the code.
- [Narrator] Meanwhile, after four years of rapid expansion
and modernization, Taco Bell is national
with over 2000 locations,
but after an initial 37% surge in profits,
sales are sagging.
- Martin spent hundreds of millions of dollars
revamping this brand and even adding new things to the menu
like Mexican seafood salad, but nothing has been a hit.
- And Taco Bell being the size it is,
can't afford to lose that kind of money.
- [Jason] It's a daunting time.
It's a big moment of transition.
I think for him it was probably make it or break it now.
- What'd you like?
- Oh, I'll have the chicken tenders.
- That's only on the kids' menu.
- Can I still order it?
- Kids only.
- Okay.
- I'll give you a minute.
- [Adam] John Martin, he needs a big idea,
something that would allow Taco Bell
to compete with the true giants of the fast food world.
- Oh, I didn't order a second cup.
- Refills are free.
- John Martin arrives at an incredible realization.
He's been going about this all wrong.
He's been trying to do what McDonald's is doing,
but that's not going to work.
He realizes the secret to compete with McDonald's
is to offer an incentive that McDonald's simply does not.
- [Narrator] In 1987, John Martin has a radical idea
for Taco Bell to revolutionize fast food
beyond McDonald's familiar model by creating his own rules.
- Fast food is about convenience and value.
McDonald's has got convenience down pat,
but he realizes the prices are what brought people in.
- [John] We add an additional menu
with everything priced under a dollar.
- [David] He comes up with what he calls a value menu,
59 cent tacos, 69 cent taco supremes.
- [Adam] It's crazy when you look at the fast food
landscape now, you go, "Wait, there was a time
where people didn't have value menus?"
But it's the truth.
- And we throw in free refills on sodas.
- [David] At that point, nobody did that.
You had a small, medium, or large soda pop.
- John Martin realizes this is the way forward.
Free refills and a value menu,
the very thing that would revolutionize fast food
as we know it.
- Have you lost your mind?
- But they don't like it.
- So how exactly are we supposed to turn a profit?
- I'm glad you asked.
We are gonna take the kitchen out of the restaurant.
- [Erin] Martin's first step in revamping Taco Bell
was to make people see it as fast food like McDonald's,
which he did by updating its appearance,
but things were kind of slow.
Taco Bell is still making a lot of its food fresh,
so now he needs to make it more like McDonald's
by making it more efficient operationally behind the scenes.
- [David] So he says, I'm going to bring in food items
that are made in a central location
and heat it up like the fast food model.
- He introduces a model called the K minus system,
which means kitchen minus.
Goes from 70% kitchen and 30% dining room
to 70% dining room and 30% kitchen.
- This is how we lower prices without sacrificing profit.
- [Narrator] And Martin sees a growing demographic
that McDonald's is not tapping into.
- McDonald's is committed first and foremost to families.
- [Adam] And it's really marketed
as the American family gathering place.
- [Natalia] But by the late 1980s,
the MTV generation is coming of age.
They're moving away to go to college,
so they have a little more independence as consumers
to choose what they want to eat.
- [Narrator] In a Hail Mary,
to save Taco Bell and his career,
Martin pours millions more into the renovation
of 2000 plus locations and quadruples his ad budget
to push his new innovations.
♪ 59, 79, 99
- [Bobby] I still remember the commercials.
♪ 59, 79, 99
If you're in a pinch, you're a broke college student,
that's low prices.
It's so cheap, you'll impulse buy it.
- [Bill] The value menu and free refills are both seismic events.
Free refills had previously only been
for a cup of coffee at a diner.
Sodas you did not get free.
- [Chirag] Can you imagine going to a fast food restaurant now
and not having the option of a self-service soda fountain?
But back then, Taco Bell was the only one doing this.
- [Jason] I think, nowadays, people might misremember
or think that those innovations
actually came from McDonald's, but they didn't.
They came from Taco Bell and they deserve the credit for it.
- [Erin] The value menu has a huge impact on their business.
It actually increased sales by 60%
and changed the game for fast food in the United States.
- [Narrator] The value strategy success
quickly sparks a wave of imitators.
- [Bobby] And the next thing you know,
Wendy's has got the extra value menu for 99 cents.
Arby's is doing five for five.
- [Narrator] But customers choosing value over variety
is bad news for McDonald's Fred Turner.
-- [Brooke] Fred Turner's recent attempts at menu expansion
have not gone over as well as he expected,
'cause it turns out no one goes to McDonald's
when they want pizza,
and now Fred's on the back foot.
- They're giving away free refills on soda.
- They're desperate.
- It's working.
- [Adam] Fred Turner sees that Taco Bell's killing it,
but he doesn't just want to copy Taco Bell's innovations.
- If people want extra soda,
we'll give it to 'em at a markup.
- How do you mean?
- Sell them a bigger cup.
- [Brooke] For Fred Turner, value isn't about spending less.
It's about getting more.
That's really what families are gonna respond to.
- What's larger than large?
- [Adam] In 1987, he creates
arguably one of the most iconic innovations
in all of fast food,
and without question, in McDonald's history.
- Just supersize me.
- [Adam] The supersized meal.
- Supersized literally meant
they were going to now offer drinks in very large cups,
a quart of soda along with your burger
with supersized fries.
- [Erin] Basically, these are high margin items
where people can get a lot more,
but it doesn't cost McDonald's that much more
so they make a bunch of money off of it.
- [Adam] Once customers realize
that for just a scant more amount of money,
they can get so much more food, there's no going back.
- You want that supersized?
Of course, like supersize those bad boys.
- [Peyton] Supersize was a huge deal
- [David] and it brings a lot of people back to McDonald's
that had started to go elsewhere.
- [Narrator] Supersize drives
record annual sales of $6 billion,
yet, it doesn't stop the rise
of what has become the fastest growing chain
in the country: Taco Bell.
- So by the late 1980s,
Taco Bell is finally in the conversation
with the big brands.
It has 2,400 stores nationwide
generating $900 million in revenue.
- [Narrator] The success gives rise to a range
of new Mexican fast food options.
- [Natalia] Mexican food in a fast food environment
is kind of new and edgy and feels more interesting
than the old burger and fries.
- Taco chains are spreading like wildfire:
Del Taco, Taco John's, Taco Cabana, you name it.
- [Narrator] And by the early 90s, Taco Bell surpasses KFC
to become one of the top five fast food chains.
- [David] John Martin comes in and he did change the game
and his model becomes the norm in the fast food industry
and it still is today.
And in doing so, he cements a spot in the industry
for Taco Bell.
- [Narrator] But as Taco Bell's sales soar
400 miles north,
an unlikely competitor hasn't even started.
- [Brooke] Enter Steve Ells.
He was a line cook,
but he knew that he wanted to do something much bigger.
- Wow.
- [Narrator] Ells doesn't know it yet,
but he's going to transform an unknown meal
into a $76 billion market that outperforms pizza,
spearhead a new $200 billion restaurant category,
and land in the middle of a massive fast food showdown.
In 1992,
in San Francisco's
Mission District,
a recent transplant, Steve Ells,
is trying out the local cuisine.
- [Adam] Steve Ells grew up in Boulder, Colorado
and attended the prestigious Culinary Institute of America,
the breeding ground
for some of the greatest American chefs ever.
- Ells's dream is to have his own fine dining restaurant,
but that's really hard to do right off the bat
unless you have a lot of money.
So out of culinary school, he gets a job as a line cook.
- [Narrator] One day a friend introduces him
to an unfamiliar meal.
- [Adam] It is a variation on a Mexican dish
that was developed right in the Mission District.
- Wow.
- The mission style burrito.
- [Erin] When we think of burritos now,
we are thinking of a mission style burrito,
that's just a burrito to us,
but many people at that time
had no idea what a burrito even was.
They might not have tried any burrito before.
- This ain't Taco Bell.
- Taco Bell is the default Mexican food
that most people in America have probably tried,
and it's a very fast food version of what Mexican food is.
But this burrito is big, it's hearty.
There's so many flavors layered into this thing
and ingredients.
- There's rice in it, there's meat, there's beans,
there's cheese, there's salsa, there's guac,
there's sour cream.
- [Jason] He realizes people don't really understand
like to have a really great freshly prepared Mexican meal.
- So Ells starts to think
if he can capitalize on the mission burrito,
it might just be a way to fund his real dream:
a fine dining restaurant.
- [Narrator] In 1993, Ells walks away from a steady paycheck
and moves home to pursue an unproven idea:
his own burrito shop.
- [Jason] Steve Ells opening a mission style burrito place
in Denver, Colorado, it's a pretty big risk.
Outside of the Bay Area,
no one had really experienced these burritos
and there's no evidence that they're going to embrace it.
- [Narrator] Ells rents a bare bones space
near the University of Denver,
believing young customers will see the appeal
of affordable food prepared with the highest quality.
- [Chirag] Ells wants to add a gourmet touch to everything.
He wants to prepare the food on site.
It needs to be fresh and in an open concept
so people can actually see it being prepared.
He wants them to know that they can trust the ingredients
going into their meal.
- [Narrator] The only problem,
is being able to serve it fast enough.
In fine dining, he's learned that great food takes time,
but time also limits the amount of people you can serve.
And if he's gonna get anywhere close
to getting enough money to fund his dream restaurant,
this burrito shop needs to move faster.
- Who doesn't want fresh food?
But fresh and fast, that's a little difficult.
In a burrito, you're dealing with upwards
of a dozen different processes
to try to do fresh and fast isn't just revolutionary,
it's unheard of.
And it may very well be impossible.
- [Narrator] But then Ells has an unorthodox idea
that will save time and showcase fresh ingredients.
- [Erin] Ells rethinks how the restaurant is configured,
so instead of having the kitchen behind the counter,
it's right where the customers are.
- The whole idea is to allow people to point
to the things they want
and to build the burrito in front of them.
The conveyor belt starts with the tortilla
and you add your rice and your beans.
Then, you can choose steak or chicken or carnitas,
you can make it vegetarian.
And then you suddenly have the burrito
that was made for you quick and efficiently
at the end of the assembly line.
- [Erin] It combines the speed of fast food
with the elevated taste and ingredients
you'd be more likely to see at a regular restaurant.
- [Vallery] It's something that we see all of the time now,
but when he did this, it was really novel.
- [Narrator] With his unique restaurant system in place,
Ells decides to give his sauces and marinades
an equally original kick.
- [Adam] And he comes upon a ripe red jalapeno
that has been smoked.
He loves the flavor so much,
he names his restaurant after the pepper,
that is known conventionally in Mexican cuisine as Chipotle.
- [Narrator] But while he's found a name,
there's no guarantee anyone will give Chipotle a shot.
- [Vallery] This was a really unusual business concept
and people might not have even known
how to pronounce the word Chipotle,
but it certainly didn't stop him.
- [Narrator] As Ells prepares
to open an untested restaurant concept,
growth at Taco Bell has stalled.
- [Adam C.] After many strong years,
Taco Bell eventually runs out of road
on its value proposition.
- [Jason] It had been adopted and copied by so many people
that it wasn't a differentiator anymore.
- [Adam] Taco Bell is struggling.
They've had three years
where they have wildly underperformed
and have slid out of the top five fast food restaurants.
- [Adam C.] And so Taco Bell moves on from its longtime CEO,
John Martin, and decides to appoint somebody new.
- [Narrator] To right the ship,
the board looks to their chief marketing officer,
Peter Waller.
- Peter Waller assumes the role of CEO
and he has a new idea
for how to get Taco Bell's groove back.
- In this business, image is everything.
- Taco Bell has sort of got a reputation
for being a little cheap,
sort of lost that fun, interesting image
when it was new, right?
It felt new.
So Peter Waller decides to create the really aggressive,
really expensive ad campaign.
- They use $500 million,
which is an exorbitant amount of money.
- Does he go to a professional athlete?
Does he go to the biggest rock star in the land?
Does he go to a politician or a luminary?
- He's hip, he's edgy, and he's testing off the charts
with the younger demographic.
- Nope, he goes to a chihuahua.
A chihuahua who likes Mexican food.
- [Narrator] It's opening week
at Steve Ells experimental burrito shop called Chipotle.
- Opening day was, as it is with many restaurants,
very, very rough.
People are running around
like chickens with their heads cut off.
He's trying to do everything.
He's trying to cook, he's trying to serve,
and the soda machine's gone crazy.
Sometimes it spits out coke and sometimes.
- [Steve] Come on!
- It spits out absolutely nothing.
However, once Ells and his staff found their rhythm,
things really began to flow.
- [Erin] Customers love it because they can come in,
they can customize it,
they can have pretty much whatever they want.
They can get it quickly.
- [Chirag] Chipotle's new system is not as fast as
McDonald's, but customers are still willing to give it time
because I can actually see it being made in front of me,
not to mention people realize
that a Chipotle burrito is worth the wait.
- [Narrator] And Chipotle's proximity
to the University of Denver
leads to a steady stream of customers.
- When you're in college, you're still growing.
You're pretty much hungry all the time,
and you just want food.
- [Adam] After only one month of being open,
Chipotle was selling over 1000 burritos a day.
- [Vallery] It just took off.
People raved about it.
This was word of mouth
that caused this business to just explode.
- [Narrator] Over the next three years,
Ells opens seven more Chipotle locations in Denver,
and by the end of 1996,
each brings in $1 million in annual sales.
With Chipotle outperforming his wildest expectations,
Ells finds himself at a crossroads.
- [Adam] Initially, Steve Ells conceived of Chipotle
as a way to bankroll his fine dining concept,
but with its growing success,
he realizes Chipotle might be the play.
- [Narrator] Meanwhile, in 1997, Taco Bell makes a bold rebrand
led by an attention grabbing new mascot.
- This tagline became viral
before the term viral even existed.
- It was everywhere.
It infected the culture like a virus, man.
That dog taught a nation Spanish.
Everybody was "yo quieroing" after that.
- [Bill] t can't be overstated
how ubiquitous this campaign was in this era.
It was on every late night talk show,
it was on everybody's T-shirt,
it was on everybody's bumper sticker.
It was a national phenomenon.
- [Narrator] But one man isn't enjoying
Taco Bell's sudden pop status: McDonald's Fred Turner.
- [Brooke] You have to imagine how annoyed
Fred Turner must have been wondering how
he let this little taco chain
take over the national conversation.
- [Adam] He has a very talented and very motivated competitor
nipping at his heels,
and he knows he has to do something about it.
- [Narrator] Meanwhile, Steve Ells expands Chipotle
with 16 locations throughout Denver,
and as his annual sales hit $14 million,
Ells decides to go all in.
- Ells had enough money
to go ahead and pursue his dream of fine dining
if he wanted to, but I think he saw
that this fast casual concept that he created
is where it's at,
and the it is not just money but his legacy.
- [Narrator] But in order to maximize expansion
beyond Denver, he needs an investor.
- Ells spends months trying to woo different venture capital
and investment firms, and they each turn him down.
They see that Ells has a significant degree of success
in Denver, but they don't believe in it
as a nationwide concept.
- [Narrator] But just as Ells loses hope,
he catches the eye of a fast food chain
poised to take the burrito national.
- [Adam] They are a fast food juggernaut
known from coast to coast,
a chain that has knowledge of the food space,
a chain that has loads of capital
to put into the expansion.
- Hi.
- We're looking for Steve Ells.
- [Narrator] In 1998, after months of pursuing investors
for Chipotle, Steve Ells finds interest
from an unlikely partner: McDonald's.
- [Adam C.] McDonald's sees as Taco Bell is growing,
a need to address the growing market for Mexican style food.
- Gentlemen, thanks for coming.
Let me give you a tour.
- [Brooke] Rather than only have McDonald's
fight head to head with Taco Bell for customers,
Fred decides to hit Taco Bell from a different angle.
- This is the assembly line.
Everything is made here fresh on site.
- [Adam C.] And they see the opportunity
in the guise of Chipotle and the burrito.
- [Narrator] In February 1998,
McDonald's buys a 20% stake in Chipotle
with an initial $50 million gamble
on Chipotle's national expansion.
- That is pretty wild when you think about it.
You really don't put those two brands
or types of food together in your head.
- This was the first time McDonald's
had made a direct investment in another restaurant.
- [Bobby] I mean, it's one thing
to try a different type of chicken sandwich
at your restaurant,
but this is really responding
to the changing American palate.
- [Natalia] By the late 1990s,
America's beliefs about their food are changing.
They are worried about processed foods
and also where their food is coming from.
- [Erin] Sure, McDonald's could have started
its own Mexican food restaurant,
but that kind of thing takes time
and they wanna be in this space right away.
Plus, Chipotle already has it figured out,
so all McDonald's has to do is take that and run with it.
- With the help of McDonald's,
they start expanding outside of Colorado:
Kansas City, Chicago, Cleveland, Columbus, and then beyond.
- [Brooke] McDonald's had the geographical know-how
of the whole country,
so they were able to help Ells strategize
to pinpoint exactly where to open the next restaurant.
- [Narrator] By 1999, Chipotle's restaurant count
more than doubles
with locations from Washington DC to Dallas,
and annual revenue nearly triples to $30 million.
Meanwhile, at Taco Bell, an executive shakeup is underway.
- Despite all the popularity of "Yo quiero Taco Bell"
as a cultural force, it didn't actually increase sales.
In fact, sales have slipped by 6%.
- [Erin] Suddenly Taco Bell, which until now
has been the biggest name in Mexican fast food,
finds itself without a clear vision,
just when competitors like Chipotle are on the rise.
- [Narrator] The board recruits a leader
known for turning around a rival fast food chain.
His name is Emil Brolick.
- [Adam] Brolick brought with him a tremendous pedigree.
He's the guy who brought Wendy's
to new heights in fast food.
- [Adam C.] And so he arrives with the determination
to make Taco Bell stand out
in an increasingly competitive marketplace.
- When you think of these brands,
what signature menu items come to mind?
For Burger King, it's the Whopper.
For McDonald's, it's the Big Mac.
At Taco Bell, we don't have one.
- [Bobby] When you think of the Big Mac,
you think of McDonald's.
But if you say, "I'm gonna go get a taco," to your buddy,
they have no idea where you're going.
- [Jason] After 40 years in business,
they decide maybe it's time for Taco Bell
to finally have their Big Mac.
- [Narrator] Brolick challenges his team
to develop something to help make Taco Bell number one
in fast food and one product developer named Lois Carson,
believes she already has it.
- What do you have for me?
- It's basically a taco stuffed inside a burrito.
You take your standard taco ingredients
and then you wrap it all in a large soft flour tortilla.
- For years, Lois Carson had been work shopping a new idea,
and she figured this might be the perfect item
to roll out at the perfect time
in front of the perfect person.
- How are you supposed to eat this thing?
- Like a burrito.
- We need a product that people can eat with one hand
while they drive.
- 70% of all sales at Taco Bell came from the drive-thru,
which means this thing that Lois has brought forth
that disintegrates all over your lap
is clearly not going to work.
- This ain't getting it done.
- [Narrator] But while Brolick rejects Carson's prototype,
she's determined to see it through.
- [Adam] She's convinced this will be the thing
that puts Taco Bell
back into the consciousness of hungry Americans.
- [Narrator] By 2004, McDonald's has grown Chipotle
across the country with 400 locations
increasing its investment by $300 million.
- Here at McDonald's, we've taken the concept of Chipotle
and turned it into a nationwide success.
Next, we want to transform it
and turn it into an international phenomenon,
by adding centralized production plants, drive-thru windows.
- They wanted to make it more efficient,
they wanted to make it more profitable.
- This is Chipotle 2.0.
- McDonald's wanted to McDonaldize Chipotle.
- [Jason] It happens in almost every business imaginable.
When the big people come in,
they buy the little person for what they do,
and then all those new innovations and new processes
get brought into this huge infrastructure,
and they almost inevitably
ruin the thing that they wanted to buy them for
to begin with.
- Chipotle is not just another fast food chain.
We're not Taco Bell.
- McDonald's was really altering the core
of what Ells thought Chipotle was,
but it wasn't really his anymore.
McDonald's had invested $360 million in Chipotle
and they had a 90% stake.
- [Bobby] It's been a successful partnership for both sides,
but at the end of the day, McDonald's wants to cut costs.
- [Adam] Steve Ells has to tow the line and follow McDonald's
or split from them entirely.
- [Narrator] At Taco Bell, it's been months
since President Emil Brolick tasked his team
with creating a new signature item.
- They need to make a delicious, unique signature item,
something that people will forever associate
with the brand.
And at this point,
Brolick has all but given up
on the development team's food ideas.
- [Narrator] But one person on his team
isn't willing to give up.
- [Brooke] Lois Carson creates this jam
packed burrito taco hybrid
that just looks like nothing else on the market.
But the problem is that it's not easy to eat,
which is one of the essential qualities of fast food,
particularly for drive-thru customers.
- [Adam] And then suddenly she has an idea.
What if I take this and I construct it in such a way
that the ingredients can't fall out?
She experiments with a larger tortilla
and folding it into a hexagonal shape.
She then grills it so that the folds stay in place
and the outer tortilla holds all the ingredients inside.
- [Narrator] In 2005, Taco Bell launches Carson's creation.
- They think it's gonna hit people smack across the face
and become the Taco Bell Big Mac.
It's the Crunch Wrap Supreme.
- [Narrator] Taco Bell sells a whopping
51 million Crunch Wrap Supremes
in the first six weeks alone.
- That level of success is unheard of.
That was more than McDonald's sold in Big Macs
over the same period of time.
- [Adam] It is soft, it is crunchy,
it is handheld perfection. It's not authentic Mexican.
It's Taco Bell.
- What the Crunch Wrap Supreme ultimately does
is create a brand new energy around Taco Bell.
- [Narrator] Elevated by the Crunch Wrap Supreme,
in 2006, Taco Bell surpasses Burger King
to become the number two fast food chain in America.
- This is a huge upset.
Taco Bell has gone from this underdog
to an American fast food icon.
- [Narrator] And Taco Bell's success
with a creative menu edition is a blow to Fred Turner,
who's bet big on a single Mexican dish: the burrito.
- After trying to use Chipotle
to take down Taco Bell in the Mexican food category,
Fred sees that Taco Bell is growing stronger regardless,
and they're getting way too close to McDonald's
for his comfort.
- Steve, take a seat.
- But Fred's not gonna let Taco Bell
knock McDonald's from the number one spot,
and he realizes his strategy is just,
it's not the best that McDonald's can do.
- I'll get right to it.
I'm proud of what we've been able to accomplish together,
but McDonald's will be parting ways with Chipotle.
- [Brooke] He decides that instead of competing
for Taco Bell's market share with Chipotle
or any other Mexican food at all,
they need to stop thinking about categories altogether
and just look at Taco Bell
like another competing fast food chain.
- I wish you and your team the best of luck.
- [Narrator] In August of 2006,
McDonald's cashes in its stake in Chipotle
for $1.5 billion.
- McDonald's is putting more money in their pockets,
which is gonna create even more opportunity
for the biggest fast food organization
in the United States.
- [Narrator] And it puts Steve Ells
back in the driver's seat of Chipotle.
- [Brooke] When McDonald's divest,
Ells walks away with everything he needs.
He's free from corporate oversight
steering him in a direction that he doesn't agree with.
He's also armed with the capital to expand Chipotle
exactly the way that he sees fit.
- [Narrator] Over the next decade,
Ells grows Chipotle from 500 to 2,500 restaurants
and increases sales by over 200%.
Steve Ells leaves Chipotle in 2020, but his legacy remains
in the new restaurant model he spearheaded
and Chipotle still leads
the $200 billion fast casual market.
- Fast casual kind of raised the bar.
- Chipotle brought out the consumer demand
for customization and onsite cooking and visibility
that previously hadn't really existed
in fast food before that.
- [Narrator] Meanwhile, Taco Bell continues with its focus
on competitive deals and
non-traditional Mexican creations
that appeal to trend following customers.
- [Bill] It's known as a place
where there's some new crazy item every six weeks:
the Baja Blast Cheesecake, for example.
- [Kevin] Nowadays, when you go into a Taco Bell,
they're like, "We got Doritos shells, man!"
Like, you know, there's a lot of collabs going on.
- [Narrator] Today, Taco Bell's sales
exceed $15 billion a year,
making it the third most successful fast food chain
after McDonald's and Chick-fil-A.
- One fascinating part of the rise
of both Taco Bell and Chipotle
is that they are Mexican inspired chains
that ultimately remade the fast food industry.
- [Narrator] Rather than try to beat Taco Bell
and Chipotle in each of their categories,
McDonald's moves into the 21st century
embracing the evolution of the fast food experience.
- [Jason] McDonald's gets credit for a lot of innovations,
but things like the dollar menu and free refills,
those were innovations that came from Taco Bell.
- When you go into a McDonald's today,
you can literally make your own food item
very much in the Chipotle mode.
- [Narrator] And by perfecting
how to add new menu items strategically,
McDonald's continues to grow
into a behemoth worth over $200 billion
without ever relinquishing the number one spot.
- [Adam] McDonald's is not going anywhere,
but there's kind of this wonderfully symbiotic
relationship between all of these brands.
Without McDonald's, there could be no Chipotle,
without Taco Bell, there could be no Chipotle,
and that's why fast food will always be part of our lives.