Since 1992, Panchero’s Mexican Grill in downtown Iowa City has been serving burritos and other south-of-the-border foods to customers ranging from homegrown Iowa City residents to drunken college kids. It’s the flagship location for a restaurant that has branched into 17 states across the country.
A year ago, a new “hombre” rolled into town—one with a lot of clout and money, ready to take on the burrito sheriff in town.
Chipotle was the new gun in Iowa City, and not only did it open up shop downtown, they opened up in a location kitty corner from Panchero’s. The chain trumpeted its opening with three days of free burritos for employees with the Old Capitol Mall, University of Iowa students and other groups and organizations. Lines stretched down the sidewalk outside Chipotle as people waited for free food and a look at the new burrito place.
The burrito war had begun.
With a similar restaurant in town, Panchero’s launched a new advertising campaign, and slogan: “Every ingredient in every bite.” Panchero’s has a new mascot for the campaign, Bob the Tool, a spatula that makes sure the ingredients are mixed evenly.
A series of televised spots showed two guys eat burritos, complaining about getting too much of one ingredient or another in each bite. A woman joins them, also eating a burrito, but without their problem. “I’m eating a Panchero’s burrito. The ingredients are mixed evenly.”
The most entertaining of the ads features one man swinging his wrapped burrito around with his belt, trying to mix the ingredients.
The commercial campaign harkens back to the days when McDonald’s and Burger King never mentioned each other by name, only referring to the “other burger.” The Panchero’s ads don’t mention Chipotle by name, but appear to be taking a swipe at the burrito giant.
The uneven burrito in the commercials is wrapped in tinfoil, which is what Chipotle does with each burrito and is one of the symbols of the chain.
In a card game of coyness, Panchero’s marketing coordinator, Alyssa Smith, wouldn’t show her hand as to whether or not the uneven burrito signified the work of Chipotle. She instead focused on the campaign itself and what she says it’s trying to convey to customers.
“It’s a new addition to our concept,” she said. “We’re known for our fresh-pressed tortillas. Now we also have the concept that we mix it together evenly so you get every ingredient in every bite.
“No one else does that. Right now we’re doing two things that the competition isn’t doing. I think if you’re a burrito connoisseur, those are two things you’ll appreciate.”
Whether it’s staying above the fray or doesn’t think Panchero’s is a threat, Chipotle has not countered the Panchero’s ads directly.
People associated with the company, however, had no qualms about speaking about Panchero’s.
“We don’t have to stay open until 2 a.m. to make our money,” said Drew Hanshaw, kitchen manager of the Chipotle in the Old Capitol Mall.
When asked why Chipotle serves better burritos than Panchero’s, Chris Arnold, public relations director for Chipotle, had a simple answer.
“In a word: food,” he said. “We’ve been on a quest to make better food, from socially responsible sources. We use naturally raised meat, meaning no hormones, a pure vegetarian diet; free range animals. What Chipotle does with food is different than any other restaurant we’ve seen in the country, chain or local.”
Arnold said moving into the Iowa market was a logical choice for Chipotle, which already has locations in Minnesota, Illinois and other surrounding states. He said the chain wasn’t worried about Panchero’s being so close.
“We’ve never been concerned with what competitors are in the area,” Arnold said. “We are confident in the food we make. We feel if we run the restaurant well it will do well regardless of competitors in the market.”
Though the commercials imply Panchero’s noticed the behemoth’s presence, Smith was unwilling to discuss Chipotle in any way.
“There’s no reason to,” she said.
She refused to answer how Panchero’s felt about Chipotle opening.
“We couldn’t be happier to have started in downtown IC,” and similar answers were common to Chipotle question-related questions.
Finally, a question of if Chipotle opening has hurt sales was, predictably, not answered.
“We’re happy with our results.”
Both companies fall under the “fast casual” restaurant model, which emphasizes customizing meals to each individual customer’s liking.
The food is made quickly, but with ingredients a step above traditional fast food. The model was made popular and perfected by sandwich giant Subway.
Panchero’s is known for its fresh-pressed tortilla. When getting a burrito, quesadilla or soft-shell taco, a ball of dough and other ingredients is pressed into the tortilla shape, then heated on both sides on a skillet. The tortilla comes out fresh—just-made for each burrito.
At Chipotle, pre-made tortillas are heated.
After the tortilla, the burrito-making process at each is similar.
A tortilla is heated, a main ingredient chosen—chicken, beef, pork or veggies—and extra ingredients are added. Wrap it up and let the customer have at it.
The final product looks the same.
Where it is different, Chipotle says, is the commitment to “food with integrity.” In its manifesto of the same name, Chipotle claims, “food with integrity” means, among other things, “encouraging growers to pursue humane and healthy practices, and rewarding small famers who eschew mass production in favor of quality.” Chipotle prides itself on producing its food in a sustainable, environmentally friendly way. Chipotle’s marketing is centered on this philosophy.
The “Local” Battle
The marketing advantages of fresh tortillas and even ingredient distribution are important for Panchero’s, but another claim is just as important to some consumers: it’s a local chain.
Having Iowa City roots goes a long way in an age of growing backlash against conglomerates that infiltrate every city and market. “Buy local” is a common theme among area business owners and environmentalists alike.
“I’m a local guy,” said Andrew Fisher, a student at The University of Iowa. “I support the local businesses. I haven’t tried Chipotle yet, on principle alone.”
A corporate goliath compared to Panchero’s, Chipotle is able to absorb the “local” argument blow and even has a counter-punch.
The Iowa City location gets the majority of its pork and some of its beef from local farmers. In addition, the produce used comes from local sources.
So while Panchero’s is the local business, Chipotle allows customers to support local business, albeit through a non-local business.
After opening in downtown Iowa City, Panchero’s opened a second location in East Lansing, Mich., home of Michigan State University.
The company expanded gradually for eight years before starting to franchise in the year 2000. Since then, they have grown exponentially and have 55 locations scattered across the nation, with three more coming before the end of the year.
Chipotle comes from similar humble, college-area beginnings.
In 1993, founder Steve Ells opened the first Chipotle near the University of Denver as a way to make money to help him open an upscale restaurant.
The popularity of Chipotle, however, steered his business aspirations and he opened a few more locations.
In 1998, Chipotle had 15 locations. That year Ells sent his business model to McDonald’s asking for investment, and McDonald’s obliged. The mega-chain invested in Chipotle and eventually become majority investor in 2001.
Chipotle’s ties with McDonald’s were completely severed in October of 2006. By then Chipotle had made its own name and money, and according to Arnold, McDonald’s decided to shift its entire focus back to its bread-and-butter restaurant.
While rich Uncle Ronald was behind the company, Chipotle exploded to over 500 stores. It currently has over 775 locations.
During lunch hour one Sunday, the clientele at each eatery fell distinctly on a side of the battle lines.
With both sides pumping in the corporate mixed music you find at restaurants, department stores and the like, diners chowed on burritos and other Mexican items, while taking time to explain why they were at one and not the other.
“They have fresher ingredients at Chipotle,” Rob Posekany said. “I liked Panchero’s when I was in college, at two in the morning and I could go there and eat. As I’ve gotten older, I want better quality food.”
His wife, Dawn, said she likes Chipotle because of its commitment to environmental responsibility.
“I like to feel good about where I’m going and what they’re involved with when I go out to eat,” she said.
Jeff Nolz chooses Chipotle for a reason that should raise alarm in the house of Panchero’s.
“I like the tortillas at Chipotle better,” he said. “Panchero’s just isn’t quite the same.”
Down the street at Panchero’s, the customers were just as steadfast in their support of Panchero’s.
Sitting in a booth were Dave Balmer and Hillary Foster, who explained their preference for the purveyors of fresh tortillas.
“We’re both Iowa City folks and grew up with Panchero’s,” Balmer said. “I don’t really see a reason to go to Chipotle, versus here. I think Panchero’s is better.”
For UI student Alex Harms, it’s a matter of taste.
“I think the spices they put on the Chipotle meat is a little weird for me,” he said. “It’s a different taste.”
Though the people mentioned above are fans, they pale in comparison to Dan Wolfe and Jennifer Sandrock.
After meeting at Panchero’s after bar hours on a Tuesday night in August of 2007, the pair hit it off. Sandrock, who attended Michigan State University at the time, eventually moved to Iowa City. The pair made a tradition of getting to Panchero’s once a week, usually on Tuesdays.
On a Tuesday this past July, Wolfe got Sandrock’s cousin to take her to the establishment. Wolfe showed up later, and in the same booth they sat in when they met, he pulled out a ring and proposed.
“She saw the ring, got excited,” Wolfe said. “She didn’t know it was coming. It worked out well.”
Wolfe said he tried Chipotle when it first opened and wasn’t a big fan.
“It’s not the same for us,” he said.