McDonald's Once Owned These 2 Popular Fast Food Chains

For a business that's often seen as the gold standard of the fast food world, McDonald's has seen surprisingly little success creating other popular chains. It was big news when the burger restaurant launched its new CosMc's brand back in 2023 because, despite the chain's massive success, it didn't own any other restaurants at the time. Less than two years later, McDonald's has already closed its few CosMc's stores. In this modern chain age, people are used to the idea that chains like Taco Bell and KFC are part of a larger group, but McDonald's stands alone. However, it wasn't always this way. For a brief run in the late '90s and early 2000s, McDonald's was looking to expand its portfolio beyond burgers, and it started with two now-popular chains: Chipotle Mexican Grill and Donatos Pizza.

In the late '90s, McDonald's acquired the two chains, buying Donatos in 1999 and investing in Chipotle in 1998. This was part of a larger strategy to expand into other markets, which also included purchasing Boston Market and a stake in the popular sandwich chain Pret A Manger. While it might seem strange now, in the '90s McDonald's was actually kind of flailing. The chain's growth had been slowed by the fact that there just weren't that many places left to open new McDonald's that would be profitable. So, the buying spread that included Chipotle and Donatos was a way to convince investors the company could continue to grow its revenue in other ways.

Chipotle and Donatos were actually in quite different places when each was acquired by McDonald's. Donatos Pizzeria had been founded in Columbus, Ohio, back in 1963 and slowly grew into a major Midwestern pizza spot. When McDonald's bought the brand in 1998, it already had 143 locations. Chipotle, on the other hand, was more of an upstart. Founder Steve Ells had started Chipotle in Denver in 1991, and by '98 it had grown, but to only 16 locations. It was a much less tested brand, and it was McDonald's first ever purchase of an outside concept. It was certainly a gamble.

In the end, both chains proved to be mismatches for the burger giant. Chipotle founder Ells was quite protective of the brand and its emphasis on fresh ingredients, rejecting many of the traditional ways McDonald's suggested to expand. Chipotle didn't want to franchise, while McDonald's executives wanted Chipotle to add breakfast and drive-thrus, which Ells also fought against.

Still, Chipotle grew like gangbusters with McDonald's investments, expanding to more than 500 locations in less than a decade. In fact, that growth in value actually helped split the companies up. Chipotle remained concerned that it was going to get transformed into a "Mexican McDonald's," and despite the growth, the burrito purveyors were still a small fraction of McDonald's business. It made more sense for McDonald's to cash out and take the profit on its ownership stake, which it did in 2006.

Despite similar issues in its pairing with McDonald's, Donatos Pizzeria had the opposite experience as Chipotle. Donatos founder Jim Grote had hoped that the partnership would turn his pizza restaurant into a national giant, but his focus on maintaining a high-quality product clashed with McDonald's rapid expansion plans. The burger chain wanted a big return on investment quickly and opened 23 Donatos locations in its first big market expansion in Atlanta. Four years later all those locations had closed.

By 2003, McDonald's was worried the focus on expanding other brands was hurting its core business. So, it sold Donatos back to Grote for less money than the chain had originally paid for it. At that point, Donatos had expanded to 182 locations, only a few dozen more than when McDonald's had bought it. Donatos ended up refocusing on what made it unique as a brand, and it now has grown to be one of the most popular pizza chains in the country, with the brand now available at over 450 locations and 179 individual restaurants.

The experiments with Chipotle and Donatos show just how important a culture match is when brands buy each other, even when one is as internationally successful as McDonald's. What works for one restaurant chain doesn't automatically work for another, especially when they are targeting different segments of the market. And while it might make other forays into new brands in the future, for now McDonald's has proven to be one of a kind.