Chipotle Executive Summary

Chipotle has a very simple product line-up offering tacos, burritos and salads. However, it offers up to 65000 combinations of ingredients for customers to choose while assembling the product. The product ingredients, sourcing and preparation are important for Chipotle w.r.t. customer experience and perceptions about the brand. There is however, no difference in product line-up when compared to direct competitors like Qdoba.

This means that all meat they serve must meet three standards- “animals have received no hormones, no antibiotics, and were humanely raised” (Menu). Although this does give Chipotle an edge in the game, the restaurant is not entirely keeping their promise. First off, when the company can’t find meat to fulfill their requirements, they end up obtaining meat from people who treat their animals with hormones, even though they promise that all their meat is “responsibly raised” (Douglass). In one year, 15 percent of all beef Chipotle served to their customers didn’t fulfill the requirement the company set for themselves (Douglass). This means that the company is lying to their customers to draw them in, something that Qdoba doesn’t have a history of. Another disappointing fact about Chipotle’s meat is that an abundance of the grass fed beef they do serve is actually imported from Australia, despite the fact that American companies are more than happy to supply the company with beef that meets their standards (Douglass). Obviously Chipotle is only worried about getting the best price on grass fed beef, and not at all phased by the idea that they aren’t supporting American companies willing to help them. While Chipotle is making a valiant effort to supply “responsibly raised meat”, they obviously need to fix where they are sourcing

One thing that is obvious is Chick-fil-a wants to help young people have a future. They do so through education, entrepreneurship, and leadership. The restaurant supports organizations who help children learn by encouraging children and giving them the tools to become successful in their schooling. One of the things the company is trying to do is help young people become entrepreneurs which will help newer generation give back to their communities. As well as entrepreneurs giving back so will those who learn how to become effective leaders. The websites were filled with ways how they help the community, but I did not find the same on the Chipotle website. Chipotle talks about fundraisers, but does not say anything about trying to help the community, nor does it talk about scholarships. Chick-fil-a is an active part of the community.

In 2012, the restaurant industry was a $435 billion dollar industry (Tristano, 2013).This amounts to a very large market that Chipotle has the opportunity to capture. In that same year the casual Mexican restaurant market totaled a whopping $31 billion in sales (Tristano, 2013). This was a 13% increase for the casual Mexican restaurant market and only amounted to 7% of the entire restaurant market. According to Tristano’s (2013) research, Chipotle Mexican Grill was the second fastest growing fast casual restaurant of all the fast casual restaurant markets in 2012.

The Fast food industry is extremely competitive. Although Chipotle is a step up from most fast food restaurants, it still must

Chipotle has experienced huge success marketing itself as a healthier and tastier alternative to traditional Mexican fast food, such as Taco Bell, by offering fresh ingredients and 'real' meats. However, the reality is that Chipotle is not as special as they claim to be. Taco Bell is better than Chipotle in many aspects, such as caloric intake, price, variety, and overall service. Also, if you actually do a side by side comparison of each restaurant's health benefits, you would be surprised to see that Taco Bell is actually better for your waistline. In addition, Chipotle attempts to give themselves the label of a 'Mexican' franchise, yet they don't sell ground beef tacos, the signature Mexican food.

Chipotle has opened their stores in few countries such as the UK, the US, Canada, Germany and France. It is now time for the corporation to follow the lead from other companies like Yum. Brands such as KFC and Taco Bell as well as McDonalds expand their footprint in the Asian market like Japan. For example, Chipotle operates less than 2,000 restaurants in only 5 countries, while McDonalds operates more than 35,000 restaurants in 119 countries, and Taco Bell, another Mexican restaurant, operates 6,500 restaurants in 20 countries which shows that the Chipotle could do better if it expands its business.

Chipotle’s kitchen and restaurant design intentionally places employees up front to reinforce a focus on service, through interaction with customers and individual attention by creating one burrito at a time (Chipotle, 2011, p. 5). While Chipotle combines basic ingredients to magnify the flavor they also stick to the basics when staffing their restaurants. Chipotle only has two shifts and cross trains their

re strong competitors and Yum! Foods leads the industry it is my recommendation that any investments be made in Chipotle.

Due to economic downturn the strength of the buyers’ power has increased as the industry looks to gain consumers with pricing strategies much like those of McDonald’s “Value Menu” and combination meals even though the cost of commodities have gone up (James, 2010). Customers of QSRs are looking for quality food without high costs. While Chipotle does not have a value menu or offer any type of combination meal much of their success is due to the fact that the customers are willing to pay a higher cost for higher-quality (Chipotle, 2010).

Chipotle is the leader in the fast casual market, with over 1,900 locations, $3.21 billion in annual revenue, and the ability to serve up to 300 customers an hour. It has innovated the restaurant market by providing reasonably priced scratch-made meals, containing local ingredients, all within the confines of a pleasing aesthetic environment (Chipotle Mexican Grill, Inc., 2014; Kaplan, 2011). To reach its success, the firm utilized architectural innovation by stealing components of various types of restaurants already in existence. The company appropriated its rapid meal preparation methods from fast food chains such Subway and Quiznos, adopted its provision of quality food from more upscale casual Mexican restaurants, and implemented a locally based supply chain similar to that seen at many local farm-to-table establishments. This convergence of different properties came together right as the millennial generation was coming of age and demand higher quality, natural, and locally sourced ingredients in meals that could receive quickly. The company has also attempted to utilize an incremental innovation approach by removing all CMO ingredients and testing new foods such as breakfast items, soup, and chorizo sausage (The Associated Press, 2015; Peterson,

One can only assume that Chipotle uses concentration strategies for their corporate level strategies, because they only concentrate on the restaurant industry. Market penetration and market development is their main focus, as they are attracting new customers as they increase brand awareness through their business strategies and their “Food With Integrity” campaign, Farmed and Dangerous live action story-telling comedy series, and Cultivate Foundation, which is a non-profit organization supporting sustainable agriculture, family farming and food education, and they are expanding into new markets with international expansion, so Chipotle can continue “to change the way people think about and eat fast food” (Chipotle, 2015). Chipotle also, uses ‘product development’, but not as aggressively as market penetration. The most recent product development is a meat alternative made from tofu, called “Sofritas”. Chipotle is highly invested in Pizzeria Locale, suggesting the possibility of horizontal integration in the near future, and is using an adjacent strategy with its sister restaurant ShopHouse Southeast Asian

It is also more widely spread geographically. Subway also offers the “choose your own” style of service, but it does not serve organic foods ("Chipotle Mexican Grill, Inc. SWOT Analysis."). Hot Head Burrito is another Mexican style restaurant that would be considered a competitor. These restaurants offer cheaper menu prices, lower-carb options and “diet menus” ("Chipotle Mexican Grill, Inc. SWOT Analysis."). While Chipotle offers none of these things, they have quite a large target market and have grown tremendously just in the last five years ("Chipotle Mexican Grill, Inc. SWOT Analysis.").

2. What does a SWOT analysis reveal about the attractiveness of Chipotle Mexican Grill’s situation and future prospects?

I believe one segment of the Chipotle customer population is the self-expression people. These people are the kind of customers that want to express their values of supporting the local farmers and the farmer’s mission of growing organic food and their way of supporting that movement is by patronizing this kind of restaurant.