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Chipotle Mexican Grill, Inc. (Chipotle) is a US based company of Mexican food restaurants that developed and operates in the fast casual, fresh Mexican food restaurant industry across the US. Chipotle is the catalyst for this new category of restaurant. Chipotle believes that the idea that food served fast doesn’t have to be typical fast food. The company manages Mexican food restaurants across the US, Canada and London, all under the flagship brand and trademark of Chipotle. Chipotle also focuses on using the best ingredients, and living their mission statement “Food with Integrity”. Their focused menu of burritos, burrito bowls, tacos, and salads; are made to order right in front of you, of high-quality, organic ingredients which are usually supplied by a number of reputable local food industry suppliers. Chipotle also offers the latest in technology trends by utilizing mobile apps and online ordering systems. Chipotle Mexican Grill has its strengths, weaknesses, opportunities, and threats as an industry leader in the fast casual dining establishments.
Company Overview
Chipotle Mexican Grill, Inc. is a chain of restaurants in the United States and Canada specializing in burritos and tacos. Chipotle was founded by Steve Ells in 1993 with the goal of selling 100 burritos a day to be profitable. Chipotle is based in Denver, Colorado and has become somewhat of a phenomenon within the realm of the restaurant industry. Chipotle has experienced tremendous growth since 2006 when the company went public (Lepore, 2011). Chipotle has steadily maintained a strong buy rating by financial analysts in the stock market (Hoover, 2014). Much of the success can be attributed to the ever expanding customer base along with upper level ma...
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...d will probably have better luck getting short term loans from lenders. Chipotle’s debt to equity ratio is extremely low compared to the competitors. At .31 Chipotle is doing very well, Yum Brands at 3.01, McDonalds at 1.59 and Panera at .69 while the industry average is at .77 (http://investing.businessweek.com). With the current ratio, Chipotle has more than enough ability to meet long term loans and if needed, will be able to secure lower interest rates on any new long term loans. The price to earnings ratio, again Chipotle is extremely strong at 55.8. Yum Brands at 26.04, McDonalds at 17.8, Panera at 27.39 and the industry average is 25.03 (http://investing.businessweek.com). With this trending being over two times the industry average, Chipotle will be paying significantly higher dividends and will attract more investors compared to the other companies.
Steve Ells founded Chipotle in 1994. When the company first opened its first restaurant, their model of business was a first of its kind. They operated a restaurant business that lies between fast food restaurant and fine dining. The management of the company pride in providing the customers with food services in a fast manner without necessarily the customers experiencing the literal fast food services experience (Ragas & Roberts, 2015). According to the company, their services are high-quality fine dining but delivered in a fast manner synonymous with the common fast-food experience. That model of business practiced by Chipotle has come to be referred as casual restaurant business model.
The fast food restaurant industry, which includes quick-service and fast-casual restaurants, is highly segmented with the top 50 companies accounting for only 25% of the industry’s sales. The $120 billion industry includes over 200,000 restaurants with 50% of those specializing in hamburger entrees. (hoovers.com 2008) The major competitors in the industry include McDonald’s, Burger King, Taco Bell, Subway, and KFC – Chick-fil-A’s major competitor in chicken sales. Chick-fil-A’s unique position in the market, specializing in chicken-based entrées, has lead to a competitive advantage which the company has been able to capitalize on. Recently, many competitors have added chicken entrees in order to compete in the market segment. Through marketing strategies and company initiatives, Chick-fil-A has tried to stay distant from competitors, offering a fresh alternative to the ordinary fast food restaurant.
As you know, Chipotle values our “food with integrity” promise and our customers respect that. However, the recent E Coli outbreak has caused Chipotle’s financial performance and reputation to suffer significantly and staying with our current business model is not our best option. Therefore, I recommend we rebrand and reposition Chipotle to ensure our long-term success.
Chipotle is classified in the restaurant industry as fast casual, a combination of the quick serve and the casual dining segments. Fast casual restaurants have the following attributes: high quality foods, upscale atmosphere, higher check averages between $7-$11, and pay at the counter (What exactly is fast casual?, 2008).
The first recommendation is that Chipotle needs to create a separate mission statement. This is critical to success because it explains who chipotle is, why Chipotle exists, what their core values are and how it will serve their stakeholders. By doing this Chipotle can achieve its vision and have their entire team on the same page. Collaboration with stakeholder to accomplish this recommendation should take between one and three months (Strategic Management, 2014).
Operations: Chipotle has set standards from when the food is bought, to when it's produced and to when it's sold. This quality control is performed by their Quality Assurance group, which foresees all of these positions.
Chipotle is my favorite place to eat. As I am sure it is for other people. Chipotle is a fast food Mexican grill. They are most known for how big they make your burritos. Now it is fast food but it isn’t actually fast, they’re like a restaurant but without the wait. They serve all naturally raised meat and organic beans. So there food is pretty healthy and worth eating. The employees are always nice and it just a great place to eat over all. Chipotle is a great choice for a quick fast food stop because it gives great service, atmosphere, food and value. My experience there is always a good one.
Chipotle is continuing to stay ahead of the curve and putting their focus now on the sustainability and farm to table concepts that are continuing to gain in popularity.
Control systems – Costco has an Enterprise Facility Information management system, each Costco is connected to corporate, the EFIM provides real-time information, management of control systems (like energy), and an inventory management system that allows suppliers to monitor their own stock levels at any Costco. The EFIM reduces costs related to energy consumption, maintenance, and contracted services
Chipotle Mexican Grill, famous for guacamole or for a spread in E.coli? According to CNN.com, CMG stocks have dropped well under $400 this week putting the companies stock at a 52-week straight low. All-in-all the stock is down 15% this year alone. People are blaming the outbreak of E.coli many customers suffered from in late November 2015. The company has taken many marketing measures to help gain customers trust back but sales are expected to drop again into the third quarter. On such measure is the new, yet almost expired Chiptopia: Summer of Rewards program. The rewards program gave customers the opportunity to obtain free chips and guacamole for registering their card, three free entrees each month if a total of eight were purchased, as
When Chipotle first opened in 1993, the goal was to serve quality food fast, but not be considered “fast food.” To avoid falling under the fast food stigma, Chipotle strives to find the best ingredients with respect to animals, farmers, and the environment. In order to achieve these goals, Chipotle has created a matrix organizational structure that is divisional by location and functional by authority. Chipotle recently expanded internationally to the United Kingdom, Germany, and France, each following strict guidelines assigned by corporate employees from their headquarters in Denver, Colorado. Similarly, each location is functionally organized according to authority: regional manager, district manager, store manager, assistant manager, and
Wendy’s is one of the world’s third largest hamburger companies that is quick service. There are over 6,500 company and franchise restaurants worldwide. Wendy’s mission is to stand for honest food, higher quality, fresh wholesome food, prepared when you order it, prepared by Wendy’s kind of people, do it Dave’s Way, we don’t cut corners. This company believes in fresh and non-frozen products so the customers are satisfied and now they bought from an honest restaurant. The foundation believes in long term success that include there core values in every production. The core values are “Quality is our Recipe” “Do the Right Thing” and “Give Back”. Wendy’s focuses on the responsibility that the stakeholders are also the key to success.
Pace is owned by Campbell Soup Company, and Old El Paso is owned by General Mills, both huge food manufacturers. In order to avoid brand parity with these big brands, Hector’s company and product need unique characteristics to give patrons a reason to buy Hector’s products. Both, Old El Paso and Pace, are not authentic companies because huge corporations run them (General Mills is located in Minneapolis, Minnesota; Campbell’s is located in Camden, New Jersey). Hector needs to capitalize on the fact that his salsa is not only superior but also authentic Mexican food. Such a product doesn’t seem to exist on the market yet.
Whole Foods Market, which is in the Grocery Store and Health Food Store industry, is one of America’s most prominent organic grocery store on the market. The supermarket chain has established a competitive advantage amongst other grocery stores, as it assures consumers that all foods are free of preservative, additive, and pesticides. The grocery store has gained such a profitable following, that it Amazon acquired it in August 2017, boosting Whole Foods Market’s digital and physical competitive advantage. In fact, most researchers have concluded that such an acquisition may eliminate any opportunity for other grocery store chains to compete against Whole Foods Market (Formichelli, 2017). Whole Foods Market’s key to success
As shown in the graph, from 2012 to 2016, the costs of food, beverage and packaging were the most significant costs for Chipotle, around a third of its total sales revenue. Hence, for 2017 to 2021, it is assumed that these costs will still be the most prominent costs for the company. Moreover, the historical data of 2012 to 2016 are used to calculate the average costs of food, beverage and packaging, as a percentage of revenue. It is assumed that this average is applicable for 2017 and onwards. Thus, from 2017 to 2021, food, beverage and packaging costs are forecasted to be 33.8% of Chipotle’s sales revenue.