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Chipotle business objectives
Chipotle Mexican Grill, Inc. case study
Chipotle Mexican Grill, Inc. case study
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Abstract
This paper explores the business strategies Chipotle is using for operations. Analyzing financial and operations data to discuss areas of concern as well as areas where Chipotle Mexican Grill is doing well. Discussions will include the importance of Chipotle’s menu preparation strategy and menu integrity. The marketing strategies Chipotle is using to increase operations and strategies used to compete against rivals in the competitive environment. Concluding with an overall evaluation of Chipotle’s business portfolio.
Corporate Strategy Chipotle Mexican Grill founder Steve Ells had a vision to “change the way people think about and eat fast food” (Gamble, Peteraf, & Thompson, Jr., 2015). He wanted to create a
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o Having friendly people take care of customers. o All while increasing awareness and respect for the environment, by using organically grown fresh produce, and meats raised in a humane manner without hormones and antibiotics.
Maintaining a limited menu allows Chipotle to focus on the quality of the products offered and create personalized dishes for their customers. The serving area is set up much like a buffet line, allowing customers to choose what items they want to include in their meals and are served instantly after completing their order. This setup provides the capability to serve over 200 people per hour. Employees are cross-trained to be able to perform more than one job duty which helps both the restaurant and the customer experience during peak times (Gamble, Peteraf, & Thompson, Jr., 2015).
Chipotle is not just focused on creating a great experience for their customers, they also strive for a positive work environment. Providing fast-tracked advancement opportunities for those who prove their commitment to the organization and want a long-term career at Chipotle Mexican Grill.
Financial and Operating
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Similar to a fast food restaurant, but more upscale with a better dining experience. Ells idea of keeping the menu simple with limited items to prepare delicious food efficiently helped to create a kitchen different from other fast food chains. Food preparation areas in Chipotle’s kitchens are similar to those of fine dining restaurants. Menu items are prepared from scratch and with fresh ingredients. Even the meats are prepped with marinades. Creating such recipes is very labor intensive, but having limited items to prepare assists in keeping the cost down. The focus on menu integrity is one of Chipotle’s advantages and is a key element to their marketing strategy. One way Chipotle is able to control their ingredients and maintain menu integrity is by controlling their suppliers. After working with certain suppliers, they created a list of approved vendors for the individual restaurants to purchase from. One reason was to try and help control costs. Healthier food items cost more and Chipotle wanted to keep the cost of their meals low for their customers, so they built relationships with certain suppliers. Eventually, they began to use distribution centers across the country that only purchased ingredients from their approved suppliers (Gamble, Peteraf, & Thompson,
New restaurant openings and comparable restaurant sales increases are important factors contributing to Chipotle’s increase in revenues in recent years.
Chipotle’s Chief Executive Officer, Steve Ells has been reputed for having started the restaurant chain in a unique way which has contributed to its apparent success over its main competitors. Chipotle business has grown exponentially from when it was first formed with most of this growth attributed to the founder’s control process in the business. When Steve Ells first got into the industry, he acknowledged the need for promoting innovation and
Chipotle competitive advantage or Strengths has come from the ingredients that come from sustainable sources. According to the MarketLine article about Chipotle Mexican Grill SWOT analysis "Chipotle serves food using naturally raised meat (pork, beef and chicken) and dairy cattle... in 2014 the company served over 155 million pounds of naturally raised meat." Chipotle cares for their customers because they are not giving us food that has hormones and addictive substances. Their competitive advantage has changed the company culture and mission Statement nowadays they called it now food with integrity, the idea that their food is made with the respect for the animals and the
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.
1.3 Market Segment 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 food, upscale atmosphere, higher check averages between $7-$11, and pay at the counter (What exactly is fast casual?, 2008). 2.0 Market Opportunity Analysis 2.1 Market Trends The restaurant industry grew to $403.5 billion in 2010, a growth of 2.1% from 2009 (Consumers still thrift when dining out, 2011).... ...
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.
Any Chipotle I have always gone to have always had good service. Their employees are great. There is never a sour moment when you ask for anything, they are always kind and welcoming. I am always greeted with a hello and a smile when I step up to order. Even if the employee serving you has had a bad day it never shows, you would never know. Despite the lines being basically out the door every time you come (which is the only downside to coming here), the wait time can give you a headache. It is worth it, because Chipotle for sure serves fast food; they usually have three employees working to serve the food. One to get what you order prepared, one to add what extras you and to finish packing it and one to cash you out. The menu is very easy to read and figure out what you want. They have all of the print on the menu in white and big font so it makes it simple for everyone to read. So there isn’t any trouble ordering what you want. They have many different options to choose from as well. You don’t always have to get the burrito.
In visiting Chipotle’s website, it is adherently clear that they are trying to do a few things to overcome their recent faux pas from the past. Putting a majority of their site’s focus on their sustainability story, how they are helping the environment,
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
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
The Santa Fe Grill is a relatively new Mexican restaurant that was started by two former business students from the University of Nebraska, Lincoln. The idea sparked after the two roommates who were both interested in pursuing entrepreneurial interests decided that a Mexican restaurant in their city would be highly successful. While taking an entrepreneur class at the University, the plan for the business began coming together. Their main focus was to create a restaurant that would feature the freshest ingredients, as well as a lively atmosphere, cutting edge advertising and marketing, plus exceptional service for customers. (Research Methods, Pg. 19) By doing so, the students hoped that they could fulfill their dreams of ownership.
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. Thus, Hector could operate in a niche market of customers buying high quality, authentic salsa. Also, both major competitors do not focus on salsa. Hector has a salsa with unique texture and taste. A product with different features helps to avoid brand parity with
Each location has an immediate family member of the owners, who oversees every day operations. They are considered the managers of their location. They are knowledgeable and well educated in all aspects of the company. The owners supervise as needed. The owners have over twenty years of experience in the restaurant and tortilleria business. They personally trained every one of the employees currently employed. The manager at each location consults the owners for anything they cannot handle on their own. The employees are to take all questions and concerns to their managers unless conflict occurs. The company uses an outside accountant and legal team to help when needed.
Burger King’s core competency is fast food restaurant franchises specializing in made to order, flame-broiled hamburger sandwiches, particularly the “Whopper”. Using the strategy of industrial organization to capture market share Burger King offers a similar product (hamburgers) in a different way (flame-broiled). This strategy of product differentiation is part of the firm conduct category that Burger King uses to set itself apart from its competitors. In order to compete with its fast food competitors Burger King accentuates its core competencies in its marketing and product strategies, thereby leveraging market share.