Value Chain Analysis: Chipotle Mexican Grill

A value chain analysis allows the firm to understand the parts of its operations that create value and those that do not. Primary activities are involved with a product’s physical creation, a product’s sale and distribution to buyers, the product’s service after the sale. Support activities provide the necessary support for the primary activities to take place. A value chain shows how the product moves from raw material stage to the final customer. Each activity examined is rated as equivalent, superior, or inferior, relative to competitor’s capabilities (Ireland, R).

Primary Activities

Inbound Logistics CMG’s (Chipotle Mexican Grill) supply chain is linked closely to the company’s “Food with Integrity” mission statement. The company has

Chipotle quickly moves workers from starting pay levels into higher paying management jobs. Starting pay for “crew,” the people who make the burritos, averages about $10.50 an hour ($21,000 a year) with benefits such as meals, insurance, and 401k (Chipotle: Careers). Chipotle claims that 98% of its managers, started as crew. Another program Chipotle run is the Restaurateur program in which a person looks over a restaurant or several restaurants. Chris Arnold, Director of Public Relations for Chipotle said that before this program whenever they promoted a manager they were taking them out of the environment in which they had the most impact (Cultivates Quality Restaurant Managers). In other words, Chipotle created this program to allow for more company hiring from within without moving employees away from where they have a proven success record. This strategy of high wages and hiring from within is gives employees incentive to give their

One of Chipotles major core competences is their ability to serve high quality food at a reasonable price. The company has a mission of “Food with Integrity.” Most of their vegetables and dairy products are organically and locally grown, which provides a lot of value to the customers nowadays (Subramanian, Ram). As for the meat products, “100% of CMG’s pork, 80% of its chicken and, 50% of its beef were classified as naturally raised beef” (Subramanian, Ram). Customers value these fresh and organic ingredients so much that they are willing to pay a little bit more over competitors like Taco Bell or Qdoba. The idea of going organic and natural has been the new trend with retail chains like Whole Foods and Trader Joe’s (Subramanian, Ram). These organic and natural products tend to be more expensive and customers realize this and are willing to pay for it. Chipotle recognized this trend of going organic and natural and took advantage immediately. With their emphasis on organic and natural products, I think there is the potential for new market entry into retail chains like Whole Foods or Trader Joe’s with products that are