1.Summary of the case
Introduction
Chipotle Mexican Grill is a restaurant chain founded by Steve Ells in 1993 with the revolutionary idea of “trying to change the way people think about and eat fast food”. Focusing on serving food sourced from sustainable farming practices (including meat product that is responsibly raised in humane ways without antibiotics or hormones) and cooked in a fast traditional way at reasonably priced dishes. “Food With Integrity” is the phrase that captures the firm’s philosophy.
As a result of Ells´s vision and strategy Chipotle had grown from one restaurant in Denver to 1,572 Chipotle restaurants serving around 800,000 costumers throughout the United States, and growing internationally as the additional restaurants in Canada(7), in England(6), in France(2), and in Germany(1) shows.
In 2013 Chipotle reported
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revenues of Chipotle reported revenues of $3.2 billion, net income of $214.9 million, and diluted earnings per share of $10.47. The net income grew a 52% from 2011 to 2013 Chipotle went public in January of 2006 with an initial offering price of $22, and as figure 1 shows it has increased to $704.
Market Environment
Chipotle is a restaurant chain part of is known as "fast-casual restaurants" what the company Technomic Information Services defined as meeting the following criteria:
1. Limited-service or self-service format
2. Average meal price between $8 and $15
3. Made-to-order food with more complex flavors than fast food restaurants
4. Upscale, unique or highly developed décor
5. Most often will not have a drive thru
Chipotle main competitors in the fast-casual restaurant sector include Qdoba Mexican Grill, Moe's Southwest Grill and Panchero's Mexican Grill. The company has identified different strategies to make the company stand out amongst the competition enabling the company to remain at the top and keep making profits. One of the strategies is new innovations examples of Chipotle´s innovation are: employing new menus that are tested in selected restaurants before the menu is adapted by all the restaurants or testing a children’s’ menu attracting more families and children to its
restaurants. Innovations have also included plans to open two new fast-food chains for Chipotle loyalists hungry for more variety based on Ells´s belief that Chipotle´s model could work well with a variety of different cuisines. ShopHouse serves Southeast Asian-style rice bowls and Pizzeria Locale serves gourmet pizza both restaurants follow the model where the meal can be customize made from fresh, local, mostly organic ingredients and naturally raised meats.
External environment analysis plays an important role in shaping the overall industry. It helps keep the business ahead of its competitors and providing opportunities for implementing innovative ideas. Based on demographic, Chipotle focuses majority of its sales on “Millennials”, who are between the ages 18 and 24. “Serving high quality food with reasonable prices” and the ability to customize your meal with a variety of different options in a fast paced environment is something many consumers are attracted to especially the younger generation. Chipotle’s first restaurant was established in Colorado but now they have restaurants all throughout the United States, Canada, United Kingdom, and so much more, located primarily in urban areas.
The company is driven by a strong set of values, even if some of those decisions increase its costs internally. This is especially the case with the sourcing of its ingredients and meats. In fact, the high-quality ingredients and advanced cooking methods used by Chipotle are second to no other fast-food chain. Among recent developments, the leader in fast-casual dining concepts plans to become absolutely GMO-free by the end of 2014. Although the aim is not new, it shows Chipotle’s commitment to bring fresh ingredients to the table. Besides offering high-quality meals to its customers, the portions are generously sized and the value is unmatched. There are very few places that can fill you up for less that $10 with quality food, and not junk. The triad of fresh, pure ingredients, cutting-edge cooking methods, and tremendous portions gives Chipotle a mouthwatering appeal.
Chipotle Mexican Grill originated in Denver, Colorado in 1993. In 1998, McDonald’s became the majority shareholder; however, in 2006, McDonald’s divested its controlling interest. Chipotle became a public company listed on the New York Stock Exchange in 2006. It currently has 1,083 locations across the United States and Canada. In May 2010, Chipotle expanded into Europe, opening their first restaurant in the United Kingdom. (Form 10-K Chipotle Mexican Grill, Inc., 2011)
In recent years, it is not even necessary to turn on the news to hear about the bad reputation farming has been getting in recent years. With the media focusing on things like drugs in animals and Pink Slime, or Lean Finely Textured Beef, it is a wonder that people are eating “non-organic” foods. However, many pro-farming organizations have been trying to fight back against these slanders. Still, the battle is not without heavy competition, and a good portion of it comes from Chipotle, a fast food Mexican restaurant that claims to only use completely organic ingredients in their food. Chipotle is constantly introducing advertisements claiming to have the natural ingredients, while slandering the names of farmers everywhere.
Chipotles has taken the market share during their launch of the new Vegan option. “Chipotle Mexican Grill introduced Sofritas, the first vegan meal offered by a national fast food chain that's not a salad or a veggie burger.” (Neporent, 2013). Taco Bell and Chipotle share the same market share, and there is a potential that
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.
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.
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
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.
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
This study will identify what form of advertising works best for the brand to reach their target audience and get them to make a purchase. By identifying what works best and what millennials respond to, specialists will be able deliver the group’s needs and communicate with them more efficiently creating repeat buyers and brand loyalty.
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,
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
The fast-food industry is changing everyday. There are new products being introduced in the market and new slogans being created. The companies in the fast-food industry will do their best to make the greater burger, and to make bigger and better fries.
By choosing to expand into markets later than other fast food restaurants Burger King hopes to avoid the problems of developing infrastructure and establishing a market base. For instance, by following McDonalds into Brazil, Burger King avoided the need to develop the infrastructure and mark...