Chipotle Mexican Grill operates as a fast-casual company which provides order-at-counter services. Furthermore, Chipotle Mexican Grill provides Mexican Americans cuisine to its customers across the United States and in some countries worldwide (Chipotle Mexican Grill). Chipotle Mexican Grill provides salads, burritos, burrito bowls, and tacos in its 2,700 outlets through its chipotle menu. Besides, the company possesses around 40 outlets worldwide with a non-chipotle menu offering rice, salsa, veggies, carnitas, chicken, beans, steak, free-range pork, and sofritas, to name a few. Nevertheless, the company provides drinking places, Mexican restaurants, grills, and food services. Geographically, the company has a significant focus on the local, national, regional, and global markets. Chipotle Mexican Grill operates 2491 stores, with a high number in the United States and a few outlets in United Kingdom, France, Canada, and Germany.
Since the foundations of Chipotle Mexican Grill in 1963, the company has experienced recommendable growth in revenue and size. As per Chipotle Mexican Grill, the income 2020 income statement of the company indicated a crucial increase in revenues with a growth rate of 7.1 percent, accounting for $5.9 billion compared to $5.6 billion in 2019. Moreover, the financial statement of the fourth quarter of 2020 indicated an increase in revenue increment with 11.6% representing $1.6 billion. Notably, the comparable restaurants’ total sales experienced growth of 5.7%, while digital sales increased by 177.2%, accounting for 49.0% of the company’s total sales (Chipotle Mexican Grill). Besides, the company managed 7.1% growth in 2020accounting for $6.0 (Chipotle Mexican Grill). Despite the COVID 19 pandemic, the company remained competitive while focusing on the health and safety of the customers and employees due to long-term investments such as effective air circulation systems and hygienic practices, including providing sanitizers in outlets, social distancing a d wellness protocols.
Chipotle Mexican Grill possesses approximately 67,680 employees operating in different outlets in the United States and outside. According to Walker and Greg, the enterprise operates in a profoundly competitive landscape while considering elements such as food quality, location, taste, services, and price (3). The competition originates from local, national, regional, and globally operated firms in the industry. Notably, most of the company’s competitors provide delivery, carry-out, and carry-in to their customers. Similarly, the competitors offer low-carbohydrate menu items targeting specific consumers with special dietary needs and preferences (Gilliard et al. 35). Some of the primary competitors include Taco Bell, Qdoba Mexican Eats, Moe’s Southwest Grill, Baja Fresh Mexican Grill, and Rubio’s Coastal Grill. The media outlet in the United States significantly covered the company’s story of hiking prices due to the rise in wages. The story was covered by The New York Times, CNBC, and INDEPENDENT.
Chipotle Mexican Grill possesses a vision, mission, guiding principles, and strategic priorities that enhance smooth operations, teamwork, innovation, and focus on the organization’s goals, contributing to the enormous growth. Company mission exits as “Food with Integrity while vision statement persists as “To do more than rolling burritos while working to cultivate a better world.” moreover, the company possesses well-outlined values which exit as the guiding principles in daily operations to achieve the target goals. The firm core value focuses on using excellent ingredients, including freshly sourced from the farm, and concentrates on quality and responsibility. Such values have an integral role in the growth of the company. Moreover, the company’s strategic priorities include being culturally relevant, leading to the customer’s development of loyalty and love. Furthermore, growth strategies concentrate on modernization and digitalization of the company services leading to a convenient experience for the customers. Notably, the primary market target of Chipotle Mexican Grill exit as the population in urban areas, youth millennial professionals, and college students.
Five Forces Analysis
Bargaining Power of Suppliers
Most of the companies operating in this industry source their raw materials from various suppliers, which allows the company to influence its suppliers. According to Alhadlaq, Chipotle receives its raw material from small farms in which the company can effectively and successfully change the supplier in case of an increment in prices (1250). Moreover, the company has significant consideration while selecting suppliers since the raw materials have an essential influence on the final product. As a result, suppliers have average bargaining power, which increases the profitability of the company.
Competitive Rivalry
Chipotle operates in a highly competitive industry with competitors running various outlets in the United States and abroad. Notably, extreme competition would lower prices, contributing to driving down company profitability (Walker and Greg 3). However, differentiation in factors comprising product, innovation, taste, brand name, price, quality, customer experience, and mode of delivery persist as a vital factor in the success of companies (Business Strategy Hub). Chipotle’s success and competitive advantage originate from increasing food quality, taste and improving consumers’ experience.
Threat of Substitute
Chipotle encounters competition from various products and services, which could substitute for the company products and services such as grocery and restaurants. Furthermore, fast food companies provide different menu items, substitute firms cheap, and fast for dining (Gilliard et al. 34). Equally, substitutes compete through marketing methods and sustaining the brand name. Moreover, Chipotle focuses on offering its customers Mexican American cuisine in a fast-casual system.
Threats of New Entrant
Fast-casual services and products exit as the segment with the fastest growth rate in the industry, attracting various entrants. An increase in the fast-casual segment players leads to an increment in the threats of the new entrant (Business Strategy Hub). For example, the recent introduction of inline grocery exits as a threat to Chipotle as people prefer shopping online instead of buying company products found at physical stores (Alhadlaq 1250). Notably, Chipotle overcome the challenges of the new entrants through brand name loyalty.
Bargaining Power of Buyers
Customers have constant demands to meet their preferences and satisfaction in the industry in which they focus on buying quality products and services at low prices. Such factors make the company encounter pressure in long-term profitability (Business Strategy Hub). However, an increase in quality due to the type of raw materials used leads to a positive reaction and customer retention.
Chipotle SWOT Analysis
Chipotle’ Strength
Chipotle possess various international strategic factors contributing to its strength and competitive advantage in the industry. Business Strategy Hub asserted that the company provides quality and tasty foods to consumers, including burritos, tacos, and salads. Furthermore, the firm offers fresh food with diverse ingredients and spices, which critically satisfies customers (Business Strategy Hub). On the same note, the company products and services have reasonable prices leading to customers getting high-quality foods at averages prices with a menu ranging from $1.40 to $8.0 (Business Strategy Hub). The firm digitalized its operations by providing an ordering app to customers to prevent waiting for lines during peak hours such as dinner and lunch. Nevertheless, the company maintains a significant relationship with suppliers leading to acquiring high-quality raw materials.
Chipotle’s Weaknesses
Although the company possesses various strengths, the firm has diverse weaknesses which originate form internal strategies. For example, the organization depends on a limited supply of ingredients, including pork, chicken, and beef (Walker and Greg 5). Furthermore, the company has experienced integrity and quality issues due to the E. coli case in 2015. Besides, firms lack the side range of menu items, limiting consumers from selecting their preferences, which is a disadvantage (Alhadlaq 1249). Nevertheless, Chipotle has encountered a high level of sodium content, which causes different health complications, including high blood pressure.
Chipotle’s Opportunities
Chipotle has diverse opportunities by focusing on external growth strategies such as expansion to the global market. As per Business Strategy Hub, most company outlets are located in the United States; thus, the firm should focus on expanding into the international market. Besides, the company has significant modernization and digitalization opportunities through online ordering and payment (Business Strategy Hub). Furthermore, opting for drive-through services presents a fundamental advantage to the firm due to convenience and easy access to products by consumers (Alhadlaq 1250). Equally, training and development programs and retaining performing employees would increase the company’s productivity and improve the competitive value.
Chipotle’s Threats
Growing competition poses a critical threat to Chipotle due to various new entrants and substitutes. On the same note, the company experiences a loss of consumers’ loyalty and trust due to food-borne illness, which has affected customers in different states in the United States (Business Strategy Hub). Such cases resulted in most customers avoiding chipotle products leading to a decline in sales and revenues (Alhadlaq 1250). Nevertheless, legal proceedings negatively impact the company regarding the low level of calories due to impacts on brand reputation.
Strategic Plan
Chipotle possesses various challenges for the company going forward due to diverse reasons. For example, the company encounters problems in attracting and retaining performing employees. The industry is currently experiencing labor challenges that negatively affect the company’s operations. Similarly, the business has experienced different challenges in the supply chain, which affects production. For example, Chipotle faced a shortage in pork leading to a stoppage in serving pork-related products in various restaurants due to suppliers who violated standards.
| Goals | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Digitalization | Online ordering | Online ordering and delivery | Online ordering and delivery | Digital supply chain management | |
| Regional and global expansion | North American and Latin American | Europe (increase in the number of outlets) | Asia | Africa | Australia |
Regional and global expansion exist as the excellent path forward for the company. The international market possesses significant opportunities for increasing the revenues of the organization.
Work Cited
Alhadlaq, Ibrahim. “Chipotle’s Strategic Marketing.” International Journal of Scientific & Engineering Research, vol. 7, no. 2, 12 Feb. 2016, pp. 1248-1251, www.ijser.org/researchpaper/Chipotles-Strategic-Marketing.pdf. Accessed 6 July 2021.
Business Strategy Hub. “Chipotle’s SWOT Analysis (2020).” Business Strategy Hub, 3 Feb. 2020, bstrategyhub.com/chipotles-swot-analysis/. Accessed 6 July 2021. https://bstrategyhub.com/chipotles-swot-analysis/
Chipotle Mexican Grill. “Chipotle Announces Fourth Quarter And Full Year 2020 Results – Feb 2, 2021.” Chipotle InvestorRoom, 11 June 2021, ir.chipotle.com/2021-02-02-Chipotle-Announces-Fourth-Quarter-And-Full-Year-2020-Results. Accessed 6 July 2021. https://ir.chipotle.com/2021-02-02-Chipotle-Announces-Fourth-Quarter-And-Full-Year-2020-Results
Gilliard, Debora J., David Lynn Hoffman, and Sally Baalbaki. “Is chipotle mexican grill successfully recovering from its food-related incidents?.” Journal of Marketing Development and Competitiveness 11.4 (2017): 34-48. http://m.www.na-businesspress.com/JMDC/JMDC11-4/GilliardDJ_11_4_.pdf
Walker, Russell, and Greg Merkley. “Chipotle Mexican Grill: Food with Integrity?.” Kellogg School of Management Cases (2017): 1-7. https://www.reachcambridge.com/wp-content/uploads/2017/06/Mexican-Grill-Case-study.pdf
