Question & Answer: Please write a four page case study about Chipotle: Mexican Grill, Inc:Food with integrity….

1.The history, development, and growth of the company over time.

Chipotle Mexican Grill (Chipotle) is an American chain of fast casual restaurants in the USA, UK, Canada, Germany and France. It started as a fast casual Mexican restaurant in Denver, Colorado in 1993 by Steve Ells and was based on the principles of using locally sourced produce. In 1995, Chipotle opened the second restaurant with the profits from its first restaurant, and then opened its next restaurant with a Small business loan. In 1998, McDonald’s became a minority investor. In 1999, Chipotle expanded its business by launching its first restaurants outside of Colorado in Minneapolis and Columbus, Ohio. By 2001, McDonald’s had become Chipotle’s largest investor which allowed rapid growth. In 2006, McDonald’s spun off its non-core assets and divested Chipotle, which went public on the New York Stock Exchange. Today, Chipotle has over 1,500 stores and is a leader in the fast casual dining segment in the United States with revenue of US $475.60 million and a staff of more than 45000 in 2015.

2.The identification of the company’s internal strengths and weaknesses.

Internal strengths of Chipotle are strong organizational structure, skilful management and strong strategic plan for growth, while the internal weaknesses are high food prices compared to competitors and limited menu to the customers.

 

3.The nature of the external environment surrounding the company.

Chipotle operates the majority of its restaurants in the United States and has 11 locations in international markets such as the United Kingdom and France. In all markets, Chipotle is located in high foot traffic urban centers and neighborhoods with high household incomes and where schools, businesses, tourist attractions are located. This allows Chipotle to target wealthier consumers and trendy urban millennials who want fast food but also want a step up from traditional fast food restaurants. Chipotle does not offer drive-through service in contrast to quick service restaurants like McDonald’s and fast casual competitors like Qdoba Mexican Grill (Qdoba). Natures of the external environment surrounding the company are as under:

Economic: “Going Global” movement of Chipotle is helping the company. With the unemployment rate still high, consumers are turning away from other expensive options and turning towards cheaper healthier options like Chipotle.

Cultural/Social: The restaurants are popular for casual dining; people are getting educated and are demanding healthier foods now. People are eating out more because it’s convenient to eat out . The “going green” movement has also promoted Chipotle in a positive manner.

Technological: Due to new social media technology available at hand, it is easier to listen to your consumer’s voice. Businesses like Chipotle and others are embracing the technology; there is rise in online food ordering through mobile apps and websites. There are also newer and faster ways to prepare food, Chipotle introduced new heating machines that heat tortillas faster and more evenly.

4.A SWOT analysis.

Strengths:    

1. Strong brand image in U.S., U.K., Canada.
2. Use of naturally raised meat and organic ingredients in cooking
3.Strong presence with over 1500 locations
4. Positive brand image with customer loyalty                                                               5.Innovative ways of publicizing and advertising the brand                                                                   6.Online order and delivery

Weakness:

1. Comparitively high priced menu items due to use of natural and organic ingredient
2.Limited choice of menu
3.Major presence only in U.S. , UK and Canada

Opportunity:

1. Expansion in untapped regions and countries
2.Addition of new items to the menu
3.Growing trend of health consciousness amongst people

Threats:

1. Intense competition from other players
2.Volatility in price of raw materials.

5.The kind of corporate-level strategy that the company is pursuing.

Chipotle engages in a vertical complementary alliance with its suppliers. The company relies on close relationships with suppliers to continually supply all of its restaurants with fresh ingredients. Chipotle also has an equity strategic alliance with Pizzeria Locale, a fast casual pizza restaurant in Denver. Pizzeria Locale currently has one restaurant and is looking to expand with Chipotle’s backing.

6.The nature of the company’s business-level strategy.

Chipotle follows a differentiation strategy. Its products are premium priced and compete with other fast casual competitors such as Qdoba and Panera Bread as opposed to cost leaders such as McDonald’s and Taco Bell. Chipotle believes that even though the cost of using organic ingredients is higher, customers are willing to pay extra for healthier food. Chipotle’s “Food with integrity” mission positions itself as a provider of higher quality food by using fresh, gourmet and increasing organic ingredients successfully differentiates their products from competitors and meets the consumer demand for healthier food.

7.The company’s structure and control systems and how they match its strategy.

The Board of Directors, elected by the shareholders, is the ultimate decision-making body of the Company, except with respect to matters reserved to the shareholders. The Board selects the Chief Executive Officer who is charged with overall responsibility for managing the Company’s business. The primary function of the Board is oversight – defining and enforcing standards of accountability that enable senior management to execute their responsibilities fully and in the interests of shareholders.

8.Recommendation.

After analyzing all of the external factors, it is clear that Chipotle is a strong brand, every household member is aware of their foods and their organic approach towards it. The company has strong organizational structure with strong business model and attractive revenues. The company has huge potential for growth globally. With the assistance of green trends, organic foods, technology, and the economic factors playing in favor of Chipotle, the company is likely to see more growth in the coming years.