Professional Documents
Culture Documents
David Škoda
Przemek Walak
Cato Meerschaert
Alper Sak
1. Executive Summary
Chipotle is one of the first chains to establish a fast-casual dining market and
is leading in the fresh-Mcx market. Chipotle’s burrito targets special segments in the
middle class market, by using higher quality ingredients in growing suburban and
urban areas. While most fast food chains rely on advertisements that promote their
menu, with limited-time discounts, new items, and value menu; Chipotle focuses on
its quality ingredients, which generates new interest and culture to how we perceive
fast-food through a number of promotional events and word of mouth.
2. Situation Analysis
Chipotle possesses good information about the market and knows a great deal about
the common attributes of the most prized customer. This information will be leveraged to
better understand who is served, what their specific needs are, and how Chipotle can better
communicate with them.
Target Markets
● Casual
● Health
● Family/Friends
● Organic
● Balanced
The profile for the typical Chipotle customer consists of the following geographic,
demographic, and behavior factors:
Geographics
Chipotle identifies a target market where it sees potential growth. Chipotle is primarily settled
in America. With New York being the city with the most Chipotle restaurants. They want to
expand their mark to Europe. Chipotle has already opened in France, Germany and United
Kingdom.
Demographics
Ages 18 to 28 are especially interested in Chipotle. They want to bring people together
regardless of their origin and social class. So it's a place for everyone, but the focus is mainly
on young urban professionals and college students. We can also say that people from Y
generation are our target because eating together gives them an opportunity to spend time
with the closest family in good standards and at a good affordable price.
https://www.populationpyramid.net/portugal/2021/
According to the demographic pyramid, our target is the dominant majority. People of
productive age as well as the generation X population are the group to whom the restaurant's
offer is directed.
Behavior Factors
● Clients enjoy trying new food/ cuisines
● Clients want to spend time with friends and family eating outside
● Clients expect a valuable healthy meal
Chipotle Mexican Grill is leading in the USA as a Mexican food chain. They have combined
fine dining and fast-casual style food well. There is a wide variety of Mexican food, but
Chipotle has a limited menu. They serve burritos, crispy corn tacos, soft flour tacos, salads
and bowls. This also includes side dishes and drinks. The company seeks to fulfill the
following benefits that are important to its customers. First, they want to use fresh
ingredients. They work with local farms for this. Second, Chipotles efforts to increase their
use of naturally raised meat, organic produce, and dairy without added hormones. Lastly, they
want something for everyone. So vegan, vegetarian but also with meat.
2.1.3 Market Trends
The restaurant carries the interest in Mexican food, which exists in different regions
and geographies, to a different dimension with the addition of local flavors. Unlike its
competitors, it is advantageous to keep its menu short and thus benefit from the effect of
simplicity on customers. The emphasis here is on the restaurant's use of healthy meat and
vegetable products, as well as the campaigns it has created for this purpose. It responds to
customers' demand for healthy meat and organic vegetables. Another trend is vegan Mexican
food. The restaurant, which makes experiments in different regions for this purpose, is getting
ready to respond to the demand that this trend will bring. When we examine the market
trends, Mexican food, which has already attracted great attention in America, has started to
attract attention in other parts of the world. The overseas branches of the restaurant are
increasing in line with this demand. There is a great potential for this, especially in the
European market. By constantly promoting its products in the company, it assumes the role of
market founder here.
Lifestyle food trends which are already developing or are expected to come are:
● Pantry Meals,
● Mental Health Cooking,
● Veganism and Vegetarianism.
● “Flexitarian” Diets.
● Carb Alternatives.
● Takeout.
● Low-Waste Foods.
Due to the above mentioned trends, chipotle has a good chance to fit into the
current trends with the idea of healthy balanced Mexican food.
Chipotle Mexican Grill has many competitors, especially in the US market. Among
the Mexican food restaurants trying to position themselves differently, this company is the
most successful. Although the company had to increase the prices of its products due to the
production of healthy meat products and its orientation towards organic agriculture, it
continues to grow rapidly in the market. According to the statistics of 2019, the company
continues to grow with the revenue it has earned with the 360 million dollar investment made
by the McDonalds company in its investment tours, as well as its revenues of $ 5.586 billion,
as well as the branches it has opened locally and abroad. Placing people's perception of
healthy Mexican food has been an attractive force in its growth.
The following SWOT analysis captures the key strengths and weaknesses within the
company and describes the opportunities and threats facing
2.2.1 Strengths
● Chipotle has no debt that means it is low risk and highly credible. Chipotle
could take out loans to expand at a faster rate and pay it off with their
increasing revenue
● Strong influence. Chipotle is changing the way people think and how we eat
fast food. With a long standing commitment to serve food from more
sustainable sources. Chipotle is at the forefront of the responsible farming
trend of getting the best ingredients at an affordable price and with care to the
responsible farming.
1
https://ir.chipotle.com/2021-10-21-Chipotle-Announces-Third-Quarter-2021-Results
2.2.2 Weaknesses
● Limited menu. With 65 000 different combinations. Technically the menu consists of
only three options ( burrito, tacos, burrito bowl).
● Higher price point than competitors. Chipotle serves higher quality which means
higher price. Chipotle comparing to other fast food competitor save their product at
higher price for organic ingredients
● Lack of brand awareness. Chipotle’s lack of brand awareness doesn’t use traditional
ways of promotion and advertisement.
2.2.3 Opportunities
● Lots of geographic growth. Presently the company operates all of its restaurants
within the USA with potential growth. Chipotle entered Europe. There is significant
moment and area for growth before the company hits saturation.
● Product branding. Many products are not affiliated with Chipotle are using Chipotle
for their sauces such as Subway who also has their own Chipotle sauce
● Asset leverage. Chipotle has high profit and no debt. Chipotle is a low risk investment
with strong grounds. If Chipotle decides to borrow money they could acquire large
sums for expansion.
2.2.4 Threats
● Competition. Chipotle has lots of room and market space for competition. Chipotle is
fairly new to the whole foods market.
● Economic Slowdowns due to COVID and market changes. The pandemic still has a
big impact on the economic situation of the countries and basically every potential
customer.
● Rise of prices due to expansion. Chipotle is a growing chain and it may be hard to
find organic suppliers for all its restaurants. Chipotle may have to face either higher
prices, lower quality or fewer restaurants.
● COVID restrictions. Limitations related to the limits of people staying in the
restaurant as well as the still unpredictable situation related to the threat of new
mutations of the virus
2.3 Competition
Unlike many of its competitors in the USA, the company attaches great importance to
word-of-mouth advertising strategy. In addition, unlike other Mexican food restaurants, they
make propaganda that they work with facilities that adopt sustainable and organic production
methods, especially in meat products. As a result, it has created a perception that it produces
healthy Mexican food, unlike its other competitors. In addition, the company distinguishes
itself as a green business with the wind turbines and energy-saving devices it uses in some of
its restaurants. Therefore, with the perception that "Chipotle Mexican Grill is a green
business with healthy products", it has established an edge over its competitors. Because of
the free products they provide, it has also achieved rapid growth in European countries that
are not familiar with Mexican cuisine compared to its other competitors.
As a matter of fact, Portugal and other EU countries are more sensitive to healthy and
organic food than the USA. Another competitor is the restaurant chain “3 Amigos”. This is
more of a local chain restaurant. The restaurant has not only Mexican dishes but also popular
dishes from various cuisines on its menu. In this case, the branches of the restaurant in
touristic areas and local loyal customers are effective. The company allocates an insufficient
budget to the advertising campaign. Therefore, it will not be difficult to stand out against this
company in the beginning. Another local Mexican cuisine chain is the company "Guacamole
- Gourmet Mexican Grill". This company is developing rapidly unlike its other competitors.
In a sense, it has an appearance that has completed its institutionalization and is in
preparation for franchising. But the main problem in this company is that the company cannot
make a quality standard effective in its branches. While there are very positive reviews on
one branch, there are very negative reviews on the other.
Chipotle Mexican Grill has created a menu consisting of 4 main categories and side
products for its customers for 2021:
● Burrito, which is the main product of Chipotle Mexican Grill company, has an
important place both as a take away product and in traditional sales. Trials are made
about the product according to the tastes of different regions. In addition, it is made in
vegan and gluten-free production.
● Burrito bowl is the version of burrito served in a bowl. Because tortilla is not used, it
is lower in calories. When we examine the amount of food, it is as satisfying as a
normal burrito. It is also pleasing to the eye in terms of the placement of the dishes.
As with burritos, it is possible to choose chicken, steak, barbacoa and carnitas.
● Tacos, on the other hand, are offered in two different ways, excluding the ingredients:
Soft-shelled and hard-shelled. The company features better in its hard-shell taco
product than its competitors. The freshness of the ingredients is especially evident in
this product.
● Salads, unlike the burrito bowl, contain lettuce and vinegar. In addition, salads have 2
times more calories, contrary to what is known. Although it is not used in salads
under normal conditions, rice can optionally be used. Customers prefer it because of
its high calorie content as well as its taste. Salads are also being developed and their
proportion in the company's revenue is increasing.
● Apart from beverages, the company provides numerous by-products. In addition to
their great harmony with the main category dishes, they are also suitable for
consumption alone with drinks. Among the sauces served with chips, especially
tomatilla red-chili salsa sauce is said to add character to the restaurant.
Chipotle Mexican Grill is a large-scale company with multiple branches. In addition, it aims
to grow abroad. For this reason, there are some critical issues for the company:
● To take into account the financial risks against the restrictions caused by the epidemic.
Increasing awareness as well as facilitating people's access to products by
strengthening the package service network.
● Continuously auditing that the determined standards are applied in all branches.
Taking precautions against disruptions in the supply chain.
● To make innovations at regular intervals by increasing the feedback from the
customers, by constantly checking the satisfaction and demands.
● Implementing a development strategy to dominate new markets abroad. In order to
raise awareness, adding local flavors to the menu only in that market will be
beneficial.
3.1 Mission
Chipotle's mission statement is “to provide ‘Food with Integrity’.” The precision in
this mission statement is all about the singularity and the high level of focus associated with
Chipotle when it comes to what it does. There sounds the unwavering commitment of the
company to being the best in the provision of foods that leaves the client feeling appreciated
and honored. The following main points relate to this mission statement.
● Improving health. To satisfy this point in the mission statement, Chipotle
chose a unique brand that distinguishes the company from the rest of fast food
enterprises across the globe. The concept behind the food product preparation
methods in Chipotle emphasizes how the company values the health of its
clients
● Reasonable prices. In relation to the first element of Chipotle mission
statement, the quotations assigned to the various food items are without a
doubt the best a customer can come by.
● Food with integrity. When it comes to what it offers its customers, there is no
debate about the content in any of Chipotle’s food items. The company has
earned itself a name as one of the most trustworthy companies of its kind,
offering a balance in the fast food industry with its naturally made items. In
fact, it offers an opportunity for every guest to have their preferences and
options considered in everything they get. All they do is make an order and
specify the level of customization they would want made to meet their needs.
It is important that Chipotle plan concrete marketing objectives that align with their mission
and vision in order for a successful marketing campaign. We'll go into a little more detail
here.
● “Improve customer awareness about the availability of fresh and healthy products. In
the first year of marketing already 30%.
● Recover 100% of lost market share within two years of marketing.
● Improve revenue by 20% in the following year.” Abwanzo, B. (2017)
● “Becoming a more culturally relevant and engaging brand to grow love and loyalty.
● Digitizing and modernizing the restaurant experience to be more convenient and
enjoyable for customers;
● Running great restaurants with great hospitality and throughput;
● Being disciplined and focused to enhance the company's powerful economic model;
and
● Building a great supporting culture as Chipotle innovates and executes across digital,
access, menu and the restaurant experience.” Chipotle Mexican Grill (2018)
3.3 Financial Objectives
● To attract loyal customers of other Mexican restaurants and increase profit margins of
at least 1% per month by allocating a large budget for disinfection and cleaning in
order to get rid of the problems caused by the pandemic and maintain profitability.
● To prepare a budget for extensive market research as well as an important R&D
process for vegan products and overseas branches.
● Increasingly, COVID resources damage, making at least double-digit profits.
● Prepare a budget for a large-scale promotional campaign to attract customers back to
restaurants.
For Chipotle, their ideal target market is college students and younger millennials.
The target customers of Chipotle China are youth office workers who have limited lunch
time. This is because Chipotle primarily uses a digital platform. It mainly focuses on online
advertising and has a presence on social media. They want to bring people together regardless
of their origin and social class. So it's a place for everyone, but the focus is mainly on young
urban professionals. They are often into healthy lifestyles and they often follow the trends on
social media. So we are talking about people with the age from 18 to 28. People with a
cosmopolitan mindset, who value their lifestyle. People who are looking to test new things.
3.5 Positioning
Chipotle will position itself as a high quality, healthy restaurant. This positioning will be
achieved by leveraging Chipotle’s competitive edge: experience, passion and Food with
integrity. Chipotle burrito will be positioned as one of the most value packed fresh ingredient
burritos, making a long term commitment to serve better and higher quality food for a fair
price. The company provides only the best ingredients raised by respect for the animals and
environment and the farmers.
4.0 Marketing Tactics
4.1 Product
The Chipotle will be at customer’s full customization and have customer experience
from the entrance of the restaurant to making your food. The restaurant always serve
everything fresh. If the customer is not happy with the burrito, the company is ready to offer
a new combination free of charge in order to give you the best food experience. Chipotle will
achieve fast, significant market penetration through a solid business model, long-range
planning, and a strong management team that is able to execute this exciting opportunity.
4.2 Pricing
Chipotle burrito charges at a premium price and will be ready to increase their price
by small increments when needed. Chipotle is different from other fast food because the food
is grilled, prepared directly before serving it to the customer. The goal is to sustain or lower
the prices with the new suppliers and distribution system. According to the Mission “Food for
Integrity” the company will continue to serve the burrito with high quality ingredients at
slightly higher cost than most regular fast food meals.
The method is based on the cost method. It consists of adding up all the costs
necessary to produce a product, increasing them by the level of margin for the company.
Application is also the method according to value - the price is set in such a way that it is
attractive to the customer and stimulates him to make a purchase, high quality products are
offered at fairly low prices;
4.3 Distribution
Chipole uses a selective supplier that doesn’t use antibiotics in the meat and organic
farmers. The company pays attention to the integration between local suppliers and the brand.
According to the way of the places the restoration will be opened. The goal is to open
at the same time one restaurant in Lisbon and one in Porto. After aasys if the brand is
successful the company starts to open new points in the key localizations.
4.4 Communication
The message Chipotle Mexican Grill should convey is that it offers healthy Mexican
food to its customers, unlike its competitors. This message should be delivered to the client
on several different outlines. The first of these should be by showing the existence of
business partners who produce healthy meat and organic vegetables and obtain products
without using hormones and chemicals. For this, it would be beneficial to broadcast
documentaries showing the production process on both traditional television channels and
digital media . In this way, the support of people who are sensitive about health and
sustainable environment can be obtained.
Secondly, coupons can be given to online magazines and publishers to give their
followers to gain new customers and gain more loyal customers.
The target learns about Chipotle through social media (Instagram, Facebook, Tik Tok)
and traditional ways of advertisement (such as catalogs, emails, etc.), family and friends.
The two most important features of Chipotle Mexican Grill are; Its branches have
central, interesting and green architecture and an understanding of healthy and sustainable
food production. Speaking of branches, the restaurant in Illinois has a wind turbine and 75
restaurants have solar panels. It also made agreements with local producers. Although this
increases costs, it strengthens the claim of healthy and sustainable Mexican food. While
adding new flavors to its menu through the feedback it receives, it is also beneficial that it
does not give up on simplicity. Chipotle Mexican Grill positions the company as a vibrant
part of local life.
5.0 Financials
In millions of USD
Total revenues
Revenue
Other income
in total
- - - -
Gross profit
Selling /
general /
administrative
costsin total 256,05 254,44 260,29 221,34
Research
and
- - - -
development
Depreciation /
amortization
63,19 62,08 63,12 59,96
Interest
expenses
(income)
-netto from
- - - -
operating
activities
Extraordinary
costs
(income)
4,66 4,27 5,67 14,26
Other
operating
expenses,
total - - - -
Operational profit
- - - -
Others, netto - - - -
Netto profit / loss before tax
Minority shares
- - - -
Shares in subsidiaries
- - - -
GAAP correction
- - - -
Netto financial result before special items
- - - -
Chipotle Mexican Grill Inc. reported sales that exceeded analysts’ expectations for its
latest quarter a sign of consumer resilience in the face of recent menu price hikes.
● The closely watched metric of comparable sales rose 31.2% in the second quarter,
outpacing analysts’ projection for a jump of nearly 30%. The company also posted
restaurant margin, which is an important measure of profitability, that outpaced
expectations.
● Average Revenue Per Restaurant remained roughly flat at about $2.2 million between
2019 and 2020. However, the metric rise to almost $2.6 million in 2021 and They
expect to rise over $2.8 million in 2022.
General and administrative expenses for the second quarter of 2021 were $146.0
million on a GAAP basis, or $119.2 million on a non-GAAP basis, excluding $23.5 million
for a modification to 2018 performance shares to account for the unplanned effects of
COVID-19, $2.1 million of certain legal expenses, and $1.2 million of transformation
expenses. GAAP and non-GAAP general and administrative expenses for the second quarter
of 2021 also include underlying general and administrative expenses totaling $92.0 million,
$22.4 million of non-cash stock compensation, and $4.4 million related to higher bonus
accruals as well as payroll taxes on equity vesting and stock option exercises.
Net income for the second quarter was $188.0 million, or $6.60 per diluted share, an increase
from $8.2 million, or $0.29 per diluted share, in the second quarter of 2020. Excluding the
impact of PSU modifications, restaurant asset impairment and closure costs, legal proceeding
costs, and corporate restructuring expenses, adjusted net income was $212.8 million and
adjusted diluted earnings per share was $7.46.
6.0 Controls
6.1 Implementation
Overall, Chipotle has found unconventional ways to reach its target market,
predominately the millenials. The company promotes customers to explore their interest in
“food with a conscience,” by having a dialogue, not by preaching to customers with
expensive TV ads. Chipotle encourages customers to be active on social media and help build
awareness of the brand.
Before opening store, have tasting events with trucks. Trucks will be placed in large
Portuguese cities, events will be publicized over social media, through email and around the
city. Also trucks will have interactive online feedback, in addition to social media use. We
have planned also developing of our Portuguese version of Chipotle application for getting
news and special offers. Measure success/failure with the feedback and general success of
event.
Meanwhile we launch the social media campaign with tracking the number of clicks
on targeted group websites ads. Also we are going to track, we hope, increasing traffic in
visits per a day on the Chipotle website.
● Planning: 1-2 months. Design overall plan, secure trucks, build necessary media
components
● Action: 3 months. Advertising, promoting and inviting people. Social media
interaction invite/direct mail invite. Actual events (span over 1 month period)
● Evaluation and Implementation of stores in most successful areas (2 years)
6.2 Marketing Organization
● Chipotle Quietly Gives Pro Athletes Free Burritos For Life. For decades,
companies have been paying astronomical sums for celebrity endorsements.
The publicity and image-boost from a celebrity tweeting about or being
photographed with a product often justify the cost. While many companies
have tried to coax celebrities into talking about their products by sending them
free merchandise, Chipotle has been using a slightly different strategy.
● Chipotle Hosts Free Festivals And Generates Local Buzz. Since 2011,
Chipotle has been hosting “Cultivate”, a series of free festivals throughout
America with live music, celebrity chef demonstrations, artisanal food and
activities that spread awareness about sustainable agriculture.
Our backup plans will depend of future ongoing action and reactions to our marketing
strategy.
● Quantifiable metrics
○ numbers of sales leads obtained
○ customer reached
○ euro amounts achieved
○ impression/interactions on social media
● Qualitative factors:
○ Customer satisfaction and feedback
○ Examining strategic objectives from the implementation phase
● Controls:
○ Overall budget
○ Market share
Bibliography
Chipotle Mexican Grill. (2018, june 27). Chipotle Announces Growth Strategies Focused On
Winning Today And Cultivating A Better Future. Chipotle:
https://ir.chipotle.com/2018-06-27-Chipotle-Announces-Growth-Strategies-Focused-On-Win
ning-Today-And-Cultivating-A-Better-Future
https://www.investing.com/equities/chipotle-mexican-grill-inc-financial-summary
https://ir.chipotle.com/2021-07-20-Chipotle-Announces-Second-Quarter-2021-Results