Chipotle: Exploratory

Research
Jessica Bear, Folakemi Bello, Selleka Fick, Jose Morales,
Tristan Strickland

MAR3613 • Homework 3
 The COVID-19 pandemic has affected many industries around the world, one being the

fast-food industry. Chipotle was one of the many restaurants that had to tweak their pricing and

business decisions in order to keep up with the higher labor and food costs that came as a result

of the pandemic. According to Matthew Goodman, a data analyst at M Science, “In recent years,

most fast-food restaurants had, maybe, raised prices in the low single digits each year…what

we’ve seen over the last six-plus months are restaurants being aggressive in pushing through

prices.” Along with in-store prices increasing, they also have increased their delivery prices. In

stores, their menu prices have increased 4% as of January 2022. Currently, their delivery prices

are about 21% higher than the cost of buying a meal in-store. Chipotle executives cite higher

labor costs as being the reason for the 4% increase. Still, their net income has almost doubled

since before the pandemic. Although they continued to make a profit regardless of their price

increases, some customers have expressed that the company was not being transparent about the

extra costs and believe that they tried to hide fees one way or another. Jacob Herlin, a data

scientist, gave his opinion on the matter stating, “They’re basically hiding the fees two different

ways, through that base price increase and through the hidden ‘service fee,’...I would very much

prefer if they had the same pricing and were just honest about a $5 delivery fee.”

In early 2022, Chipotle released their earnings for the last quarter of 2021. We saw a 7%

increase in their market, meaning that the chain had higher-than-expected earnings for that

period of time. During December of 2021, their prices increased by 4%. The total increase in

revenue of 22% (reaching $2 billion dollars overall) tells us that consumers were willing to dine

at Chipotle regardless of any price increases. Chipotle made a huge impact by facilitating their

customers' needs with their app. The Chipotle app accounted for 45% of sales during 2021, and

having both pick up & delivery options helped them reach the milestone of 26.5 million
consumers joining their loyalty program. Due to the pandemic, Chipotle was able to accelerate

the popularity of their app with ease. “The pandemic accelerated digital habits that enabled the

company to hone in on that segment,” says Chipotle’s CFO, Jack Hartung. Even while dealing

with the difficulty of the COVID-19 pandemic, Chipotle was able to open up 78 restaurants and

their sales have gone up by 15.2% overall.

Chipotle Mexican Grill, Inc. has market share in both the Mexican restaurant and the fast-

food restaurant industry. According to the company profile for Chipotle Mexican Grill produced

by IBIS World, Chipotle’s Mexican restaurant share is estimated to be 10.7% of industry revenue

in total. Although they have a market share that is lower than their competitors, they present a

stronger revenue growth and profit than their rivals. As a result of the COVID-19 pandemic,

most of Chipotle’s sales converted to online purchases. Taking this into consideration, Chipotle

had to conform to their audience and has managed to have great success during the pandemic,

especially because of the online rewards program they offer. This online program includes over

24 million members, which is around 25% of their total customers. Although they did have to

implement more digital options to serve customers as a result of the pandemic, the company had

already been working on integrating digital technology into their services, so this was not a

detrimental change for them.

 Research Problem

Over these past few years, we have seen many businesses struggle through the COVID-

19 pandemic. The primary strategy that most businesses deployed to stay afloat was increasing

the prices of their product. For example, Chipotle increased their prices by 4% in 2021, yet they

still managed to increase their sales by 15.2% overall. Even with quality cuts to their products to

try and cut costs, Chipotle still managed to increase their sales. The 4% increase in prices does

affect the overall sales, but it is not the only contributing factor. Although sales are doing well,

some consumers have still expressed their concern about increased prices with a lack of

increased product or quality. Many consumers do not want to pay more for a product that is the

same quality that they had before. The research problem we currently face is determining what

effect the new rewards system will have on the number of people who will continue to eat at

Chipotle regardless of menu prices.

Hypothesis

Independent Variable: Implementing a new and improved rewards system will increase customer

benefits.

Dependent Variable: Consumers will choose to continue eating at Chipotle.

Hypothesis Statement: Although some customers may complain about the menu prices, utilizing

a rewards system with better benefits will cause more customers to eat more at Chipotle.
 Sampling Frame

The sampling frame we are going to focus on is Chipotle customers that are enrolled in their

rewards program. The sample of people will include all of Chipotle’s customers, but to narrow it

down we’re focusing only on the app usage and the specific data that comes along with that. We

want to specifically understand how Chipotle customers feel about the price changes after using

the rewards program, and we believe this is the best way to do so. This is important because it

leaves little room for error or missing data fields and ensures that the data we receive is only

from Chipotle customers that have enrolled in the rewards program.

Cover Message

Dear Participant,

We are requesting your assistance with a study conducted by researchers at Chipotle on

both the price changes and new rewards system at Chipotle. You must be at least the age of 18

and have an active rewards account with Chipotle in order to participate. The study will take you

approximately 10 minutes to complete. Each question will have its instructions stated clearly

above it.

Since this study is anonymous, please do not provide any information that may reveal

your identity such as name, initials, phone number, etc. Participation in this survey is voluntary.

Participants who complete the survey in full will be entered into a raffle to win one $100

Chipotle Gift Card. If you have any questions or concerns, please reach out to us.

Chipotle Researchers

1234 Chipotle Lane, Tampa, FL 33617

1-800-BURRITO (1-800-287-7486)

ChipotleResearchers@Chipotle.com
 Survey Questions

Nominal: What do you like the most about eating at Chipotle?

● 1 - Quality

● 2 - Convenience

● 3 - Pricing

● 4 - Rewards System Benefits

Ordinal: How satisfied are you with our new rewards system?

● 1 - Extremely Dissatisfied

● 2 - Somewhat Dissatisfied

● 3 - Neither Satisfied nor Dissatisfied

● 4 - Somewhat Satisfied

● 5 - Extremely Satisfied

Interval: How likely are you to return to Chipotle? (Zero to Ten Scale)

● 0 - Extremely Unlikely

● 10 - Extremely Likely

Ratio: How many times in a month do you visit Chipotle?

● 0-2 times per month

● 3-4 times per month

● More than 4 times per month

Likert Scale: I am okay with the price of my meal from Chipotle.

● Strongly Disagree

● Somewhat Disagree

● Neither Agree nor Disagree

● Somewhat Agree

● Strongly Agree

Open-Ended Questions

● Describe how you feel about Chipotle’s current menu prices.

● Does Chipotle’s rewards system help offset the increased prices? Why or why not?

Survey Link

Chipotle Satisfaction Survey

Article PDF’s

● Article 1: Inflation Hits the Fast-Food Counter - The New York Times.pdf

● Article 2: Chipotle Shares Gain After Solid Earnings

● Article 3: Chipotle Mexican Grill, inc. - Company Profile