Business Strategy

Review
Syndicate 10
ANTHONY 291 17 005
SOFIA PUJIASTI 291 17 053
AFRISKA YUNI ANGGRAINI 291 17 238
ARFAN NUR AKBAR 291 17 246
Chipotle Mexican Grill

 Founded in 1993 by Steve Ells, created a new segment of dining

industry, fast-casual
 Vision : “to change the way people think about and eat fast food
 Serves burritos, tacos, and nachos that can be personalized that
made from fresh and high-quality ingredients
 Menu and food preparation (the menu at chipotle mexican grill
restaurants was quite limited-buriritos, crispy and soft tacos and 16
ingredients, the workspace more closely resemble the layout of
kitchen in fine dining restaurant, kitchen crews used classic cooking
method). (2013) New Vegetarian menu and it is called sofritas.
 (2006) Chipotle goes public and become independent enterprise.
Chipotle Mexican Grill
 Ditched the out of sight kitchen idea and created an open kitchen
design.
 Serving order (customers order by speaking directly to the employee
who prepares the food and is preparing the order behind the counter).
Improved by serving order using fax, online, or via an iphone ordering
app
 Marketing (traditional Outlets, “owned media” as food festival,
community outreach, social media, world of mouth). (2013) scarecrow
marketing program (3 minute animated film and a game (for ipads and
Iphones)
 2013 Revenues of $3.21 Billions, with a 17,7% increase over 2012
 (2014)Chiphotle began an initiative to stop using ingredients grown with
genetically modified seed in all of its dishes and shifting to organic
product.
 1.595 unit operation, in 43 states as of February 2014
Financial Performance
Return on Equity
24.00%

22.00%

20.00%

18.00%

16.00%

14.00%

12.00%

10.00%
2007 2009 2011 2012 2013
Financial Performance
Current Ratio
3.4
3.34
3.3
3.2 3.18
3.1
3
2.91 2.93
2.9
2.8
2.75
2.7
2.6
2.5
2007 2009 2011 2012 2013

Based on the Current Ratio statistics, Chipotle grew its company from 2007 to 2013. This is
interesting because on those period there was a time of economic depression, but Chipotle
maintain to keep growing
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Restaurant Industry Analysis

Unit Count Increase over Prior Year

Fast-casual is positioned as fast
2007 11,013 11% food (convenience) but with
2008 12,108 10% focus on food quality & service.
2009 12,801 6%
2010 13,161 4% People tend to move away from
2011 13,643 7% fast-food consumption through
2012 15,312 12% a healthier and the food
2013 16,215 6%
integrity.
Chipotle Key Success Factor

 Great Company Strategy for Expansion

They are expanding at a faster rate, with information on 1.600 specific
sites now in the U.S with Chipotles, exactly what regions, what markets,
what intersections they would want to go with the new concepts.
 Menu strategy
Chipotle’s menu strategy had been to keep it simple, so it much easier
to create those few things exceptionally well. The high quality of meats
and vegetables also help drive the sales of the simple menu
 Serving order quickly
One of Chipotle’s biggest innovations had been creating the ability to
have a customer’s order ready quickly.
Chipotle Key Success Factor

 The Commitment to Food With Integrity

Chipotle began to increase its use of organically grown local produce,
products from animals that were raised with animal welfare standards
and isn’t fed by antibiotics and growth hormones
 A new diagnostic and planning tool for field support personnel
Customer throughput on the service line at Chipotle restaurants
increased during the peak lunch hour and peak dinner hour.
 Strong Supply Chain Management Practices
The fast-casual industry must be able to cut cost to maintain the similar,
lower level prices. Chipotle utilized the services of 23 independently
owned and operated regional distribution centers to purchase and
deliver ingredients to the restaurants.
Chipotle Key Success Factor

 Marketing
Word of mouth publicity from customers telling others about their
favorable experiences at Chipotle restaurants was the most powerful
marketing of all. They also did advertising mix, events, some food-
related issues into Scarecrow marketing program
 Restaurant Site Selection
Chipotle had an internal team of real estate managers that devoted
substantial time and effort to evaluating potential locations for new
restaurants.
 Strong Employee Staffing
It’s important for every company to have employees who buy into the
culture of the company, so that the customer can have the best
possible experience.
Chipotle Strategic Moves

 Chipotle use a First Mover Strategic Moves to maintain the leading

In fast-casual Mexican Grill
 Using high-quality, fresh ingredients and classic cooking methods,
and ready to be served one to two minutes after they were ordered
 Enabling customers to select the ingredients they wanted in each
dish by speaking directly to the employees assembling the dish on
the serving line
COMPETITOR
Taco Bell
 Leading in US Mexican quick-service restaurant segment, with 49%
market share
 Yum! Brands, the Taco Bell’s parent company announced in 2013
will open up 3,000 new locations worldwide, with most of franchising
 Taco Bell keep innovating new and creative menu options that
appeal to the target market
 Taco Bell using a defensive strategy move, which is maintain the
economy-pricing to thwart lower price, with the new menu
COMPETITOR
Moe’s Southwest Grill
 There are currently 500 fast-casual Moe’s Southwest Grill locations in
37 states and the District of Columbia, most Moe’s location were
franchised
 Currently plans to open up 100 new restaurants in 2014
 Moe’s uses high-quality ingredients: all natural, cage-free, white
breast meat chicken, steroid free, grain-fed pulled pork, 100% grass-
fed sirloin steak, and organic tofu.
 Trying to saturate the market through franchising, in attempt to
overtake fast-casual dining spots (from Chipotle and Qdoba)
 Moe’s using a defensive strategy move, by challenge quality and
safety of competitor’s product
COMPETITOR
Qdoba Mexican Grill
 Qdoba is the 2nd largest fast-casual Mexican brand in the US as 2014
 There were 615 Qdoba Mexican Grill restaurants in 46 states, District
of Colombia, and Canada
 Qdoba management believes that they have long-term growth,
and can open as many as 2,000 locations
 Qdoba try to saturate the market through franchising
 All menu of Qdoba made from fresh ingredients and innovative
flavors; can be customized based on customer preferences
 Training and development the employees by the high-performing
general managers and team members
 Try to build brand awareness and generate customer traffic by
national advertising promotion
Recommendation for Chipotle

 Marketing and advertising

Chipotle does very little national marketing and advertising. They should
consider to hold campaign promotion in certain events (holiday, summer,
music, Christmas, etc.) using billboard in favorite spot.
In many ways Chipotle has created its own culture in the new generation.
They became popular on social media and are trending in many other
social forms. They need to start marketing nationally, this will attract the
new customers who may not even know what Chipotle is, and clarify
about something bad from word-of-mouth publicity
 Brand Awareness
Chipotle need to make consumers more aware of the pros and cons of
high quality meats and vegetables. They can do that by launch the
marketing campaign about their healthy and wellness for every human
being.
Recommendation for Chipotle

 Additional Catering
Chipotle only averages about 1% of catering sales per yearly sales.
Catering allows for Chipotle to enter the live of consumers who
wouldn’t normally go into a Chipotle restaurant. Catering will also build
brand awareness and intrigue into new consumer’s life.
 Ingredients
The cost of food, beverage, and packing is raising from 30.7 % to 33.4
%. This due the rising market price for organically grown ingredients
and natural meats. In the long run, this poses a very serious threat for
Chipotle. So, they need to build better relationships and contracts with
a fixed cost for a long time with organic farmers.
THANK YOU !
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