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Analysis of Chipotle Mexican Grill

Chipotle Mexican Grill (CMG or Chipotle) was founded in 1993 by Steve Ells. The eatery would achieve tremendous growth in the following 20 or so years. By 2014, the restaurant had over 1600 outlets with more than ten outside the United States. Many would be surprised at what caused such a rapid expansion of Chipotle. A close look at the companies’ policies, including its vision, mission, goals, among other factors, shows that the growth that CMG realized was by design and not chance. This paper will look at the company’s problems and propose relevant solutions as well as what CMG did well and what it did not.

Problem Chipotle is Facing and its Solution

Chipotle growth has always come from retained earnings, and the company does not borrow. It thus maintains a modest growth rate even in a good year. Recently, however, the management has been put under growth pressure by speculators and some shareholders who expect a 47% growth rate. This pressure could put the company in a fruitless search for productivity leading to the failure and abandonment of its vision and mission. To avoid yielding to this unproductive pressure, the stakeholders of Chipotle Mexican Grill Inc. should focus on offering a great customer experience and only focus on the financials after the core operations are concluded.

Factors that Made Chipotle Perform well

There are a number of factors made Chipotle outperform its competitors, the overall industry, and even the S&P 500. The first one was having a great visionary leader in Steve Els. By ensuring “Food Integrity,” Mr. Ells ensured that profitability, the company’s primary objective, was achieved. Chipotle had a precise aim of making its products like burritos from natural ingredients. Steve Ells himself testified that his company’s goal was to remove antibiotics from the company’s menu altogether. This talk was justified by concrete actions and by 2010, all pork that the restaurant sold was natural. The chicken was also required to be naturally raised, and the chicken that the company procured had to meet standards. This move made the products slightly expensive, but the sales rose demonstrating the customer’s value for quality food.

The move to offer “food with integrity” meant that CMG had to adopt a mode of procurement different from its competitors. The ingredients had to be supplied by Chipotle-owned supply centres so as to meet the company set standards. Company-owned distributions, as expected, were expensive, but the company compensated for the losses in other sectors. The company also offered a great customer experience by providing few menus and many extras, thus making an extended menu with few resources. It fulfilled its say of “a few things a thousand ways,” (Hoffman, 2014). The company also ensured a reduced ordering time, making it more reliable than its competitors.

From the start of its operations in 1993, Chipotle focused on marketing and building a solid brand name. The location of CMG stores was in high traffic areas, but their stores were smaller in size, thus paying a smaller rent compared to competitors. Another strong branding technique that the company used was making their meals taste significantly better than their competitors. The company also hired expensive employees and promoted staff, facilitating employee loyalty. In addition to these, Chipotle enhanced operational efficiency, took advantage of emerging trends and technologies, and projected an image of a great brand.

Areas Chipotle did not do well

There are a few areas that CMG failed to capitalize well. One was the price of its products, especially in comparison to Trader Joe offering healthier diets at a lower cost. CMG was also highly competed by Wholefoods and Panera, which, despite being marginally expensive, served healthier diets. Chipotle did not take the required steps to keep imitators like Boloco away. Its advertising strategy was also wrongly made for the wrong target men, instead of women and children.

Reference

Hoffman, A. N., (2014). Chipotle Mexican Grill Inc.: Conscious capitalism by serving ‘food with integrity’. SAGE Publications. Web.

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Essay4Business. 2023. "Analysis of Chipotle Mexican Grill." January 22, 2023. https://essay4business.com/analysis-of-chipotle-mexican-grill/.

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Essay4Business. (2023) 'Analysis of Chipotle Mexican Grill'. 22 January.

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