Chipotle's Strategic Success

This assignment delves into the strategic vision, backward integration strategy, people-oriented culture, customization focus, and financial success of Chipotle Mexican Grill. It evaluates the company's internal and external environments using SWOT and Porter Five Forces analyses, and presents a detailed financial analysis from 2007 to 2013.

Case analysis: Chipotle Mexican Grill

TABLE OF CONTENTS
Overview......................................................................................................................................1
Strategic vision............................................................................................................................1
Strategies......................................................................................................................................2
Cultural aspects or evaluation......................................................................................................2
Marketing plan.............................................................................................................................2
Key highlights of Mexican Grill..................................................................................................2
Internal and external environment of the company.....................................................................2
External environment assessment: Porter five force analysis......................................................3
Financial analysis or evaluation...................................................................................................4

Overview
By doing analysis of the concerned case, it has found that founder of Chipotle Mexican
Grill has placed high level of emphasis on reinvention or innovation. Given case presents that
CEO of Mexican tends to focus on providing customers with fresh quality food that made with
fresh ingredients and classic cooking methods. In addition to this, restaurant owner also placed
emphasis on the adoption and execution of customization concept. On the basis of such aspect,
customers can select ingredients for the dish ordered by them. Further, in the service sector,
satisfaction level of the customers influence from several aspects such as interior, quality of
services and staff abilities. All such aspects show that strategic initiatives and actions that were
undertaken by the CEO of Mexican Grill highly prominent.
Strategic vision
Vision statement of Chipotle Mexican Grill is ‘to change the way people think about and
eat fast food’.

Strategies
Chipotle Mexican Grill focusing on employing backward integration strategy which in
turn results into efficiency enhancement and cost savings.
Cultural aspects or evaluation
Chipotle Mexican Grill lays high level of emphasis on indulging performance based and
people oriented culture. It believes that such culture will prove to be suitable from the
perspective of both customers as well as employees and thereby helps in getting the desired level
of outcome or success.
Marketing plan
Chipotle Mexican Grill is positioning its services on the basis of quality of ingredients,
customization and innovation.
Key highlights of Mexican Grill
 Customization in menu and food preparation
 Serving food to the customers quickly
 Strong commitment such as ‘Food with Integrity’
 Effective quality and supply chain management
 Competent and motivated staff
 Such restaurant unit lays high level of emphasis on undertaking traditional tool of
marketing which is less effective in the present times. Thus, for attaining success
restaurant owner needs to undertake modern marketing techniques. On the basis of such
aspect, CEO of Mexican Grill need to place advertisements on social sites such as
Facebook and Twitter which in turn helps in developing awareness among the large
number of customers.
Internal and external environment of the company
SWOT analysis has been done for analyzing or evaluating internal environmental aspects
of Chipotle Mexican Grill. Hence, SWOT analysis of restaurant is enumerated below:
Internal environmental assessment: SWOT analysis

External environment assessment: Porter five force analysis
 Bargaining power of buyers: In the context of fast food restaurant sector, bargaining
power of the customers can said to be high. The rationale behind this, low switching cost,
large number of providers and availability of more substitutes.
 Bargaining power of suppliers: Under such category, it can be depicted that bargaining
power of the supplier such as Chipotle Mexican Grill due to the presence of large number
of chains which are offering fast food services to the customers at reasonable prices.
 Threats from substitutes: Strong forces regarding high availability of substitutes and low
switching cost may be served as a threat for Mexican Grill.
 Threats from new entrants: Restaurant owner is facing moderate threat from new
entrants. Moreover, high cost of brand development imposes threat in front of new
arrivals or suppliers. However, new entrants can attract customers by offering innovative
products at suitable or lower prices.
 Industry rivalry: Case presents that competitive rivalry is high in the fast food sector.
Moreover, there are several firms such as Mc-D etc which are offering fast food to the
customers at suitable prices.
StrengthsSkilledpersonnelEffectivesupplychainmanagementpracticesWellestablishedqualityassurancedepartmemntWordofmouthpublicityServingordersquicklyWeaknessesLackofwideR&DpracticesHighcaloryfoodisconsideredasnotgoodforthehealthconsciouspeopleOpportunitiesExploreindevelopingcountriesEnhancecustomerbasebyofferinginnovative,fresh,healthier,hygienicandqualityfastfoodservicestothecustomers.ThreatsThreatfrommajorfastfoodservicechainssuchasMoe'sSouthwestGrill,TacoBelletcandnationalaswellasregionalquickservice&casualdiningrestaurantunitsChangingcustomertasteandpreferenceAmendementsinfoodsafetylegislation

Financial analysis or evaluation
From financial analysis or evaluation, it has assessed that both operating and net income
of Chipotle Mexican Grill was increased significantly over the time frame. Income statement
data clearly exhibits that operating income inclined from $108183 to $532720 respectively at the
end of 2013. In addition to this, net income of the restaurant unit increased from $70563 to
$327438 significantly. By taking into account all such aspects it can be mentioned that effectual
financial strategies were employed by the owner of restaurant during the concerned accounting
periods from 2007 to 2013. The below mentioned graph presents that liquidity position of the
restaurant was good during the concerned years. In accordance with the ideal ratio such as 2:1,
restaurant unit maintained enough current assets that can be used for meeting obligations. In
2013, current ratio of Chipotle Mexican Grill inclined from 2.75:1 to 3.34. Referring the
outcome of such ratio, it is suggested to the owner of Chipotle Mexican Grill that to employ
additional funds in other productive activities that aid in profit margin.
Particulars 2007 2009 2011 2012 2013
Current
assets
201844 297454 501192 546607 666307
Current
liabilities
73301 102153 157453 186852 199228
Current
ratio
2.75 2.91 3.18 2.93 3.34
2007 2009 2011 2012 2013
0
0.5
1
1.5
2
2.5
3
3.5
Current ratio
Current ratio