Financial Analysis and Industry Report of Chipotle Mexican Grill

The assignment provides a detailed financial analysis of Chipotle Mexican Grill, including current ratio, inventory turnover ratio, debt ratio, total asset turnover, fixed asset turnover, operating profit margin, return on equity, and return on assets. Additionally, it includes an industry report on the fast food industry, a five forces analysis, and key elements of success in the industry. The document also provides references to external sources for further reading.

Competitive Strategy
Chipotle Mexican Grill

COMPETITIVE STRATEGY 1
Table of Contents
Introduction................................................................................................................................3
About Food Casuals Industry.................................................................................................3
Strategic Issues.......................................................................................................................3
Challenges in Retaining and Attracting Employees...........................................................4
Attacks from Critics...........................................................................................................4
Slowing Sales Growth........................................................................................................5
Supply Chain Problems......................................................................................................5
Recommendations..................................................................................................................5
Part 2..........................................................................................................................................6
The vision of Chipotle Mexican Grill....................................................................................6
Business Model......................................................................................................................6
Business Canvas Model of Chipotle Mexican Grill...........................................................6
PEST Analysis of Fast Casual Industry.................................................................................8
Political Factors..................................................................................................................9
Economic Factors...............................................................................................................9
Social Factor.......................................................................................................................9
Technological Factors......................................................................................................10
Industry Analysis.................................................................................................................10
Dominant Economic Traits of Fast Casual Industry............................................................10
Growth rate and Market size............................................................................................10
Number of Rivals.............................................................................................................10
Product Innovation...........................................................................................................11
Porter Five Force Framework..............................................................................................11
Suppliers Bargaining Power.............................................................................................11
Customers Bargaining Power...........................................................................................12
Threats of New Entrants...................................................................................................12
Threats of Substitutes.......................................................................................................12
Competitive Rivalry in the Industry.................................................................................13
Drivers of Change................................................................................................................13
Changes in the Government policies and regulatory influences......................................13
Marketing Innovations.....................................................................................................13

COMPETITIVE STRATEGY 2
Changing lifestyles, and attitudes....................................................................................13
Competitors of Chipotle Mexican Grill...............................................................................14
Strategic Moves by the Chipotle’s Rivals............................................................................14
Moe’s Southwest Grill.....................................................................................................14
Qdoba Mexican Grill........................................................................................................14
Strategic Group Map............................................................................................................14
Key Success Factors of Fast Casual Industry......................................................................15
Simple Menu....................................................................................................................15
Efficiency.........................................................................................................................15
Strong Employee Staffing................................................................................................15
Artistically Pleasing Interior of Restaurants....................................................................16
Management of supply chain...........................................................................................16
Strategic Expansion..........................................................................................................16
The attractiveness of the Industry and Personal Assessment...............................................16
Competitive Analysis...........................................................................................................17
Current Competitive Strategy of Chipotle.......................................................................17
Supporting Business Strategies........................................................................................17
SWOT Analysis of Chipotle................................................................................................18
Competitively Important Competencies..............................................................................19
Value chain analysis of Chipotle..........................................................................................19
Inbound Logistics.............................................................................................................19
Operations........................................................................................................................20
Marketing and Sales.........................................................................................................20
Competitive Strength Analysis of Competitors...................................................................20
Financial Analysis................................................................................................................21
Major Trends and Red Flags............................................................................................21
Conclusion................................................................................................................................21
References................................................................................................................................24
Appendix..................................................................................................................................28
Financial Analysis of Chipotle Mexican Grill.....................................................................28

COMPETITIVE STRATEGY 3
Introduction
I was appointed by the Chipotle’s Senior Management in order to provide a current
assessment of the Fast Casual industry and in particular Chipotle’s competitive position
within that industry. A brief review of my methodology to the analysis of the Fast Casual
Industry conclusions developed based on that analysis, identification of the significant issues
facing the company’s current strategic approach, and, the recommendations that had been
developed around these conclusions which are focused on these strategic issues. Besides this
the report will elaborate the vision, the business model of the company and its external
analysis. The analysis of the industry and competition will be performed to give an overview
of the operations of various businesses in the industry. Further, SWOT Analysis of the
company and its core competencies will be explained. In the end, financial analysis of the
company will be done.
About Food Casuals Industry
When we talk about the restaurants, fast casual is the only growing industry for almost 20
years. While it only covers less than 10% of the complete market, the variety and number of
the restaurants of the fast-casual have been developing all over the country, with an amazing
progress of approx. 500% since 1999 (Franchise, 2018). Changing preferences of the
customers and creative concepts of the restaurants are the motivating forces behind this
development. Gradually customers are considering more for healthy substitutes and are more
dynamic in their flavours. They are searching for more than the classic fries and burger.
Chipotle Mexican Grill is the part of this industry and it is the first chain of fast casual dining
formations.

COMPETITIVE STRATEGY 4
Strategic Issues
Strategic issues are those issues which are said to be an unsolved question and require a result
or waiting for some descriptive future event. Furthermore, it is strategic and has an impact on
the development and course of the business (Ambler, 2018). Every organization faces some
type of strategic issues which provide threat or opportunity for the future of the business so as
Chipotle Mexican Grill. The company is dominating the fast-casual restaurant's industry from
last many years.
The chain of burrito has enjoyed the sales growth in double-digit for last many years. Along
with this, it has high favourability among those diners who are health-conscious and
searching for a meal with reasonable price. But recently, the sales growth of the Chipotle is
going down, due to which the investors are in shock because after 22 years of the
commencement of the business the company is losing. Even the number of competitors of the
company are increasing, as the fast-casual industry is becoming more crowded with the
opening of new concept restaurants and trying to copy the success of Chipotle. As per the
analysis, Chipotle Mexican Grill is facing some major challenges such as a tightening labour
market, new attacks from critics, slowing sales growth and supply chain issues.
Challenges in Retaining and Attracting Employees
The restaurant is struggling with the narrowing market of labour because of increasing
demand for the meals of the restaurants and strengthening the economy.
Attacks from Critics
Chipotle has now become the new target of some attack advertisements which are advertised
by the Centre for Consumer Freedom, which is a non-profit organization situated in
Washington, DC.

COMPETITIVE STRATEGY 5
The advertisements, which were advertised in the New York Post, blame Chipotle for
misleadingly publicizing its food as a healthy and free of extra hormones (Peterson, 2015).
Slowing Sales Growth
For several quarters the sales of Chipotle is narrowing. That metric raised 4.3% in the second
quarter, succeeding a 10.4% rise in the first quarter. Store sales rose to 16.8% in 2014. The
revenue of the restaurant is still increasing but at slow growth rate.
Supply Chain Problems
Chipotle stopped providing beef at many of its restaurants due to its harsh ethics for how
animals must be raised and nourished. The shortage of beef started when the company
canceled the ties with one of the suppliers who breached its standards, according to that the
use of antibiotics and hormones are ban.
After ceasing the contract with the supplier, chipotle has faced many problems in searching
for the replacement which can meet its standards.
Recommendations
In order to solve the strategic issue of retaining and attracting employees, Chipotle
Mexican Grill should improve its compensation and incentive policies to retain the
employees. Along with this if the revised policies will be attractive then it will attract
new employees available in the industry and will help in increasing the productivity
of the business.
The company can improve its training sessions by making them more interactive,
entertaining and learning to retain its existing employees.
Due to the negative critics about the food manufactured in the restaurants the
company can face huge losses. In order to fight with this criticism, the company can
make their videos of some particular dishes and can telecast it on Television, upload

COMPETITIVE STRATEGY 6
on a social media platform. These videos will show the customers about the
ingredients that are being used while making the dishes. Besides this, it will help in
increasing the followers of the company as people will start learning new dishes from
the experts.
In order to increase the sales, the company can add more products to its menu card.
Along with this it can improve its promotional activities, expand restaurants.
The company can increase its sales by enhancing the ambiance, environment, sitting
arrangements in the restaurants as this will attract the more customers.
Chipotle Mexican Grill believes in maintaining some standards, therefore, it can
invite suppliers by offering the benefit of extra payment, free vouchers for the
supplier family and in return of this they can ask them to follow all the pre-decided
standards framed by the company.
Part 2
The vision of Chipotle Mexican Grill
The vision of Chipotle Mexican Grill is to offer food with honesty and changing the
perception of the people about eating fast food. Along with this, they survive in the market by
following their ethics and standards in manufacturing healthy food (Chipotle, 2018).
Business Model
A business model is said to be a plan of the company which represents how the company will
make a profit and generates profit. It provides an idea of what services and products company
is going to produce and market, it's planning, and expenses it will incur (Das, 2017). A
business model is represented with the help of business canvas model.

COMPETITIVE STRATEGY 7
Business Canvas Model of Chipotle Mexican Grill
Key Partners
 Loom state-
Supplies
Chipotle with
100% organic
clothing.
 McDonald’s
Myth
 Mark
Crumpacker
Sequence,
LLC-
Marketing
 Local
Farmers-
Every product
of Chipotle is
sourced
within 350
miles of each
store.
 Budlight and
Coke- Drink
Suppliers
Key Activities
 Family owned
farms
 Face-to-face
interaction
 Food with
honesty
 Phone
application
from which
burrito can be
ordered
electronically
 Relationship
With customers
 Large Party
Orders
 Naturally
Raised Meat
Value Proposition
 Alcohol
beverages
 Discounted
rates
 Simple menu
comprising
vegetarian
 Fresh healthy
food
Customer
Relationship
 Naturally raised
food to
maintain
environmental
awareness
 A close
relationship
with the
customers
 Value-added
justifiable
efforts
overshadow
added costs
 High-quality
standards are
regularly
maintained
Customer Segments
 The goal of
increasing
customer pool
beyond green
customers
 Pleasant
atmosphere with
rationalized
service
 Local industries,
health-aware
customers, greet
customers, etc.
Key Resources
 Alcoholic
Beverages
 Unique building
design
 Well trained
employees
 Promotional
discounts/event
s
 Quality
guarantee by
local farmers
Channels
Social Media
 The website,
YouTube,
Facebook,
Twitter
Advertisement
 Radio,
signs/display,
universities,
billboards,
bags, cups, and
store.
Integrated
Channels
 Radio,
advertising
events, ads
endorse
Facebook,
which is 24/7
Channel Phases
 Awareness
 Assessment
 Acquisition
 Distribution

COMPETITIVE STRATEGY 8
 After Sales
Cost Structure
 Chipotle
represents
itself as value-
focused for
the customer
but is cost-
focused
because of
low pricing
products, lean
cost structure,
and wide-
ranging
outsourcing to
local farms
 The expensive
resources are
employees
and avocados
 The expensive
activity is to
retain
naturally
raised chicken
and pigs
(Mealey,
2018)
Revenue Streams
 Coupons, debit,
online payment
by debit or
credit card,
cash, credit
 Scanning
barcode on the
phone for
comfort and
suitability
PEST Analysis of Fast Casual Industry
Source [(Ahmed, 2014)]

COMPETITIVE STRATEGY 9
Political Factors
Fast-casual restaurants are now providing healthier choices of food on their menus because of
the public policies which are pushing them for offering foods with lower sugar and sodium.
For example: Being the part of the act "Health Menu Choices Act” service of food with over
twenty locations in Canada, Ontario, should now specify the calories for drinks and food
openly. These changes will definitely do the makeover of the whole industry in coming years
(Frue, 2017).
Economic Factors
The unemployment rates and state of the country can affect the fast-casual industry. Healthier
substitutes for foods are costlier as compared to the easy to make meals or fast food. Not just
this, but the suitability of the food which is readily made regardless of its unhealthy nature
can overshadow the experimental and mistake of making food from scratch. This has offered
larger development of the restaurants of fast food over the last decades.
Social Factor
The trends of fast casual industry change as per the wants of the customers. As discussed
above the major focus in most of the countries is healthiness. This aspect is not just being
emphasized by the government but also by the customers. This reflects the rise of whole
foods and organic foods as diet and changes in the lifestyle is taking place. Vegetarian and
pescetarian eating are now becoming the choice of people's lifestyle, especially among the
younger generation. How food appeal to the public is depended on company's branding look.
Therefore, fast-casual restaurants are doing a makeover of their brands.

COMPETITIVE STRATEGY 10
Technological Factors
Technology in every industry provides a competitive edge. It is very important to make food
labels, packaging, and the food production. New businesses might be lacking in the power of
technology as compared to experienced food-based companies (Pratap, 2016).
Industry Analysis
Chipotle Mexican Grill operates in a Fast Casual industry which is enjoying fast growth from
last several years. In terms of growth fast casual is the leading industry in the sector of the
restaurant. This industry provides various opportunities for the interested restaurants and
entrepreneurs (Fast Casual, 2017).
Dominant Economic Traits of Fast Casual Industry
Growth rate and Market size
The fast Casual industry is said to the multi-billion dollar industry and growing very fast
from last some years (UCF, 2018). Though being the tiniest segment of whole restaurant
industry fast-casual restaurants are counted in the category of fastest developing restaurants,
having increased their stake of all quick-service restaurants revenues from 5 to 15 % since 10
years (Forbes, 2014).
Number of Rivals
The Fast Casual Industry competes with all types of restaurants segments, ranging from quick
service, locally owned restaurants, dining chains, national and regional restaurants. The size
and number differ from one region to another region. The International leader in this industry
is McDonald's, is the company who created the concept of fast food in 1950 and has approx.
35,000 restaurants globally. In the segment of fast-casual Chipotle has two main competitors
i.e. Qdoba Mexican Grill, and Moe’s Southwest Grill.

COMPETITIVE STRATEGY 11
Product Innovation
In order to survive and stay competitive in the industry, it is very important for the members
of the industry to regularly bring new and innovative products. With the regularly changing
needs and wants of the customers, there is always space for developments. Chipotle has
changed the perception of people about fast food in the industry. They are the meaning of the
invention, a novelty in the fast food industry.
Porter Five Force Framework
Source [(Mason Myers, 2013)]
Porter’s five force framework is a model which helps in recognizing and evaluating the five
competitive forces that form every industry and supports in defining the strengths and
weaknesses of an industry (Magretta, 2012). This model is mostly used to identify the
structure of an industry in order to define the corporate strategies. The five forces are
Suppliers bargaining power, buyers bargaining power, new entrant’s threats, threats of
substitute products, and competitive rivalry in the industry (Roy, 2011).
Suppliers Bargaining Power
The suppliers bargaining power is reverse of buyers bargaining power. This force can also be
said as the market of contributions or inputs. The suppliers provide services in the industry

COMPETITIVE STRATEGY 12
such as labor, raw materials, and expertise and have dominancy power over industries. It is
one of the strong force in the industry of fast casual. While the power of supplier is normally
weak in this industry, but still has the main influence on the industry (Dominican, 2018).
Most of the restaurants in the industry receive their food items from numerous farmers,
packaging companies, and butchers; they do not produce their food. Restaurants in the
industry have various options of suppliers and that determines the price at which their product
will be sold. This reflects the power of this force is weak in this industry.
Customers Bargaining Power
The customers bargaining power in Fast casual industry plays a significant role. When the
power of the buyer is strong, then they can basically set the price. The fast-casual market
customers ask for high-quality food and an exclusive experience, along with affordable price.
While the restaurants of the fast-casual industry may increase costs, the industry should do so
in the ways that do not meaningfully exceed or affect customer expectations.
Threats of New Entrants
In the fast-casual segment, the threat of new entrants is high. This reason must be understood
by the existing fast-casual chains because there are few entry barriers in the industry
(Adamkasi, 2017). It is comparatively economical to set up a restaurant.
Threats of Substitutes
The threat of Substitutes means the product outside the fast-casual industry. It exists when the
demand for a product is affecting the changes in the price of a substitute product. In the
model of porter, the threat of substitute normally has an impact on the industry by price
competition. Fast-casual restaurants do not need to compete with other various restaurants of
fast casual in the matter of price.

COMPETITIVE STRATEGY 13
Competitive Rivalry in the Industry
In the fast-casual industry, the competition between the firms is very high. It shows how a
company attains competitive advantage in the industry over other companies. Companies can
attain a competitive advantage by any of the following ways: enhancing product
differentiation, developing relations with the suppliers, altering prices, and productively using
distribution channels.
Drivers of Change
Changes in the Government policies and regulatory influences
In the coming future the policies related to GMO-free vegetables, cage free animals, organic
vegetables, etc. will change. Moe’s and Chipotle are the companies who have already
changed their system and are already forward in this area. This will help in making new
landscapes for the farmers and they have to make use of organic food and sound methods
(KPMG, 2016).
Marketing Innovations
It is very important to make a brand in the food industry. Every Mexican, fast-casual
restaurant has done awesome work but one of them should become the leader. It can be by
oversaturation being the most efficient, having the best product, etc. (Barcelona, 2014). All
the restaurants should bring some innovative marketing campaign that reflects their
dominance over another competitor.
Changing lifestyles, and attitudes
If the society makes efforts to consume organic and ethical, then Chipotle can see growth in
its sales, because they are already at the forefront of ethical and healthy eating habits. If the
society becomes more knowledgeable about steroids, GMO’s, animals caging, etc. then the
sales of fast casuals and Mexican market will increase.

COMPETITIVE STRATEGY 14
Competitors of Chipotle Mexican Grill
The fast-food trend has always been overpowering among the people of various cities and
towns around the world. Chipotle Mexican Grill is one of the starters that took the advantage
of this need in order to make a unit that provides fast food in diverse urban centres (Bhasin,
2017). It has many competitors in the industry such as Qdoba Mexican Grill, Moe's
Southwest Grill, McDonalds, KFC, Starbucks, Subway, Pizza Hut, Domino’s Pizza, Burger
King, Dunkin Donuts, Taco Bell, Wendy’s, Tim Horton’s, and Papa John’s Pizza.
Strategic Moves by the Chipotle’s Rivals
Moe’s Southwest Grill
Presently Moe’s has planned to commence their 100 more restaurants.
Moe’s is continuously trying to saturate the market by franchising in order to overtake
the market position of Chipotle. (Moe’s Southwest Grill, 2018)
Qdoba Mexican Grill
In U.S Qdoba is the second largest Mexican brand in Fast Casual. (Business Insider,
2018)
Qdoba is expected to follow the expansion strategy as per the belief of its
management and should try to cover the market by franchising.
Strategic Group Map

COMPETITIVE STRATEGY 15
Key Success Factors of Fast Casual Industry
Simple Menu
Keeping simple menu at the restaurants of fast-casual help in making those listed few items
on the menu exceptionally well. The high quality of vegetarian and meats supports in
increasing the sales of the simple menu.
Efficiency
The key success factor of the Mexican Fast Casual industry is able to speedily attend the
customers. The experience of fast-casual dining works when the customer is getting its meal
quickly (Xaxx, 2018).
Strong Employee Staffing
The Mexican segment of Fast Casual always believes in providing strong customer service as
it helps them in retaining customers back in the restaurants, and survive in the industry for the
P
r
i
c
e
Few Locations Many Locations
Moe’s Qdoba Chipotle
Taco Bell

COMPETITIVE STRATEGY 16
long term. This can be achieved by having excellent top management who adopt the culture
of the restaurant and encourage others to follow it.
Artistically Pleasing Interior of Restaurants
The fast-casual restaurants not only provide tasty and healthy food but they also provide a
good environment which makes the best experience for the customers.
Management of supply chain
The industry should try to reduce the cost in order to maintain lower-level prices. The
customers pay for the fast-casual restaurants when the price of the food does not exceed
definite price point.
Strategic Expansion
In Fast casual industry, expansion is very important. All the players in the industry are trying
to attain the saturation in terms of the marketplace in order to get ahead of their competitors
(Food Service Equipment and Supplies, 2018).
The attractiveness of the Industry and Personal Assessment
The Mexican segment of fast casual is ruled by 3 Players: Moe’s, Qdoba, and Chipotle. It is
essential to involve Taco Bell on this list because it currently had 49% of Mexican's fast food
market share. Without involving Mexican smaller chains and local restaurants like California
Tortilla and Bajaj Fresh, this section is completely leaded by the strong players with strong
marketing power, brand image, and capital. The cost of making and maintaining a restaurant
in the fast casual industry is very high. A new entrant in the industry would need effective
management of supply chain if they want to offer healthy food because the organic food
prices are high. With the strong rivalry and saturation of the fast-casual restaurants, skills of
supply chain management are required along with the cost of restaurant maintenance. This

COMPETITIVE STRATEGY 17
industry is not attractive in which the new entrants should involve because the strong players
will effortlessly throw them out.
Competitive Analysis
Current Competitive Strategy of Chipotle
Make use of classic cooking methods, fresh ingredients, and high quality of products
to provide great taste at an affordable price and serve the dish within two minutes
after the order is placed.
Making operationally effective restaurants with an artistically attractive interior
Allowing customers to select the ingredients they want in the dish they ordered by
asking directly to the staff in the restaurants.
Increasing respect and awareness for the environment and using organic food and
naturally raised animal meat
Building a special culture that is welcoming, high performing employees which are
motivated to take care of every consumer and empowered to attain high standards.
Supporting Business Strategies
The kitchen and restaurant designs purposefully place most of the employees up front
where interaction with the customers can be done in a personal manner.
Chipotle give importance to performance-based and developing a people-oriented,
culture in its every restaurant. The base of that culture initiates with employing good
people to handle the restaurants and staff.
Chipotle has implemented a campaign named as Food with Integrity, it is a movement
to make use of nutritious ingredients, top quality and enhance the Chipotle experience
(Chipotle Analysis, 2018).

COMPETITIVE STRATEGY 18
Chipotle follows the principle of customer customization. Through this, customers
can select their choice of meats, cheese, rice, salsas, etc.
Is this a Winning Strategy?
Are the policies or strategy are appropriate for the present situations of the company? Yes
Is the strategy assisting the company to attain a justifiable competitive advantage? Yes
Is the strategy helping the company in performing effectively? Yes
Conclusion: For Chipotle these strategies are very effective and providing positive results as
the competitors are also coping these strategies.
SWOT Analysis of Chipotle
Source [(Dreamstime, 2018)]
Strength
Make use of ethical raised and high
quality of meat and vegetables
Restaurant management, staffing, and
capability of hiring.
Quickly serving the dish ordered by
Weaknesses
Inability to manage the beverage,
packing, and food cost because of
pricing prices of the market

COMPETITIVE STRATEGY 19
the customer
Opportunities
Catering is the best opportunity to
increase the customer base.
Serving breakfast is a great
opportunity to earn a profit on early
morning crowd; this will help in
attracting the customers of Taco Bell.
Threats
The competition that Chipotle is
dealing is fierce, particularly when all
models are practically similar.
Competitively Important Competencies
Dedication of Chipotle to offer high quality of vegetables and meat allows it to make
a strong justifiable advantage, even when Moe's follows a similar model (Chipotle
Mexican Grill, 2018).
The simple and limited menu of Chipotle supports them in attracting the customers
quickly, though allowing Chipotle try to serve the food at affordable price.
Value chain analysis of Chipotle
Inbound Logistics
The inbound logistics of Chipotle is very high. The restaurant is spending a huge amount to
attain competitive advantage and high quality of vegetables and meats (Adamkasi, 2018). The
biggest competitor of Chipotle is Moe's who also provide a high quality of vegetables and
meats.

COMPETITIVE STRATEGY 20
Operations
In the value chains operations are very low because of competence and fast speed of the
model “through put” they have.
Marketing and Sales
Chipotle accept to promote its product by word-of-mouth through consumers discussing their
experience with other people. Chipotle typically do advertising of its restaurants when they
enter in a new community. It has advertisements for its freshly expanded program of catering.
Competitive Strength Analysis of Competitors
Competitors Service Quality Location
Moe’s Southwest
Grill
They give more
priority to friendly
and hospitality
services in every
restaurant.
High-quality
ingredients are
used by Moe's
which comprise
cage-free, steroid
free, organic tofu.
Trans factor MSG
is not included in
any of the dishes
of Moe’s.
Moe’s have
about 680
restaurants in
40 states.
Qdoba Mexican Grill It is the only
restaurant of fast
casual industry
Offer high quality
of food and is
typically fast food
They had
approx. 700
restaurants in

COMPETITIVE STRATEGY 21
who offers
breakfast which
makes them the
holder of that
market share.
restaurants. 47 states.
Financial Analysis
Major Trends and Red Flags
The key trends that are revealed in the financials of Chipotle are that the net income and total
revenue in increasing (Morning Star, 2018). Every year the cash of the company is
increasing, despite the major red flag of flood, packaging, and beverages prices are increasing
regularly every year. Due to the rise in the cost of high-quality meats, and organic vegetables
the cost of packaging, beverages, and food has gone up. Chipotle should try to reduce some
cost so that they can regularly earn a profit.
Conclusion
Chipotle Mexican Grill is a well-known restaurant of Fast Casual Industry as it offers high
quality of products and services to its customers. Presently, the Fast Casual Industry is
growing at a significant rate. From the above analysis, it can be concluded that Chipotle can
avoid strategic issues by adopting various options such as providing vouchers to its suppliers,
changing the compensation policies of the employees, uploading the videos of the making of
the dishes, etc. In the above report, the business canvas model is reflecting various aspects of
the Chipotle restaurant. PEST Analysis is used to identify various external factors that are

COMPETITIVE STRATEGY 22
affecting the business environment and Chipotle should try to come up them with the help of
various strategies. Three dominant economic traits of the industry are also discussed above
which reflect the reason behind industry’s success.
Porter five force analysis framework is reflecting the power of five forces such as suppliers
bargaining power is very low in this industry, buyers bargaining power is high, threats of new
entrants is high, threats of substitute is low, and competitive rivalry is very high. Further in
the report, the driver of change in the industry is discussed such as changes in the policies of
government, marketing innovations, and changing lifestyles, and attitudes. These drivers are
the reason behind the changes in the environment and offering of every restaurant of the fast-
casual industry. The competitors of Chipotle Mexican Grill such as Moe’s Southwest Grill,
Qdoba Mexican Grill, etc. are planning their strategic moves to give strong competition to
Chipotle. The strategic growth map has also been presented to give the idea of the Chipotle’s
position in relation to its competitors.
The key success factors in the report such as simple menu, artistically pleasing interior, etc.
are reflecting the reason of the sudden growth of the industry. However, it has been noted that
the fast-casual industry is not attractive for new entrants as the existing players are very
strong and they have the power to throw out the new players. Additionally, the competitive
analysis has also been done which reflects the current strategies of Chipotle (allowing
customers to select the ingredients of the dishes, make use of classic cooking methods, etc.),
and its supporting business strategies.
SWOT Analysis has been done to analyse the internal environment of the Chipotle Mexican
Grill. Moreover, important competencies of Chipotle reflect that they provide a high quality
of vegetables and meats, along with a simple menu that attracts customers. The value chain
analysis is done to provide the idea of inbound logistics, operations, and marketing and sales

COMPETITIVE STRATEGY 23
of Chipotle. Strength analysis of the Chipotle Competitors has been done and financial
analysis of the Chipotle to analyse its performance in the market.

COMPETITIVE STRATEGY 24
References
Adamkasi. (2017). Porter’s Five Forces Model of Food Industry. Retrieved from
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COMPETITIVE STRATEGY 27
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COMPETITIVE STRATEGY 28
Appendix
Financial Analysis of Chipotle Mexican Grill
2016 2017
$m $m
1) Current Ratio Current Assets 522.00 630.00
Current Liabilities 282.00 324.00
1.85 1.94
2)
Inventory
Turnover Ration Cost of Goods Sold 3406 3720
Average Inventory 15 17.5
227.07 212.57
3) Debt Ratio Total Debt 624 681
Total Assets 2026 2046
31% 33%
4)
Total Asset
Turnover Net Sales 3904 4476
Average Total Assets 2375.5 2036
1.64 2.20
5)
Fixed asset
turnover Net Sales 3904 4476
Average Fixed Assets 1260.5 1321
3.10 3.39
6)
Operating Profit
Margin Operating Income 35 271
Net Sales 3904 4476
1% 6%
7) Return On Equity
Net Income after
Preference Dividends 23 176
Average Common Stock
Holder's Equity 1765 1383
1.3% 13%
8) Return On Asset Net Income 23 176

COMPETITIVE STRATEGY 29
Total Assets 2026 2046
0.011352419 0.086021505