Marketing Analysis of Chipotle Mexican Grill

This report provides a strategic and situational analysis of Chipotle Mexican Grill, including SWOT analysis, marketing strategy analysis, and recommendations. It also includes segmentation, targeting, and positioning strategies. The report concludes with a discussion of the marketing mix and Chipotle's current promotional campaign.

Running Head: MARKETING 1
Marketing: Chipotle Mexican Grill

MARKETING 2
Table of Contents
Introduction.................................................................................................................................................3
Strategic/Situational Analysis......................................................................................................................3
Businesses and Products of Company.....................................................................................................3
Internal Analysis......................................................................................................................................4
External Analysis......................................................................................................................................5
SWOT Matrix...........................................................................................................................................6
Marketing Strategy Analysis....................................................................................................................7
Segmentation..........................................................................................................................................7
Target Marketing.....................................................................................................................................8
Positioning...............................................................................................................................................9
Marketing Mix.........................................................................................................................................9
Marketing Strategy Recommendations.....................................................................................................12
Innovation Recommendations...................................................................................................................13
Conclusion.................................................................................................................................................13
References.................................................................................................................................................15

MARKETING 3
Introduction
Marketing planning and analysis are important activities for most of the firms in today’s
competitive business environment (Chernev, 2018). The major objective of this report is to apply
different concepts and frameworks of marketing on chosen organization i.e. Chipotle Mexican
Grill. Chipotle Mexican Grill is an American fast casual restaurant chains that has its operations
in United States, Germany, Canada, United Kingdom and France. It specializes in mission style
burritos and tacos. It was founded by Steve Ells in 1993 in Colorado with the goal of providing
excellent quality foods which are prepared using fresh and organic ingredients. The name of this
organization has been derived from chipotle, Nahuati name for dried and smoked jalapeno chili
pepper. It trades on New York Stock Exchange using the ticker symbol CMG. Chipotle is one of
the first fast casual dining chains. Currently, it has its operations in over 2000 locations and it has
the income of 475.6$ million with over 45,000 employees till 2016 (Chipotle, 2018).
The mission statement of this company is “food with integrity” and its vision statement is “to
nurture a better world with each burrito it makes”. The major values of this company are higher
quality, innovation, learning by doing approach, customer loyalty and enhancing popularity and
continuous introduction of broader menu. To prepare the food, the organization uses quality,
natural and locally produced ingredients. It is using innovative assembly line method that assists
the firm in meal creation and rapid services (Ragas, 2009).
Strategic/Situational Analysis
Businesses and Products of Company
As one of the largest chain of fast casual dining, Chipotle is engaged in offering a wide range of
food products to its customers. The organization offers naturally grown meat, ingredients and
dishes produced by hand in its food outlets. It is a fast casual dining chain among Mexican
restaurants which offers Mexican products like burritos, chips, crispy corn tacos, guacamole and
salads. Apart from these products, it provides a different menu for kids segment that includes
kid’s meal with seasonal fruits or chips and organic milk and juice. Thus, these are the major
product offerings of Chipotle which make up its brand portfolio. Currently, the company is
operating its business by having different strategic business units in different countries (Stevens,
2014).

MARKETING 4
For this discussion, the Chipotle’s strategic business unit of United States is taken into
consideration. Its internal and external analysis is given below:
Internal Analysis
Strengths
Focused food menu with customization:
Chipotle Mexican Grill is offering a focused food menu with only 4 entrée items like tacos,
salads, burrito and burrito bowls. This is the biggest strength of Chipotle US to provide with
customization options with different types of beans, meats, tofu and a range of extras like cheese,
lettuce, salsas and guacamole.
Innovation and differentiated marketing and advertisement:
This strategic business unit of Chipotle has differentiated itself in its advertising and marketing
efforts. It is promoting its brand not only through traditional modes like print media and
Television but also via digital media, content programs that consist of ‘Cultivate’ festivals of
food, ideas and music. These marketing initiatives assisted the organization to create a word-of-
mouth and thus organic promotion about Chipotle’s food items (Walker & Merkley, 2017).
Weaknesses
Higher priced food menu:
One of the biggest weaknesses of Chipotle is its higher priced food menu as its competing brands
are selling the food items half its price. The company offers its products on comparatively higher
prices as it uses natural and organic ingredients in their food. It has an adverse impact on the
purchase behavior of customers in United States.
Limited Food menu:
In United States, the outlets of Chipotle serve a range of tacos and burritos but this menu is
limited to these two product categories mainly and hence it lacks a wide variety of food products.
While compared to Chipotle’s biggest competing brands Panera bread and Qdoba Mexican Grill

MARKETING 5
serve variety of food items. This is the reason that customer spending is higher at these
restaurants.
External Analysis
Opportunities
Industry growth and market trends
The Food service and restaurant industry in United States showed a development of more than
11% in the year 2016 over the past year. In this market, the growth can be endorsed to the robust
economic development in this country. It provides various business opportunities to the business
of Chipotle. In US, there is a growing trend of health consciousness among population that can
be profitable for the future growth of Chipotle as it serves food items by using natural and
organic ingredients (Welford, 2016).
Business expansion in untapped countries and regions
It is the most significant opportunity for the business operations of Chipotle US. In past 10 years,
it has expanded its business very fast and it has made its entry into European market. It provides
it various opportunities to spread in Europe and other nations also (Hessamoddin, Libaers &
Burkemper, 2015).
Technological factors
In this country, technological factors are very important for Chipotle as the company can
upgrade its operations and food preparation activities by using advanced technologies. Modern
technology will help the company to promote its products by using online and social media
marketing. Moreover, it can use this factor in making its supply chain operations smoother.
Thus, this external factor can provide the opportunity to enhance its business operations and
activities effectively.
Threats
Competitive Analysis

MARKETING 6
Competition is one of the biggest threats for the business of Chipotle in United States. There are
various players which are posing intense competition on Chipotle US. Some of them are such as
Qdoba Mexican Grill, Moe Southwest Grill, Panchero’s Mexican Grill and California Tortilla
etc. Among them, Qdoba Mexican Grill is biggest competitor of Chipotle that is operating its
business as fast casual restaurant and it has more than 600 locations across the world. The prices
of its products are lower as compared to the prices of Chipotle. This is the reason that it
generates more customer base than Chipotle in US. In this industry, these players are competing
on the basis of quality and unique taste, food integrity and comfortable dining areas. However,
this organization is facing competitive pressure but it can overcome this by offering healthy and
organic food products (Pen, 2015).
Economic Factors
In United States, there is economic instability that may affect the business of Chipotle Mexican
Grill. The frequent changes in economy have affected the disposable income of American
households. For this organization, it is very important to change its pricing strategy and lower the
prices of food products. Moreover, there is a price inflation and product’s scarcity which can
enhance the food prices and imply potential loss of customers (Miles, Gilmore, Harrigan, Lewis
& Sethna, 2015).
Legal Factors
Chipotle’s industry needs to comply with various food and safety regulations. It enhances the
compliance costs for the company and impacts its operating margins. Moreover, changes in
wages law in United States have an impact on operating margin of Chipotle.
Lower Entry Barriers
In this industry, entry barriers are low as cost of entry is comparatively lower than other sectors.
It is not very difficult for the brands to penetrate the market. Considering this threat, it is very
important for Chipotle to use innovative methods to deal with this challenge (Yu, Ramanathan,
& Nath, 2017).
SWOT Matrix

MARKETING 7
SWOT
MATRIX
Strengths
 Focused food menu with
customization
 Innovation and differentiated
marketing and advertisement
Weaknesses
 Higher priced food menu
 Limited Food menu
Internal
Factors
External
Factors
Opportunities
 Industry growth and market trends
 Business expansion in untapped
countries and regions
 Technological factors
Threats
 Intense Competition
 Economic Instability
 Food and safety regulations
 Lower Entry Barriers
Impact Positive Negative
Marketing Strategy Analysis
Segmentation
Demographic Segmentation
Under demographic segmentation, Chipotle Mexican Grill is focusing on customers on the basis
of different variables like age, income and occupation. The major focus of the company is on the
people between 18 to 55 years old. By using the income variable, Chipotle is aiming its products
and services on the people from middle and higher income level as prices of its food items are
higher. Its food services can be customized which entice the students and young customers
(Simpson, 2015).

MARKETING 8
(Source: Business Insider, 2018)
Geographic Segmentation
Using geographic segmentation, this organization is focused on both urban and rural customers
in United States. As mentioned above, the food and restaurant industry is significantly growing
in this country. It is focused on major cities of this nation.
Psychographic Segmentation
Under psychographic segmentation, Chipotle restaurant is targeting its customers on the basis of
their lifestyle and interests towards Mexican food items. As this organization is an offering food
item by using organic and natural ingredients so it is emphasizing on health conscious people
(Grant, 2016).
Target Marketing
On the basis of segmentation characteristics and variables, Chipotle is targeting most appropriate
customers which are given below:
In Demographic segmentation, the company is using three variables i.e. age, profession and
income. This allows the company to target all customer segments like youth, adults and old age

MARKETING 9
people. Primarily, it targets the millennial segment of customers in United States (Goworek,
McGoldrick & McGoldrick, 2015).
(Source: Erbentraut, 2017)
The products’ prices are very high so it targets rich population of Australia. Under geographic,
the primary target market of Chipotle is Austin, Bellingham, San Francisco and various other
cities. The company has opened its stores in the areas which are more populated and
approachable for shopping purpose. By considering the psychographic characteristics, Chipotle
targets the people who prefer to eat food that is prepared from organic and natural ingredients
(Lantos, 2015).
Positioning
Chipotle Mexican Grill has positioned itself as casual dining restaurant chain that is engaged in
serving Mexican cuisine that made of using organic and natural ingredients. While promoting its
products and services among American customers, the major focus of the company is on the
health concerned people. Their philosophy is “Food with Integrity” that is very hard to avoid.
Thus, the company positions itself as a restaurant that has integrity for farms, animals and
environment (Möller & Parvinen, 2-15).
Marketing Mix
Product

MARKETING 10
Chipotle is a leading food organization that is based in United States and many other countries.
Under its current product strategy, it has managed to bring sophistication in its Mexican food and
dining experience which it provides to its customers. It is focused on offering only 6 dishes like
crispy corn tacos, burrito, salad, bowl, soft flour tacos etc. The products are made of fresh and
quality ingredients which are received from suppliers and farmers on daily basis. The current
strategy of this organization is appropriate for its target markets. It is using organic and natural
ingredients in its products that reinforces its positioning strategy and develop positive perception
among customers towards its food items (Chipotle, 2018).
(Source: Chipotle, 2018)

MARKETING 11
(Source: Chipotle, 2018)
Price
As mentioned above, the company is using high quality materials in its dishes so the prices of
products are higher than competing brands. For instance, bowls and burritos are priced between
$6.5 and $7. However, it is using a right pricing strategy but it is not that much attractive to
entice youth segment and students as they cannot afford its dishes. It is providing discounted
offers to its regular customers (Yu, Ramanathan, & Nath, 2017). The good part of its higher
pricing strategy is that it is able to earn higher profit margins in United States.
Place
Under its place strategy, Chipotle has established an extensive distribution network. The food
products can be ordered by using their website that has store tracker so that people can locate the
food outlet nearby to their locations (Baker, 2014). It has situated its stores in the most crowded
areas of US’s cities. Its restaurants offer quick services but food served meets the sophistication
that is attained in fine dining. It has 1800 locations in United States itself.
Promotion

MARKETING 12
Chipotle is using different online and offline modes to reach the customers. It is promoting its
products and services through television ads, newspaper, billboards etc. It is posting the pictures
and videos on social media sites like Facebook, Instagram and Twitter.
(Source: Chipotle, 2018)
The current ad campaign of this company is the “Chipotle for Real”. It highlights its ingredients
and processes which are used in food preparation at Chipotle’s kitchen (Edwards, 2012). In
United States, the SBU is engaged in providing different discounts and offers so that it can
attract more customers.

MARKETING 13
(Source: Wohl, 2018)
Marketing Strategy Recommendations
After conducting above marketing strategy analysis of Chipotle, it can be recommended that this
strategic business unit should make changes in its pricing strategy. Recently, the company is
using premium pricing technique for its all product categories. In the future, it should offer some
of the products on mid-ranged prices so that middle income level and lower level people can
afford them. It has been seen that youth segment and students like to eat the food outside so
company should set the prices considering their buying behavior. Under product strategy, it
should continue to offer its food items and dishes using natural and organic products which will
assist the organization to retain its current customers and create new customer base. It should
improve its cooking process and manage its operational costs so that it can reduce the prices of
products. These changes will assist to better attain their stated positioning in the minds of above-
mentioned targeted audiences (Cowan, 2016).
The current marketing ad campaign of Chipotle is totally based on promoting the quality of
products. The company should focus on increasing its range of products so that it can have
diversified customer base. Currently, it has limited dishes in its food menu that affects its
customer base and sales adversely. It should provide home delivery services in the nearby areas
of restaurants so people can enjoy the dishes of Chipotle at their home. It will be easier and

MARKETING 14
convenient for them. However, organization’s promotion should be same but it should enhance
these practices by introducing new dishes in menu. In this way, Chipotle US will be able to meet
its positioning statement in customers’ minds.
Innovation Recommendations
Currently, this strategic business unit of Chipotle is in growth stage as its products are started to
sell at faster rate. In United States, people are very much aware about its healthy and organic
dishes. The people are promoting its products through word of mouth. The customers in United
States are able to analyze the capabilities of Chipotle. The promotion strategies of company are
very effective which are helping it in gaining a larger customer base and generating more profits.
In order to avoid the drastic declines, the company has started to become healthy fast casual
option for American customers. For this, it has begun to provide non-GMO products, responsibly
raised animals, domestically produced raw materials, home style cooking and natural and organic
ingredients which are of the excellent quality (Gilliard, Hoffman & Baalbaki, 2017). To
overcome the decline stage, Chipotle has acquired smaller food chains in US and continues to
grow through this. In the future, the company should adopt product development strategy and
make some changes in its food menu. It should add some more variety in its food menu like
happy hours to attract more customers. In order to revamp its brand, it should plan to close its
underperforming food outlets. It can update their locations. It should implement effective
changes so that it can regain the trust of customers. In this way, it will be able to revitalize the
brand.
Conclusion
From the above analysis, it can be concluded that US business unit of Chipotle is operating its
business operations successfully. By using effective strategies and techniques, the company is
able to attain a larger customer’s base and generate more revenues in US restaurant industry. It is
found that external and internal environments of business are very supportive and positive for the
future growth of organization. It is using effective marketing strategies which are helping it in
attracting a larger population. In the future, the company can make some changes in its processes

MARKETING 15
and products so that it can gain sustainable competitive advantage against other competing
Mexican restaurants in United States.

MARKETING 16
References
Baker, M. J. (2014). Marketing strategy and management. Macmillan International Higher
Education.
Chernev, A. (2018). Strategic marketing management. Cerebellum Press.
Chipotle. (2018). Chipotle Mexican Grill: Gourmet Burritos and Tacos. Retrieved from
http://chipotle.com/.
Cowan, S. (2016) Chipotle’s Strategy to Win Back Customers: Free Burritos. Retrieved from
http://www.takepart.com/article/2016/01/15/chipotle-free-food.
Edwards, J. (2012). How Chipotle's Business Model Depends On NEVER Running TV Ads.
Retrieved from http://www.businessinsider.com/how-chipotles-business-model-relies-on-
never-doing-tv-advertising-2012-3
Erbentraut, J. (2017). Chipotle Customers Haven’t Forgotten The Chain’s Food Safety Crisis.
Retrieved from https://www.huffingtonpost.in/entry/chipotle-food-safety-sales-
poll_us_586422b4e4b0eb58648801fd
Gilliard, D. J., Hoffman, D. L., & Baalbaki, S. (2017). Is Chipotle Mexican Grill Successfully
Recovering from Its Food-Related Incidents?. Journal of Marketing Development and
Competitiveness, 11(4), 34-48.
Goworek, H., McGoldrick, P. J., & McGoldrick, P. J. (2015). Retail marketing management:
Principles and practice. Harlow, UK: Pearson.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Hessamoddin, S., Libaers, D., & Burkemper, A. (2015). Examining the Relationship between
Creativity and Innovation: Meta-analysis of Organizational, Cultural and Environmetal
Factors. Journal of Business Venturing, 30(5), 714-731.
Lantos, G. P. (2015). Consumer behavior in action: Real-life applications for marketing
managers. Routledge.
Miles, M., Gilmore, A., Harrigan, P., Lewis, G., & Sethna, Z. (2015). Exploring entrepreneurial
marketing. Journal of Strategic Marketing, 23(2), 94-111.

MARKETING 17
Möller, K., & Parvinen, P. (2015). An impact-oriented implementation approach in business
marketing research: Introduction to the Special Issue on “Implementing Strategies and
Theories of B2B Marketing and Sales Management”. Industrial Marketing
Management, 45, 3-11.
Pen, Q. (2015). Chipotle Mexican Grill Delivers Another Quarter of Outstanding Growth.
Retrieved from http://www.gurufocus.com/news/314493/chipotle-mexican-grill-delivers-
another-quarter-of-outstanding-growth
Ragas, W. M. (2009). Communicating Corporate Social Responsibility and Brand Sincerity: A
Case Study of Chipotle Mexican Grill's ‘Food with Integrity’ Program. International
Journal Of Strategic Communication. 3(4).
Simpson, S. (2015). Chipotle Mexican Grill Inc.: Strategy with a Higher Mission or Farmed and
Dangerous?. Journal of Case Studies, 33(2), 38-59.
Stevens, N.L. (2014). Beyond the burrito: Chipotle Mexican Grill’s brand extension. Journal of
Business Cases and Applications. (12).
Walker, R., & Merkley, G. (2017). Chipotle Mexican Grill: Food with Integrity?. Kellogg
School of Management.
Welford, R. (2016). Corporate environmental management 3: Towards sustainable development.
Routledge.
Wohl, J. (2018). Chipotle Says It's For Real In New Campaign From New Cmo. Retrieved from
https://adage.com/article/cmo-strategy/chipotle-real-campaign-cmo/315036/
Yu, W., Ramanathan, R., & Nath, P. (2017). Environmental pressures and performance: An
analysis of the roles of environmental innovation strategy and marketing
capability. Technological Forecasting and Social Change, 117, 160-169.

MARKETING 18