Chipotle Case Study: Analyzing Strengths, Weaknesses, and Strategies

This case study analyzes Chipotle's strategic environment within the quick-service restaurant (QSR) industry. It begins by defining the industry and assessing its attractiveness, followed by a Porter's Five Forces analysis to evaluate competitive pressures. The study then examines Chipotle's core competencies, emphasizing its operational efficiencies, high-quality products, and brand image. A PEST analysis explores the political, economic, social-cultural, and technological factors impacting the company. A SWOT analysis identifies Chipotle's strengths, weaknesses, opportunities, and threats. The study concludes by evaluating Chipotle's core competencies and recommending strategies to overcome challenges, such as menu diversification, international expansion, and enhanced marketing efforts. The analysis highlights the importance of maintaining quality, adapting to customer preferences, and leveraging technology to sustain competitive advantage in the dynamic QSR market.

Running head: CHIPOTLE CASE ANALSYSIS
Chipotle case analysis
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1CHIPOTLE CASE ANALSYSIS
Executive summary
The purpose of this research is to analyse the strategic environment of the company
Chipotle. The flowing report is the analysis of the strength and weakness of the company and it
has been found from the macro and microenvironment analysis that Chipotle comes under the
top Quick service restaurants. From porter’s five forces analysis, it also has been found that
threat of competitors and threat of buyers are more. Further, the report contains the discussion
core competencies of having top services and regarded as front line operative organisation. The
quick pickup services for food has become popular that implementation of this has become
viable to serve customers. Increase in the variety of menu and international expansion can also
be recommended for the company.

2CHIPOTLE CASE ANALSYSIS
Table of Contents
Define the industry that the company is working on.......................................................................3
Attractiveness of the Industry..........................................................................................................3
Porter’s five forces analysis.............................................................................................................3
Core competencies...........................................................................................................................5
PEST analysis..................................................................................................................................6
Political factors............................................................................................................................6
Economic Factors........................................................................................................................6
Social-cultural factors..................................................................................................................6
Technological factors...................................................................................................................6
SWOT analysis................................................................................................................................8
Do Chipotle possess core competencies that they can continue to leverage?.................................8
Strategies to overcome the challenges.............................................................................................9
References......................................................................................................................................11

3CHIPOTLE CASE ANALSYSIS
Define the industry that the company is working on
Chipotle organisation comes under the quick services restaurant industry. The company
operate in this new emerging industry. The main feature of these companies under this industry
is possibility of saving expense and reduces cost in operations. In addition, the speedy services
and customer expectations serves well for these companies (Wheelen and Hunger 2017). The
quick pickup services for food has become popular that the implementation process of this has
become viable to serve customers. The menus are prepared on centralised suppliers (Getz and
Page 2016). The most efficient part is placing orders and payment system of the companies,
which can be done smoothly without interaction. There is also efficiency of having no outlet and
saving ambience expense (Chipotle.com, 2017).
Attractiveness of the Industry
The key attractive features of QSRs are to maintain growth. The marketing and brand
recognition of the Chipotle and locations are the key success factor of the industry. As a twenty
first century company, the consumers have adapted according their own convenience. Therefore,
the attractiveness increases with the acceptance of the services (Wheelen and Hunger 2017).
Porter’s five forces analysis
To analyse the industry Porter has divided five factors
 Threat of competitors – As an exclusive quick service restaurant Chipotle in USA has
many threats of competitors. Fast food restaurant chains and fast casual restaurant chains
are also competition with the restaurant chain (Getz and Page 2016). Though it has
dominated the full service restaurants, the bakeries, fast casual segments are a success in

4CHIPOTLE CASE ANALSYSIS
the market. The most challenging competitor of Chipotle is Qdoba and Pei Wei, though
belonging to other segment of restaurant. The other most important competitor is Panera
Bread (Getz and Page 2016).
 Threat of new entrants - Chipotle has a record of steady growth and is committed to the
industry. The main criteria are the customer satisfaction to eliminate any risk of new
entrants. However, this Mexican grill is well established and has variety of menus; they
have shortage of competitors in the region (Ho et al. 2014).
 Threat of substitutes – quick service restaurants comes under a different type of industry.
Although any kind of fast food chain is known as a prospective competitors of the
industry, the key features of this industry makes it unique in giving the service in a
different efficient way.
 Threat of suppliers - as being networked in the best suppliers in USA Chipotle gain this
as an advantage (Ho et al. 2014). Having restaurants in 1100 location and variety of
menu and a central storage system in their company.
 Threat of buyers – This rate of risk is average for Chipotle. The main criteria, that gives
them the competitive advantage is the service delivery method and their unique flavours
in chicken according the survey result. Though other large international food chain
competitors like Mc Donald’s, El Pollo, Taco Bell, KFC and others are the alternatives
comes as a threat for Chipotle (Chipotle.com. 2017).

5CHIPOTLE CASE ANALSYSIS
Core competencies
Chipotle has the organisational capabilities and other competitive advantage and carefully
trained people in the company (Chipotle.com, 2017). The promotional activities, empowered
teams, strong personalities and freshly prepared food are the strong elements of the company.
 Over the top services and regarded as front line operative organisation.
 Suppliers are dominated by them as being a singular organic produce buyers in the
country
 The order processing and delivery services at the point of sale are essentially contributed
to the capabilities and of the company.
 Strategy of differentiated product positioning and higher consumer willingness to pay is
known to contribute to the sustainability factor of the company (Rothaermel 2015)
 As belonging to a vast food sector and large target consumers can lead to more value in
performance of the company. Operational efficiencies are also a strong capability of the
company.
 The most favoured dish of the company is chicken preparations, according to the survey
by QSR Magazine. This also leverages them about the survey of the company
(Shabanova et al. 2015).
 High quality and socially responsible products as well as the green technologies takes
care of their CSR activities and is an addition to the positive brand recognition.

6CHIPOTLE CASE ANALSYSIS
PEST analysis
Political factors
The political component of environmental analysis is very important for the company.
United States Restaurant change plays a essential role in growth of restaurants. The Zoning
Laws, insurance, credit policies and governments permits also affects the business across the
region. Thus, the different locations become convenience factor for the company (Shabanova et
al. 2015).
Economic Factors
The global economy affects the restaurants business and trends in food prices too. All
over reduction in food prices has also affected the industry. However, with the CAGR of 8.8%
since 1990, the demand of food as well as the fast food has grown exponentially over the years
(Hill et al., 2014). Negotiation with the wholesalers has allowed Chipotle to hold competitive
prices in the industry.
Social-cultural factors
The high-level service, quality deliverance and redefined experience of food must be
considered as the dedication to the society of the restaurant. Using health benefits and local
products and flavours that are preferred in the culture are the main criteria to being socially
responsible. Chipotle gives a good responsibility for the company (Hollensen 2015).
Technological factors
Chipotle has invested for technological advancements in the company. It also serves the
operational proficiency in automated payment system, ordering apps and tortilla grills to increase
the efficiency and effectiveness of the operation of the organisation. The grills add to the 100%

7CHIPOTLE CASE ANALSYSIS
efficiency in the operation. The company also invested about $10 million to redesign the
strategies and mobile app improvements (Chipotle.com, 2017).

8CHIPOTLE CASE ANALSYSIS
SWOT analysis
Strength
 Different and innovative
advertisements (Krishna 2014)
 Green initiatives by the company and
organic or natural food products
 Not having a franchise corporation
 Strong and brand image and better
loyalty from customers
 1100 outlets all total and well
networked
Weakness
 High cost of materials like ingredients
used and meat
 High priced in comparison to
competitors menu
 Media of advertisement is limited
 Location only based on USA
Opportunities
 Variety of menu should be introduced
 Can expand in international market
 Can explore to online media
advertisements opportunities
 Can expand more on green food
initiatives
Threats
 A market where there is perfect
competition can be developed
 Change in demand for food
 Change in customer’s taste and
preference (Hollensen 2015)
core competencies Chipotle possess that they can continue to leverage.
As USA is most popular quick service, restaurant Chipotle already poses all the strategic
competitive ability that can ensure their success further in the future. For improving all the

9CHIPOTLE CASE ANALSYSIS
aspects of business, high quality products and well services are at their disposal to use (Hill et
al., 2014). In addition, the strategic advantage also lies in sourcing natural meat produces and
other fresh foods from all over USA. The company has also 1100 people to source from and have
2750 salaried employees to resource from (Rothaermel 2015). Chipotle represents a fast casual
segment of quick service segments. They also sources different ingredients from convenient
sources. Chipotle black beans are certified organic foods and serve for daily purposes usage. As
serving a majority of individuals aged from 18 to 24 years old, Chipotle has customised their
flexibility in serving (Kwansa and Parsa 2014). Also years of services have equipped them with
good experience and enhanced their brand image in USA. The Mexican grill has net revenue of
$3,214,591 with profit margin of 9.43 percent.
Strategies to overcome the challenges
 The menu variety of Chipotle’s can be developed and more flexibility can give them
advantage that is more competitive in the market. As equipped with naturally raised meat
sources they can explore more in organic food variety of the company. Adding more
signature products and for enhancements of taste and lowering the prices can help them
expand the market more. Smoothening the service for more effectiveness can lead to
competitive advantage too. Customising the product according the need of the customers
can improve the services (Kozlenkova 2014).
 Increasing the marketing budget of the company may lead to expansion in the
advertisements of the company and media marketing presence may lead to better
exposure in the market (Kwansa and Parsa 2014). A larger audience of the company may
be targeted with new media of advertisements.

10CHIPOTLE CASE ANALSYSIS
 International expansion of Chipotle may help the company to grow as well as maximising
the revenue. There is also a possibility of breaking into new markets and countries for
possibilities in enhancements in brand recognition (Tripathi and Dave 2017).
 Alternative ways of implementing the strategies is to offer healthier items as they have
already started to explore the organic food market.

11CHIPOTLE CASE ANALSYSIS
References
Chipotle.com. 2017. Chipotle Mexican Grill. [online] Available at: https://www.chipotle.com/
[Accessed 27 Oct. 2017].
Getz, D. and Page, S.J., 2016. Event studies: Theory, research and policy for planned events.
Routledge.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Kozlenkova, I.V., Samaha, S.A. and Palmatier, R.W., 2014. Resource-based theory in
marketing. Journal of the Academy of Marketing Science, 42(1), pp.1-21.
Krishna, K., 2014. Analysing Competition in the Quick Service Restaurant Industry. Browser
Download This Paper.
Kwansa, F.A. and Parsa, H.G., 2014. Quick service restaurants, franchising, and multi-unit
chain management. Routledge.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.