Chipotle Mexican Grill: PESTLE Analysis, Strategy & Customer Service

This report provides an analysis of Chipotle Mexican Grill's internal and external environment using the PESTLE model, examining political, economic, social, technological, legal, and ecological factors affecting the company. It delves into the company's business strategy, mission, vision, strengths, and weaknesses, particularly focusing on the food safety issues that have impacted the company's reputation and financial performance. The report further explores strategies for managing staff, improving teamwork, and addressing leadership failures in the wake of food-borne illness outbreaks. It also touches on the importance of customer service and provides recommendations for Chipotle to regain customer confidence and improve its overall operations.

MANAGMENT

Contents
Introduction...........................................................................................................................................2
PESTLE model......................................................................................................................................3
Elements of internal environment..........................................................................................................5
Marketing strategy...............................................................................................................................12
Customer service experience...............................................................................................................14
Recommendation................................................................................................................................15
References...........................................................................................................................................17

Introduction
Chipotle Mexican Grill is a renowned chain of fast food restaurants in U.S., U.K.,
Germany, France, and Canada. Chipotle Mexican Grill was established in 1993. This
company serves a menu of salads, burrito bowls, soft flour salad, kid`s menu, bottled drinks
and beer, margaritas, Crispy Corn Tacos, and burrito by using fresh ingredients. Company`s
CEO claims that he has unbeatable start in his tenure and the company have earned (Cole,
2014). This report aims to deal in internal and external environmental analysis of Chipotle
Mexican Grill. The organisation is struggling to regain the customer confidence and sustain
the supply chain of organic ingredients (Petersonoct, 2015). Although, there are many
problems faced by the company such as food safety, supply chain, tightened labour market,
and increasing competition but mainly the report focuses on food safety issues in the CMG.
To evaluate the financial performance, it is important to consider the stock prices of at
least 5 years and it is given below-
Year Share price Percent change
2019 513.24 18.86%
2018 431.58 49.39%
2017 377.79 -23.39%
2016 428.56 -21.37%

2015 659.13 -29.9%
When referring to the company`s resources, Chipotle owns approximately 2400
restaurants at different places such as in-line or end-cap locations in properly arranged rows.
The company holds outlet at various centres such as food courts, airports, malls, train
stations, and freestanding buildings. The restaurant structure is based on point of system that
provides several applications including training, financial tools, scheduling, and data
protection services. Point of system is integrated with other important functions and
operations. It records transactions, authorises, and enables credit transactions.
PESTLE model
Political factors- these factors play a significant role in determining the impact on
chipotle Mexican grill. The company is exposed to different types of political system and
environment because the company operates in different countries (Aithal, 2016). As company
rely purely on organic products and if the FDA approves strong regulations for the fast food
chains then chipotle`s product offering would change accordingly. Undoubtedly, the
company will face legal and political interruption due to outbreak of regulation made by FDA
for food safety. As the company has lost its trust in the eyes of government, it will not
provide any subsidies. The government will impose penalty on the CMG because of
negativity impact on health of the public. Strong trade groups, which include American meat
institute, US food and drug administration, and testing procedure of deadly bacteria will
affect the company`s operations.
Economic factors- Economic changes affect the financial performance of the chipotle
Mexican grill. As the industry is volatile and instable, it has many pros and cons such as beef
or other raw material prices may increase due to inflation, unavailability, and scarcity. This

will lead to increase in the price of dishes and food products, which may influence the
customers to buy it from somewhere else. The threat can be shifting of loyal customers
(Khan, Alam, & Alam, 2015).
Social factors- these factors is inclusive of norms and certain trends that include
stereotype of different segments in the market. For instance- US customers have become
more health conscious especially about what they intake. This can be opportunity for health-
concerned restaurants such as chipotle. This company appeals and targets younger generation
“Millennial “rather than focusing on baby boomers or the “X” generation (Sridhar et al.,
2016). Due to outbreak of quality products and services, CMG has created a negative image
among its stakeholders especially customers. customer dissatisfaction in regards to.
Technological factors- over the last five years, the industry is transforming at high
pace. This factor is not much concerned with chipotle, as a food-based company rely more on
face-to-face interaction rather than depending only on online marketing and advertisement
(Vigna, Bianco, Goia, & Serra, 2018).
Legal factors- As discussed before, the company is struggling to maintain food safety
and when dealing with new suppliers, it proves to be very difficult situation for chipotle to
comply with food safety regulations.
Ecological factors- the company operates in a friendly environment, which is based
on availing organic products to the customers.

(Source: Slidemodel, 2019)
Some of the direct competitors are Qdoba restaurant corporation, Mswg LLC, MTY
Food group, Rubio’s coastal grill. Whereas, this company face indirect competition from
Burger king, checkers, and KFC. As per the industry report of nation`s Restaurant News, the
traffic for fast casual eateries has exceeded any other segment in last five years. On the other
hand, American based woodpecker restaurant has some features such as patented saltage
prime meat, craft beers, artisanal cocktail in a whimsical style. Whereas, CMG`s menu has
only 2 percent of beer offerings. Although there are many barriers to new entrants such as
economies of scale, location, encroached competitors, legal problems, and highly perishable
goods. The threat of new entrants is moderate to high as the fast-casual industry is rapidly
growing which set many challenges for the chipotle. As new entrants plan to bring innovative
products that, can bring new customers and build barriers from the existing restaurant
(Leiber, Stensaker, & Harvey, 2018).
Some of the basic needs that a customer expects are greeting them, positive and fresh
environment, good quality food, hospitality, a fine dining, and quick service. A fine dining
includes steak houses, celebrity-owned, themed restaurant, good ambience, and gourmet. To
excite the customer, a restaurant should offer innovative dishes, services, and interior. The

decision making process of customer can get affected by customer behaviour such as location
of the restaurant, neighbour restaurant, excellent services, ambience, music and art in the
restaurant, and cooking trends. Customers chose a restaurant, which can give them value for
they have paid. Apart from these, some customer behaviour is driven by Veblen theory where
in the customers are attracted in the name of luxurious services. The theory of demand
reverses in this case, as the demand increases and the price of the service also increases.
Elements of internal environment
Business strategy
The mission, vision, objectives, and values revolve around food integrity and
changing customer behaviour for people`s eating fast food habits. As company provides
highly natural raised pork, beef, and chicken. This company plans to keep the menu simple
but a combination of fresh ingredients create countless meal varieties to provide to the
customers.
Mission
To change the pattern of how people think and eat the fast food. The company in
interest in providing restaurant jobs or for other corporate things. The company focuses on
using high-quality ingredients to make great food that can have greater access to everyone at
a reasonable price.
Vision
The company has to build vision to consider the future of fast food to bring its
services and food philosophy to the culinary traditions of Italy, Naples, and Asia. This
company ensures that whether the company is able to promote the efforts of local farmers in a
sustainable way-

Serving the best naturally raised food product with greater taste, greater value, and
great nutrition. The company support the family farmers who take care of their animals.
Moreover, the company uses meat without the use of added hormones and antibiotics.
(Source: Tutorialspoint, 2019)
Strengths and weaknesses
A glimpse of weakness and issues in chipotle has been given introduction. The
mission statement “food with integrity” was among the major strength of the company but it
has turned to its main weakness. This has led to reduction in company sales by 13.3 percent
in 2016. Customers started questioning the so-called integrity which they food should have
possessed. Continuous shortage of quality in food will create a very bad impression on
customers if not treated on time. Moreover, another major issues faced by Chipotle Mexican
Grill is food unsafety that have affected the revenue and growth (Vigna, Bianco, Goia, &
Serra, 2018). This unsafe food outbreak has led to negative publicity that has caused lack of
loyal customers. It has been assumed that company is unable and is not capable for delivering
clean food since last two years. Company can strive to turn its weakness to its strength again
by keeping its food of high quality (Bull et al., 2016).

Exploiting the strength
After the outbreak of E.coli (bacteria), which was highly opposing the use of
antibiotics became a reason in causing kidney damage. The company has used its strength to
plan addition of new things in the menu to build an attractive restaurant. This restaurant has
decided to offer certain facilitates such as “testing” so that customers will be able to see and
give their suggestion (Cole, 2014).
Managing the staff
In order to manage the staff at the restaurant, so that the company can be prosperous.
This company has to build successful teams spirit to improve the quality of food again.
Teamwork is more effective than individual work because human relations are very
important. The effect of establishing a quality testing team is much greater than individual
efforts of only the expert. Two working approaches should be mixed-up to become effective
in restaurant business (Phadermrod, Crowder, & Wills, 2019). Especially when staff should
know about their duties and this is possible in an organised team. Although, it is necessary to
understand that working individually is much simpler rather than conveying and discussing
each decision with a group. It needs the changing of the actions and various working methods
as per the demand of the goal. While analysing the team, it is to undertake how staff respond
under high stress, how they are concerned about the work, and how the sense of humour is,
which is important when dealing with the uncertain situation. A good team can hold the
people together when time become difficult.
On the basis of organisation principles, a achieved organisational objective does not
ensure that there is a good relationship between the restaurant workers. After sometime,
interaction among waiters and bartenders is more work-based, and the interpersonal
connection becomes weak. The more they work successfully together; they can grow in the

organisation as friends. When deciding and recognising certain symptoms, it is not a good
sign when colleagues give attention to other`s mistakes. Moreover, one should stay away
from people who make useless interpretation about people`s actions. This does not lead to
productive business effect but it eliminates self-centeredness. Frequent absence on the
workplace is a good sign of bad relationships among the team members. Gossips and intrigue
can be disturbing elements and should be treated.
Therefore, informal communication is established with an aim to eliminate the reason
of this symptom. Proper information is a way to eliminate and every gossip is a result of
deficient information. Apart from this, in order to control above situations, manager uses
“management diplomacy.” Moreover, responsibilities of a restaurant manager are huge such
as to manage the staff members, control the finance, and finally serve best quality services to
customer. A good team manager should be a cultured person, who have nice manners, taste,
must respect each team member, treat staff with due respect. A manager should not be
stubborn or take credits only for oneself. Or else no member will work effectively and
efficiently even not a good hardworking candidate if manager is self-centred jerk who always
think of success and earnings. A manager must reward his team members because every
individual wants to work in positive work environment that finally enhances profit.
Leadership in chipotle Mexican Grill
Over the last few years, sales and revenue declined drastically due to well-published
cases of consumers become ill. Food-borne illness was not only the case of leadership failure.
Chipotle have not recognised the damage of relationship with the customers and investor. The
company have noticed fall nine points in its stock. Due to negative perception created due to
food safety issues, chipotle leadership not only failed to protect the customers, it had led to
fail the brand and continued to look less trustable in eyes of consumers (McMillan, 2017).

Moreover, the spotlight of dissatisfaction will remain on chipotle and its leadership
unless it shows care for its customers. Communication problems need to be solved as it not
only have food safety issues but also trust issues (McMillan, 2017). Mostly, a company
operates and follows a particular leadership style either it can be authoritative or democratic.
An authoritative leader orders and undertakes policies to decide how goals has to be
achieved. This leader directs and controls all the business activities without allowing the team
members to participate in decision-making. This leader has full control over the team.
Whereas, democratic leadership is also recognized as shared or participative leadership. In
this leadership, members in the group take more active participative role in decision-making
process (McMillan, 2017).
In order to manage the subordinates in the restaurant, autocratic leaders who take
decision by taking the responsibility on oneself rather than delegating it into the team. For
instance- a democratic leader in restaurant allow the waiter staff to undertake some of the
own decisions especially on to how to handle the disgruntled customers and allow them to
work on their own system during the order and delivering the food. When waiter has the
power to handle the situations of their own and finally come up with a sense of
accomplishment in the work. On the other hand, it also empowers the employees
(Meiannwang, 2017). By following g the democratic style properly and attract the customers,
a manager should be consistent, manage the work proactively, learn the operation with the
help of doing the work by yourself, prioritising the staff retention, keep an eye on customer
satisfaction by improving their experience. In order to create a favourable environment and
run the restaurant efficiently, there are some ways to manage the restaurant effectively-
A democratic leader Listens to the employee` advice and feedback (Norton, 2018).
Align the menu.

Democratic leader put efforts to create an employee manual (Norton, 2018).
An effective inventory system should be established.
An democratic cares of employee`s development and invest in the staff such as training and
development sessions (Norton, 2018).
Create sub-stations in the kitchen to work
Apart from this, an improved managerial skilled will help the restaurant to be
effective such as consistency, manage proactively, learning the operations by working,
prioritizing the staff retention, keep an eye on customer satisfaction, improving the customer
experience, and necessarily invest in advertising (Norton, 2018).
Organisational structure
While considering the organised structure of chipotle, a systematic structure need to
be established according to business operations such as purchases, Kitchen, Service, Cleaning
etc. Although, there are many types of organisational structure such as line organisational
structure, functional organisational structure, divisional organisational structure, matrix
organisational structure, and project organisational structure (Robertson, 2018). Therefore,
centralised organisational structure depends on one individual to take decisions to provide
direction to the company. Whereas, decentralised organisational structure engage several
individuals who are responsible to make decisions and run the business. Most importantly
for chipotle Mexican grill, centralised organisational structure is more favourable as a single
department procures controls and purchases the material for the whole organisation. A
manager ideally purchases all the raw material for the entire material group. Each material
group has raw material of products to be manufactured (Robertson, 2018).