In-Depth Case Study: Strategic Analysis of Chipotle - MBA 5513

This case study provides a comprehensive strategic analysis of Chipotle Mexican Grill, examining its general environment, industry position, competitive landscape, and internal operations. It utilizes tools such as SWOT analysis and Porter's Five Forces to evaluate Chipotle's strengths, weaknesses, opportunities, and threats. The analysis covers technological, demographic, economic, political, sociocultural, global, and physical environmental trends impacting the company. Furthermore, it delves into competitor analysis, comparing Chipotle with Qdoba and Taco Bell. The study concludes with strategy formulation and a strategic action plan, recommending increased menu variety, international expansion, and enhanced advertising efforts to ensure Chipotle's continued growth and market leadership in the restaurant industry. This document is available on Desklib, a platform providing study tools and resources for students.

Running head: EFFECTIVE CASE ANALYSIS
Effective case analysis
Name of the Student:
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Author’s Note:

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EFFECTIVE CASE ANALYSIS
Table of Contents
1. General environmental analysis:..................................................................................................3
a) Technological trends....................................................................................................................3
b) Demographic trends....................................................................................................................3
c) Economic trend............................................................................................................................3
d) Political trend..............................................................................................................................3
e) Socio cultural...............................................................................................................................3
f) Global trend..................................................................................................................................3
g) Physical environmental...............................................................................................................3
2. Industry analysis..........................................................................................................................3
3. Competitor analysis.....................................................................................................................3
4. Internal analysis...........................................................................................................................3
5. SWOT analysis............................................................................................................................3
6. Strategy formulation....................................................................................................................3
7. Strategic action plan....................................................................................................................3

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EFFECTIVE CASE ANALYSIS
1. General environmental analysis:
a) Technological trends
Chipotle being a service driven and food based company deals with face to face
interactions with customers. Business model of restaurant has improved by incorporating
technology and due to more and more customers becoming tech savvy, further improvement has
been done by adding the option of mobile payment and speeding up their online ordering process
(Barrows et al., 2016).
b) Demographic trends
Business of restaurant is drawn by opening in outlet having geographical draw and
population density. The majority target market of Chipotle is focused on younger individual aged
between 18 to 24 years of age (Gilliard et al., 2017). Initially, they based their restaurant in areas
where Mexican food was prevalent such as Colorado and Denver.
c) Economic trend
Cost of labour and real estate costs impacts operation of restaurant and input cost stability is
ensured by engagement of company with their supply chain. Price of various products such as
beef, grains and other dairy items fluctuated due to weather conditions and change in conditions
of supply and demand of three largest exporters of United States (Kim et al., 2015).
d) Political trend
The operation of Chipotle Mexican Grill is significantly impacted by political
environment and they are tethered to the guidelines and rules such as licences, permits,
insurance, environmental regulations in different countries of their operations.

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EFFECTIVE CASE ANALYSIS
e) Socio cultural
It is indicated by sentiment of consumers in country that most of them have the
inclination of reducing their expense on eating or they would want it to maintain at best level.
Hence, CMC is likely to be impacted in its margin due to rising cost of foods and unwillingness
of consumers to purchase them at higher price (Cohen & Muñoz, 2017).
f) Global trend
The business of Chipotle can be affected by some global factors as they have expanded
into other countries that United States. Chipotle operations should take into considerations
exporting and importing factors as it has wide impact on their input costs (Morris, 2015).
g) Physical environmental
Products of Chipotle are being improved and they are raised naturally and being
produced organically. For their ingredients such as beef, pork and chicken, innovation that
restaurant has been engaged in is raising them, naturally.
2. Industry analysis
Industry analysis of Chipotle can be explained with the application of porters five force
model:

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EFFECTIVE CASE ANALYSIS
Bargaining power of buyer- Industry in which Chipotle operates has higher degree of
bargaining power. In order to maintain a competitive edge, it is required by Chipotle to offer
wide menu options to their customer base at reasonable prices compared to other restaurants
competing with it.
Threat of substitutes- Chipotle has higher rate of substitutes in US as many restaurants
are offering Mexican cuisines such as Taco Bell and Qdoba. These restaurants keep on up
scaling and enhancing their menu items.
Threat of potential entrants- Intense competition will be experienced by Chipotle in
both full service and quick service segments. Fast casual restaurant has witnessed rapid growth
in recent years and significant increase in fresh eateries poses a considerable amount of threat to
Chipotle.
Existence of rivals- In setting them apart from competitors, a fine job has been done by
Chipotle in terms of their ingredients and products.

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EFFECTIVE CASE ANALYSIS
Suppliers bargaining power- The ability of Chipotle to obtain high quality ingredients
is dependent upon the power of suppliers. Usually, local areas, Chipotle engage in direct
negotiations with the suppliers so that they buy ingredients at most competitive prices (Walker &
Merkley, 2017).
3. Competitor analysis
Qdoba:
Strengths-
 Rapid expansion of brand
 Featuring of mission style burritos and wide variety of options on menu
 Reasonable prices
 Long-term potential for expansion
Weaknesses-
 Confined only to United States
 Fewer stores and locations
Vision-
 Ingredients quality
 Serving high quality Mexican cuisine
Pricing-
 Alterations in strategy of pricing for main dishes using bundling options
Financial Information-

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EFFECTIVE CASE ANALYSIS
 Sales expected to increase
 Increasing revenue trend
Taco bell:
Strength-
 Testing of new menu for experimentation
 Up scaling menu items and have Miami based chef
 Quick service segments
Weakness-
 Appealing to less value conscious and older customers
Vision-
 Expanded usage and trail of Mexican food
Pricing-
Lower price of items such as steak burrito and burrito bowl with chicken at $ 5.99
compared to Chipotle at the rate $ 9.88 and $ 10.34Financial information-
 Phenomenal increase in market share of United States
 Increased sales growth
4. Internal analysis
All the restaurants of CMG were owned by company and they either freestanding, end
caps and in lines. A differentiation strategy is used by Chipotle that helps in generating
willingness of customers to make payment even if the menus are priced at higher costs. From the

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EFFECTIVE CASE ANALYSIS
financials of company, it can be seen that there is consistent increase in revenue. Inventory
valuations, account receivable and current assets have increased. Looking at year on year, stock
price of CMG, it can be seen that there was phenomenal increase in the price of stock from 59.42
in year 2007 to 367.29 in year 2012. The input cost of restaurant is high due to global increase in
food commodity price and sustainable sourcing practices. Strategy used by business is different
from its competitors and in light of higher expected price, company has raised the menu prices
(McLaughlin & Dicken, 2016).
5. SWOT analysis
Strength
 All ingredients are sourced and raised
naturally and there are no pesticides
and genetically engineered hormones
involved.
 Work of mouth strategy employed by
Chipotle help in gaining brand loyalty
and building image
 Social responsibilities initiatives and
employment of green house
technologies
 Innovative and different marketing
strategies
Weakness
 Higher procurement costs of input and
raw materials compared to their
competitors such as Qdoba.
 Limited menu options with higher
prices of items and have few
international outlets.
 Limited advertising
 Small business units and they are
required to adhere to performance
standards and equivalent quality
(Wilford, 2016).
 They are predominantly located In
United States that might restrict them in
exploring

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EFFECTIVE CASE ANALYSIS
Opportunities
 Growing consciousness and popularity
of healthy food. In order to gain
popularity in market, Chipotle has
opportunity in terms of incorporating
superior and healthy ingredient on their
menu.
 Digital platforms will enable Chipotle
in gaining and enhancing customer base
by adding features such as launching of
applications that enable customers in
ordering online food at quick delivery
system (Cohen & Muñoz, 2017).
 Possibilities of franchisee and
expansion of their menu items.
Threat
 Higher and intense competition in
restaurant industry in US as well as
internationally
 Cost and price of menu items of their
competitors
 Fluctuation in price of raw materials
due to change in climatic condition and
other macro economic factors
 Any decrease in quality of food will
lead to declining demands of menu
items of restaurant.
6. Strategy formulation
Some of strategies that should be considered by Chipotle to continue their expansion and
becoming renowned leader in the restaurant industry are listed below:
 Increasing variety on menu list- One of the most feasible strategic options for Chipotle
would be increasing items on their menu lists. It is perceived by the restaurant will yield

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EFFECTIVE CASE ANALYSIS
highest benefit from option risk to reward ratio. Taco Bell and some other restaurant in
the market are proving to be formidable competitors. Adding more items will help them
in taking advantage of economies of scale in terms of input costs (Shin et al., 2018).
Moreover, these will also help in increasing sales volume and flexible menu pricing.
 International expansion- In the current scenario, there is limited international presence
of Chipotle and they are mostly confined to European countries. Expanding at
international level will make organization in generating higher revenue and making brand
popular globally. This will also provide them with the opportunity of accessing new
market and brand recognition.
 Increasing budget on advertising- The advertising strategy that Chipotle relies on is
word of mouth strategy. They do not implement any mass media marketing campaigns
and they are very instrumental in using technology and social media for reaching their
targeted customers. Advertising strategy plays a very crucial role in attracting customers
and sparking intense competition in restaurant market (Rowell, 2016).
7. Strategic action plan
The action plan of Chipotle would incorporate the techniques that will be used to achieve
the objectives and the person in different departments who are entitled to perform it. The time
plan of each strategy to be implemented should be outlined in the strategic plan. Chipotle is an
organization that is growing on constant basis and for further flourishing in the restaurant
industry; they need to plan some of the strategies in a way that helps in addressing some of the
ongoing business issues. For incorporating the innovative factor in their business operations,
Chipotle has adequate financial backing (Swenson & Olsen, 2017). The strategic plan
development of Chipotle needs the expansion of recommended strategies. It is necessary for

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EFFECTIVE CASE ANALYSIS
organization to make the identification of crucial strategies and core values should be
communicated that pertains to triple bottle line. Implementation of strategies will help company
them in gaining competitive advantage and offering healthier items to their customers. Main
focus of company should be on working on adding newer items on their menu, offering healthier
items for attracting customer demographics (Ho et al., 2014). Desires of customer can be
ascertained by conducting surveys. Price range of customers needs to be understood in a better
way that will help them in accordingly designing their products. The objective of restaurant is to
diver higher quality products with high quality ingredients by aligning it its sustainable and
environmental friendly source.

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EFFECTIVE CASE ANALYSIS
References list:
Autry, C. W., Williams, B. D., & Golicic, S. (2014). Relational and process multiplexity in
vertical supply chain triads: an exploration in the US restaurant industry. Journal of
Business Logistics, 35(1), 52-70.
Barrows, C. W., Vieira Jr, E. T., & DiPietro, R. B. (2016). Increasing the effectiveness of
benchmarking in the restaurant industry. International Journal of Process Management
and Benchmarking, 6(1), 79-111.
Cohen, B., & Muñoz, P. (2017). Entering Conscious Consumer Markets: Toward a New
Generation of Sustainability Strategies. California Management Review, 59(4), 23-48.
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.
Ho, B., Liang, W., Chan, H., & Ma, P. (2014). STRATEGIC ANALYSIS FOR: Chipotle
Mexican Grill.
Kim, S., Koh, Y., Cha, J., & Lee, S. (2015). Effects of social media on firm value for US
restaurant companies. International Journal of Hospitality Management, 49, 40-46.

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EFFECTIVE CASE ANALYSIS
McLaughlin, P., & Dicken, C. (2016, May). Evolution of the Food-Away-From-Home Industry:
Recent and Emerging Trends. In 2016 Annual Meeting, July 31-August 2, 2016, Boston,
Massachusetts (No. 236077). Agricultural and Applied Economics Association.
Morris, R. J. (2015). Sorry, no carnitas: balancing “Food with Integrity” and growth at
Chipotle. The CASE Journal, 11(3), 369-371.
Rowell, K. M. (2016). Food with Integrity: A Financial Analysis of Chipotle Mexican
Grill (Doctoral dissertation, The University of Mississippi).
Shin, Y. H., Im, J., Jung, S. E., & Severt, K. (2018). The theory of planned behavior and the
norm activation model approach to consumer behavior regarding organic
menus. International Journal of Hospitality Management, 69, 21-29.
Swenson, R., & Olsen, N. (2017). Food for Thought: Audience Engagement with Sustainability
Messages in Branded Content. Environmental Communication, 1-16.
WALKER, R., & MERKLEY, G. (2017). Chipotle Mexican Grill: Food with Integrity?.
Wilford, M. (2016). Understanding Beef as a Business: A Corporate Social Responsibility
Analysis of Chipotle Mexican Grill.