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Copy of Chipotle Case Study

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Lyndzie01 J

on 25 September 2013

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Transcript of Copy of Chipotle Case Study

<> Steve Ells, founder of Chipotle, opened the first restaurant
in Denver Colorado, 1993.
"Deciding he could shake up the traditional
Mexican made-to-order burrito by adding
gourmet ingredients, the dream Chipotle
Mexican Grill was born. "
What do they sell?
<> SIMPLE GOURMET mexican menu
burritos
burrito bowls
tacos
Financial Taste
It means serving the very best sustainably raised food possible with an eye to great taste, great nutrition and great value.
It means that we support and sustain family farmers who respect the land and the animals in their care.
It means that whenever possible we use meat from animals raised without the use of antibiotics or added hormones.
And it means that we source organic and local produce when practical. And that we use dairy from cows raised without the use of synthetic hormones.
Food With Integrity is a journey that started more than a decade ago and one that will never end.
According to the Union of Concerned Scientists, American pork producers use over 10 million pounds of antibiotics per year to keep their confinement raised pigs from getting sick. That's more than an estimated three times the amount used to treat all human illness.
By using 100% recycled content in our napkins,
we save over 22 million gallons of water per year.
since 2001, 100% of Chipotle's pork is sourced from farmers who follow the "naturally raised" guidelines

"It's not possible or practical for us to source all of our ingredients locally. Still, we believe it's important to do as much as we can."

In 2010, at least 50% of produce items were sourced from local farms when seasonally available
DIFFERENTIATION
Current Ratio 3.8
Quick Ratio 3.73
Debt to Assets 0.27%
Cash on Hand $444.63M
Days of Inventory 2.3 days
P/E Ratio 48.63
FIGURES
Financially
Healthy?

STOCKS
November 18, 2010 $227.64
August 22, 2011: $273.20
November 18, 2011: $311.10

INVEST?
YES!
$6,700
<> Bringing customers and staff together in an open kitchen
atmosphere.
Fast-Casual

Industry

Over 60,000 different combinations
PURSUE?
WHICH STRATEGY DOES
TANGIBLE RESOURCES
FOOD QUALITY
INTANGIBLE RESOURCES
ELLS COOKING TALENT AND VISON
STRONG WORKFORCE
UNIQUE CUSTOMER EXPERIENCE
EMPLOYEE COMMITMENT
CORE COMPETENCE
IN OPERATION BY OFFERING SUSTAINABLY RAISED PRODUCTS
COMBINED WITH GREAT TASTE AND CUSTOMER EXPERIENCE
COMPETITIVE ADVANTAGE
1.5 TIMES THE EBITA OF MAJOR COMEPTITORS
SSS OUTPACES THE INDUSTRY
1 OF THE TOP 3 QUICK SERVICE RESTAURANT BRANDS IN RATED ON OVERALL CUSOTMER SATISFACTION
SUSTAINABLE RESTAURANTS
APPEALING ECLECTIC ATMOSPHERE
BETTER THAN
THE REST
"A big goal at Chipotle is to bridge the cultural and linguistic gaps between Chipotle employees. So there is a whole team dedicated to empowering, educating, and training employees to increase internal promotions, cultural sensitivity, and communication skills. We also provide continuing English language education to all employees who request it."
EMPLOYMENT OPPORTUNITY
LIMITATIONS
Easy to copy by competitors
High criticism associated with out-of-step actions
Limit source of resources
Incur higher costs than competitors
Create challenges moving globally
Strengths
First Movers in the Fast-Casual industry
Strong Brand Representation
Local internal management
Environmentally Conscious
Motivated, detailed Leadership
Social Media Drivers
Deep Customer Loyalty
Employee Opportunity

Weaknesses
Lack of Healthy options
Commitment to stay locally owned
International Uncertainty


Opportunities
Threats
Leverage (Strength - Opportunities)
Using their strong brand vision and social media following constancy to expand and market to the international frontier.
Being so committed to global health, Chipotle has positioned their brand and reputation to partner with environmentalist movements which can cut cost in the long run.
What's Next on the Menu?
Constraints (Weakness - Opportunity)
Their Mexican food base model is limiting the health options that could be provided to customers. Staying locally owned is driving their expansion opportunities.
Food Cost
Fast- Causal industry expansion (strong competition)
Publicly held companies
Physical changing landscapes of suppliers
Rapid Growth (in a short time period)
Immigration and workforce laws

Healthy Menu
Revamped international strategy approach
Partnerships

Vulnerability (Threat - Strength)
Raising food cost and the commitment to organically sustainable food is pressuring the Chipotle to operate under constantly changing price structures. By their simplistic approach to mean items, barriers are opened for competitors to enter the industry successfully. Growing in a short period of time could lead to tension with rapid expansion with the "fast-casual" industry on the rise.
page 79
Expansion
Recommendations
165 - 180

1590
Increase prices gradually
Upgrade information system and company structure
Embrace the company strength of high customer satisfaction by developing and implementing a customer loyalty program
Develop innovative strategies e
Closely monitor Same Store Sales
Focus on maintaining low prime costs (COGS & Labor)
Maintain enough distance amongst restaurants
Full transcript