Chipotle's Secret to Increasing Sales

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How one of the most popular fast casual chains in the U.S. manages to increase its sales, quarter after quarter.

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Chipotle's Secret to Increasing Sales

  1. 1. Chipotle’s Secret to Increasing Sales Image: Chipotle
  2. 2. How does Chipotle continue to increase sales year after year?
  3. 3. Or quarter after quarter, for that matter? • In the first quarter of 2014, many of CMG’s peers found tough sledding in the rough winter weather. • Competitor Panera Bread’s revenue rose 8% year over year, but the company cited the weather as a major impact to sales. • Chipotle’s first-quarter revenue roared ahead, rising more than 24% versus the prior year.
  4. 4. What’s the Key? Co-CEO Steve Ells and CFO John Hartung recently reminded analysts of Chipotle’s approach at two recent investment conferences in May and June.
  5. 5. It’s not marketing- or discount-driven Essentially, the company focuses on “throughput,” that is, optimizing the number of people it can move through its serving line during the busiest hours, often at lunch.
  6. 6. Throughput as defined by Chipotle • Management focuses on what it calls its “four pillars of throughput.” Chipotle in downtown Portland, Oregon. Image by Shanti Bradford under Creative Commons License.
  7. 7. Chipotle’s Four Pillars • A French culinary term meaning “set in place” or “everything in place.” • All ingredients and serving implements are in front of the server, who faces the customer. • If an ingredient runs out, the server stays in place. Filling the ingredient is the job of… Pillar #1: “Mise en place”
  8. 8. Chipotle’s Four Pillars • The linebacker replenishes serving pans. • He or she makes sure the serving areas are neat and organized. • This allows the servers to “maintain great eye contact” and “great communication” with the customers. Pillar #2: “The Linebacker”
  9. 9. Chipotle’s Four Pillars • Stationed between the last server and the point of sale (cash register) operator. • Checks that food is neatly bundled up. • Ensures that salsa & chips and drink orders are in place and ready to go by the time payment is made. Pillar #3: “The Expediter”
  10. 10. Chipotle’s Four Pillars • Having the best people in the right places. • One of the most important jobs of a Chipotle manager is understanding employee strengths, and knowing how to get the right aces in the right places to optimize speed and service. Pillar #4: “Aces in their places”
  11. 11. Chipotle’s Four Pillars By focusing on these four pillars, Chipotle can improve the speed and quality of its service. • Some Chipotle locations, such as the 230 West Monroe restaurant in Chicago, serve over 300 customers per hour during peak hours such as lunchtime.
  12. 12. Chipotle’s Four Pillars Chipotle has spent years as an organization improving its simple yet effective food setup. • That’s why the company’s new ShopHouse and Pizzeria Locale concepts share the same layout, format, and logistical structure as Chipotle restaurants.
  13. 13. The Four Pillars Will Spur Future Growth According to co-CEO Ells, when a Chipotle field manager walks into a ShopHouse, he or she sees a Chipotle: It’s the same restaurant; different theme. Think this is a Chipotle? Look again (check out the menu). ShopHouse image by Ted Eytan under Creative Commons License
  14. 14. CMG also knows how to keep on the right side of demand Chipotle doesn’t franchise: It has fewer locations than some competitors, but gets to keep all the revenue and profits, and make its own decisions • Fewer than 1,700 locations means that when a new store opens, there is almost always pent- up demand. • Add to this a product favored by millenials, which Consumer Reports recently ranked No. 1 among burrito restaurants: lines continue to be long…
  15. 15. Summing Up the Strategy • By improving hourly throughput, the company can continue to increase its sales by meeting demand, without much further leverage from marketing. These meat trays are “mise en place.” Image by brownpau under Creative Commons License.
  16. 16. Chipotle’s Secret Is Simplicity Itself • No gimmicks • Limited marketing • No technological secret weapons • Focus on productivity and the customer Cup image by Sun Dazed under Creative Commons License.
  17. 17. Leaked: Apple's next smart device (warning, it may shock you) Are you interested in finding fast-growing companies like Chipotle while they're still relatively small? Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

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