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Chipotle
- 1. Management 494BI: Diana Salvucci,Antonio Monteiro, Ravina Jangra, Nick Forgione
- 2. MEET STEVE ELLS Founder, Co-CEO Graduate of Culinary Institute of America (New York) Chipotle Visionary $80,000 loan $85,000 in investments
- 3. 1993: First Chipotlein Boulder, Colorado 1998: McDonald’s purchases first minority stake in Chipotle 1999: Chipotle expands to 37 locations 2000: Venture into organic and sustainable ingredients 2008: International expansion into Canada 2010: Chipotle goes to London
- 4. CHIPOTLE RESTAURANTS: STATE-BY-STATEBREAKDOWN
- 6. 2000 • Started serving naturally raised pork. •2010: 100% of pork is naturally raised 2002 • Started serving naturally raised chicken. • 100% of chicken comes from farms that meet Chipotle’s high standards. 2007 • Over 60% of Chipotle’s beef is naturally raised • Now, 100% of the beef is naturally raised 2007 • Chipotle stops usage of cheese or sour cream with rBGH 2010 • As of 2010, 40% of the black beans are certified organic
- 7. Nontraditional marketingis key to Chipotle’s business model. They focus on creating positive Word-of-Mouth as opposed to spending money on advertising When a new store opens, they give their neighbors free food to create customer loyalty Professional athletes are given vouchers for a free burrito each day which leads to social media publicity Only 2% of revenue is spent on advertising
- 8. Manager Incentives Consistency is the ultimate goal Managers are offered large bonuses to stay in store Promoting from within allows greater success Inspires employees and creates dedication
- 9. BUSINESS STRATEGY “I remainconfident that our performance is rooted in our long- term vision to change the way people think about and eat fast food…This focused approach makes us unique in the restaurant industry, and continues to differentiate Chipotle in significant ways.” ~Steve Ells, Founder of Chipotle
- 10. FAST-CASUAL Among themost successful restaurants in the up and coming niche fast- casual industry Fast-casual dining offers Higher average tickets More upscale fare Better decor and atmosphere compared to fast food restaurants No drive through in fast casual restaurants Able to offer high-quality food ingredients that are created faster and less expensive than full-service restaurants
- 11. ORGANIC AND SUSTAINABLE Use of organic and sustainable ingredients All farmers are approved and must have quality specifications Prefer farms that are family owned and operated Chipotle is the largest restaurant buyer of locally grown produce All restaurants are sustainable in the environment
- 12. THE CHIPOTLE ADVANTAGE Exceptional service from hard working managers and employees Managers are offered big bonuses for running a productive business so managers work hard to please the customer
- 13. STRENGTHS • Sustainable supplychain • No steroids or growth hormones • First-mover (fast-casual) WEAKNESSES • Single corporate office • Relationship with suppliers • Unhealthy menu items OPPORTUNITIES • Healthier options menu • International and domestic expansion THREATS • Lack of franchising • Threat of new entrants into “fast- casual” market Chipotle
- 14. STRENGTHS Sustainable supplychain Able to leverage supply chain management capabilities from McDonald’s No steroids or growth hormones Customers willing to pay premium price First-mover (fast-casual) Customers seek something “hipper, faster, and cheaper than full-service”
- 15. WEAKNESSES Single corporateoffice Organizational and cultural challenges Relationship with suppliers Supplier shortages Difficult to find substitutes (interruptions in supply chain) Unhealthy food items Average burrito: 900-1,000 calories, 50 grams of fat, and 2,030 mg of sodium Qdoba offers healthier and less filling options Mexican lettuce wraps
- 16. OPPORTUNITIES Healthier optionsmenu International and domestic expansion Continue cautious approach to foreign expansion Explore franchising to reap the benefits Reduction in overhead costs
- 17. THREATS Lack offranchising Competitors moving quickly to expand internationally and domestically Threat of new entrants Sourcing and offering quality ingredients is a relatively simple business model to mimic EG. Fast food chains New concepts
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- 19. Chipotle’s marketing strategy isto replace traditional advertising with emotionally engaging stories. Example: Back to the Start The 2-minute animated film symbolizes Chipotle’s shift away from factory farms and its increasing commitment to naturally-raised animals and locally grown produce Organic Sustainable Local
- 20. The shortfilm generated a lot of publicity and positive feedback. Chipotle should continue with this strategic, selective use of television advertising and capitalize on the success of the first film. Using consistent animation and use of imagery, Chipotle should continue advertising with emotionally-evoking short films during popular prime time events, such as the Super Bowl or the Academy Awards. Each film could highlight a different aspect of sustainable agriculture or feature different naturally-raised animals.
- 22. Chipotle should investmore resources in the Chipotle Student Brand Manager Program Before each new location is opened, a brand manager should already be promoting Chipotle at local campuses, schools, and community centers Brand managers should be used to both increase Chipotle’s social media presence and educate consumers about sustainable farming
- 23. IMPROVING SOCIALMEDIA PRESENCE Brand managers should receive incentives for the number of people in their network that begin following them on social media sites. Brand managers should utilize technology to allow people to like social media pages on the spot and be rewarded with coupons and promotional deals.
- 24. EDUCATING PEOPLEON SUSTAINABLE FARMING All coupons and promotional materials should also be informative about Chipotle’s commitment to sustainable agriculture and their dedication to naturally-raised animals and locally-grown produce.
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- 27. INTRODUCING THE SMALL(ER)BURRITO Chipotle could introduce a smaller burrito to allow customers to experience the same great taste, but in smaller portions. Through social media, Chipotle should actively endorse this smaller burrito which will be available with white or wheat tortillas. This new option will target consumers who are seeking healthier options.
Editor's Notes
- #2 IntroductionSteve Ells (entrepreneurship)Relationship w/Suppliers (Farmers)Food w/IntegrityChart
- #3 With an $85,000 loan from his father and the realtor's help, Ells found and renovated an old ice cream parlor near the University of Denver.Post-culinary school, Ells moved to San Francisco to work under the tutelage of celebrity chef Jeremiah Tower. While living in the city, Ells was inspired by watching an assembly line of workers at a local taqueria, efficiently feeding hungry masses of patrons.
- #4 venture
- #10 “I remain confident that our performance is rooted in our long-term vision to change the way people think about and eat fast food…This focused approach makes us unique in the restaurant industry, and continues to differentiate Chipotle in significant ways.” -Steve Ells, Creator of Chipotle
- #14 Continue cautious approach to international expansion
- #15 Chipotle offers a sleek, modern “eclectic design”
- #16 Issues with management and effective communicationLesser ability to understand local and cultural differences
- #18 With a combination of company owned and franchised restaurants, Panera is able to rely primarily on cash generated from operations to fund new company owned locations while maximizing expansion through new franchises.