Chipotle Mexican Grill Inc Food With Integrity

Topics: Marketing, Sustainable agriculture, Chipotle Mexican Grill Pages: 5 (826 words) Published: July 1, 2015
Chipotle: Mexican Grill, Inc.: "Food with Integrity"
Executive Summary
The total U.S restaurant sales in 2012 raised up double to $631.8 billion compared to ones in 2000. Also 12.9 million people are employed in 970,000 restaurant locations. The U.S restaurant industry played the customers' hearts by three segments: full service, quick service and fast casual. The three major key players in this industry are Chipotle, Taco Bell and Qdoba. In recession of U.S economy and consumers' announcement of spending less on food outings, what changes would this restaurant industry become? With the depressed economy, full service had less chance on lower prices than the others because of food and beverage, labor and real estate costs. The consumer's willingness of lower food price also affected Chipotle with the mission statement "Food with Integrity" because Chipotle's price is a little higher for serving good quality food with inputs sourced using sustainable farming practices. From the learned points of Chipotle's case, we will analyze "Is Chipotle's current strategy be able to compete with the competitors in the difficult economic times competing for a share of the customer's stomach?" or "Could Chipotle continue to use quality and sustainably sourced inputs as differentiators to justify a higher price menu?" Introduction of Chipotle's background

In 1993, Steven Ells, the founder of Chipotle Mexican Grill (CMG), opened the first restaurant in Denver, Colorado and his goal was to reinvent Mexican food with the excellent chef experiences of San Francisco. Based on his goal, Ells successfully opened 16 restaurants in 1998 and then got an initial investment to expand more units from McDonald's corporation. In October 2006, Chipotle and McDonald ended up going the separate ways according to different kinds of food, experience and culture. The mission statement "Food with Integrity" was occurred by Edward Behr's article that was using without antibiotics or confining pigs. Now Chipotle, one of the fast casual segments, operates more than 1300 own restaurants and employs above 30000 hourly and salaried workers. Situational Analysis

Organic agriculture and sustainable sources
Freshness (no freezers and microwave ovens)
Only company-owned restaurants
Perfect well-planned operation and supply chain systems
Typical restaurant's smaller size
Non-traditional marketing strategy
Higher selling price than competitors
Poor promotional method (word-of-mouth publicity and in-house advertising) Lack of customer relationship management
Globally fancy level in organic agriculture
Initial investment from McDonald
Environmental and sustainable restaurants (use of solar energy and reduce carbon footprint) Threats
Limited source of organic suppliers
Compete with all segments from restaurant industry
People's eating-out times reduce with the depressed economy
"Einhorn Effect" – competitor produces similar products and greater risk of losing customers Key Issue
Chipotle, currently running its owned restaurants in the fast casual segment of the restaurant industry, is recognized with "Food with Integrity: its current strategy". Could Chipotle's current strategy and sustainability afford to compete with the competitors who favored lower check prices to hold on the market share in the difficult economic times? Or "Could Chipotle's restaurants continue to use quality and sustainably sourced inputs as differentiators to justify a higher price menu?" Alternative actions and Evaluation of Alternative actions

Alternative actions
1. Differentiation strategy by "Food with Integrity" (current strategy) Good reputation
Differentiated products can reduce consumer's sensitivity to price increases Get loyalty of customers because of its hygienic and fresh products Highly dependent on organic suppliers
Counterfeiting of competitor's low-cost strategy
Economic recession can reduce sales
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