Company Overview of Chipotle
Chipotle Mexican Grill is a fast-casual Mexican food restaurant, which is operating, based on set of values. It offers fresh Mexican food to the customers. The company believes that qualities of the ingredients are most important for fast food business. The organization gives important to food sourcing in a way that they are handling of animals, environment and people. The company also operates in United States, Germany, England, France as well as Canada. The core sustainable mission of the organization is to provide “food with integrity”. The vision of the organization is to continue of expansion rate as well as support “food with integrity” values (Chipotle.com 2016). The organizational goals are production and use of naturally raised, organic hormone free, non-genetically modified ingredients, low cost and efficient food processing industry and meet with 100 percent market from chicken and dairy production. The organization promotes a communication campaign for the customers to meet with its mission “Food with Integrity”. This slogan gives positive message to the customers that food production should become healthier and ethical (Chipotle.com 2015). It cultivates a better world.
Figure 1: Logo of Chipotle Mexican Grill
(Source: Chipotle.com 2015)
Figure 2: SWOT Analysis of Chipotle Mexican Grill
(Source: Chipotle.com 2016)
Strengths: The following are the strengths of the Chipotle Mexican Grill such as:
Rapid growth: Chipotle has grown their market since it became public. It achieves positive annual revenue as well as earnings growth since it shows robust gains (Baker 2014). It manages to place annual revenue as well as earnings expansion of 10 as well as 7 percent respectively.
Good financial strength: The Company consists of strong balance sheet and generates cash flow. In the year 2016, the organization investment is over $1 billion. It does business under low favorable conditions without have to give interest to the creditors (Chipotle.com 2016).
Weaknesses: The following are the weaknesses of the Chipotle Mexican Grill such as:
Quality of ingredients: Due to recent E.Coli outbreak, the quality of food of the organization becomes a weakness and food safety becomes a huge issue. The customers began to escape and it gave a bad reputation on their brand. Chipotle also focuses on difficult supply chain, and therefore it is difficult to monitor safety as well as quality of food (Hollensen 2015). The local suppliers are not containing resources to track the food safety concerns.
Dependence on US market: 99 percent of the restaurants of Chipotle are based in US. Growth in US has slow down as the company is focused on customer discretionary spending. It gives a result to change within macroeconomic situations (Mcdonald, Malcolm and Brown 2016).
Current Marketing Situation Analysis
Opportunities: The following are the opportunities of the Chipotle Mexican Grill such as:
Expansion of store: In the coming year, the company plans to open 220-235 stores in US. The company also plans to expand into international market and emerging markets such as Asia where there is Mexican dining choices.
New categories of products: Chipotle offers four categories of products such as burritos, salads, tacos and burrito bowls (Armstrong et al. 2014). The company also plans to add new categories, which help to expand their sales.
Threats: The following are the threats of the Chipotle Mexican Grill such as:
Food safety issues: It is hard for the company to gain trust from the customers due to recent case of food borne illness due to poor food quality (West, Ford and Ibrahim 2015). It lessens the customer perceptions on quality of food. The management team takes possible step to improve their food safety.
Competition: Chipotle has highly competitive environment based on cost, quality as well as service. The primary competitors are locally owned restaurants, national chains. The other competitors are taco Bell, McDonalds and others.
The objective of Chipotle Mexican Grill is:
- To increase customer awareness with regards to significance and profits consuming of naturally raised production
Chipotle is the organization, which is serving “food with integrity” to the customers. The strategy of the organization resounds with an interest in environment as well as development of food from various organizations. The new strategy of the organization is to make best gourmet burrito (Boone and Kurtz 2013). The product should be customer’s full customization and provide consumer experience from entrance into the restaurant. The organization always serves naturally raised produce as well as organic products to the customers. The burrito products are charged premium price. They are also ready to raise cost by small ingredients (Kolb 2016). The strategy, which is decided by the organization to implement is to increase green customer supply chain. For this purpose, the organization created Chipotle Cultivate Foundation to focus on food issues. It hires creative artist’s agency in order to create “Back to the Start” which is expressively influential animated short on significance to raise pigs sustainably.
The target market of Chipotle is the primary customer section in millennials. They should be of age between 23 as well as 36. They are preferring quality over food (Ritter 2014). The main strategy of the organization is to win the millennials by providing them fresh food as well as target them on personality.
Organizational Objective
The company is positioning their products into the market by use of non-traditional communication channel. They are focused on conveying of message on food sourcing as well as organic farming. The organization also uploads their products and service to Youtube and uploads animated videos (Tuten and Solomon 2014). The non-traditional marketing campaign of the organization results into increase of customer those are visiting the restaurant based on recommendation from friend as well as family. The company chooses the slogan for their business as “Food with Integrity” to send message to the customers such as their food produce is healthier and ethical (Young 2014). It is an environmental responsible mission for their organization. The marketing campaign “Cultivate a better world” becomes a successful promotional channel of their services.
Chipotle should keep their social networks strategy to reach their targeted customer. The company has a presence in Twitter, YouTube and others. It should provide a value based pricing on their products and services. It should asset the requirements of customers such as low prices. In order to meet with perceived customer value, the company should set a target price. The product should be designed at target price in order to deliver desired customer value. The company should use hybrid-marketing channel such as producer-retailer-consumer (Ho et al. 2014). The marketing tactics of Chipotle is based on to change the way people are thinking. The company provides sustainable sources for their ingredients.
The actions, which are taken by the company to make a unique position in the market, are to make changes in their food safety practices. The company takes steps such as high resolution testing of their fresh produce as well as moving tomatoes from the restaurants reverse to middle commissions. It will reduce the risk of any further outbreak (Simpson 2015). The company plans to use of direct mail, which consists of offers like buy-one as well as get one coupon. The marketing action of Chipotle to attract customers and back them to the restaurants is focusing on food safety (Rowell 2016). The marketing campaign helps the customers to get the reasons of previous outbreak into the organization.
|
Activities for action plan |
Time taken |
|
Design of overall marketing plan |
0.5 month |
|
Building of required media components |
0.5 month |
|
Advertise and promotion |
1 month |
|
Social media interaction |
1 week |
|
Feedback dialogue |
1 month |
|
Evaluation of the plan |
1 week |
|
Implementation of the plan |
2 weeks |
The overall action plan for Chipotle to gain profitability and increase their profit is 4 months. The goal of company is to serve organic and natural foods to the customers based on its sustainable mission ‘Food with Integrity”.
The budget plans for Chipotle Mexican Grill are as follows:
|
Tangible Benefits |
|
|
Categories |
Cost (in millions) |
|
Reducing of product price |
£ 400,000.00 |
|
Reducing of marketing errors |
£ 300,000.00 |
|
Increase in flexibility |
£ 80,000.00 |
|
Increase in activity speed |
£ 70,000.00 |
|
Upgrading in market planning plus its control |
£ 60,000.00 |
|
Further cost |
£ 30,000.00 |
|
Total Tangible profits |
£ 940,000.00 |
|
Tangible One-Time Costs |
|
|
Categories |
Cost (in millions) |
|
Cost of improvement |
£ 400,000.00 |
|
Administrative expenses |
£ 100,000.00 |
|
Equipment rent |
£ 100,000.00 |
|
Training Cost |
£ 50,000.00 |
|
Operating expenses |
£ 35,000.00 |
|
Further Cost |
£ 30,000.00 |
|
Total Tangible One-Time Costs |
£ 715,000.00 |
|
Tangible Recurring Costs |
|
|
Categories |
Cost (in millions) |
|
Product/material |
£ 100,000.00 |
|
Marketing expenses |
£ 140,000.00 |
|
Incremental cost for communications |
£ 110,000.00 |
|
Sales expenses |
£ 20,000.00 |
|
Supplier cost |
£ 70,000.00 |
|
Further Cost |
£ 80,000.00 |
|
Total Tangible Recurring Costs |
£ 520,000.00 |
|
Break Even Analysis for Chipotle |
|||
|
Costs of Existing plan |
Year 1 (in millions) |
Year 2 (in millions) |
Year 3 (in millions) |
|
Total Improvement Costs |
£ – |
£ – |
£ – |
|
Cost for Additional equipments |
£ 100,000.00 |
£ 150,000.00 |
£ 150,000.00 |
|
Operation costs |
£ 25,000.00 |
£ 25,000.00 |
£ 20,000.00 |
|
Time throughout development |
£ – |
£ – |
£ 20,000.00 |
|
Total Maintenance costs |
£ 40,000.00 |
£ 40,000.00 |
£ 50,000.00 |
|
Total Cost of Existing Plan |
£ 165,000.00 |
£ 215,000.00 |
£ 240,000.00 |
|
Costs of Proposed marketing plan |
Year 1 (in millions) |
Year 2 (in millions) |
Year 3 (in millions) |
|
Total improvement Costs |
£ 100,000.00 |
£ 200,000.00 |
£ 210,000.00 |
|
Administrative expenses |
£ 100,000.00 |
£ – |
£ – |
|
Operation expenses |
£ 35,000.00 |
£ 40,000.00 |
£ 35,000.00 |
|
Time throughout development |
£ – |
£ – |
£ – |
|
Total Maintenance costs |
£ 50,000.00 |
£ 50,000.00 |
£ 70,000.00 |
|
Total Cost of Proposed Plan |
£ 285,000.00 |
£ 290,000.00 |
£ 315,000.00 |
Tight controls are measured as well as monitored by the organization. Two-way communication is the best way to reach the customers. Chipotle will maintain price with their restaurants and provider of high quality ingredients in order to serve healthier fast food. The marketing department should focus on their monthly sales (Wainwright 2015). Forecasting should be done on the organizational culture and brand personality to prepare a healthier future for Chipotle. The organization is looking for skilled candidates who have knowledge in local marketing as well as marketing stage and tactics. New marketing strategies help the company to develop their growth (Chipotle.com 2015). Currently, the company is more focusing on its sustainable mission such as “Food with Integrity”.
Conclusion
It is concluded that Chipotle has paid price to implement their food safety strategy into their business organization. The company plans for an advertising as well as promotional campaign in order to gain trust of customers. The company has potential to do better in sustainable food movements. It serves organic food to the customers. Through perfect communication channel, the company discloses detailed information related to their food products to the customers. Finally, the company chooses the slogan for their business as “Food with Integrity” to send message to the customers such as their food produce is healthier and ethical. In order to assemble with perceived customer worth, the company should set an aim price. The product should be planned at target price in order to bring preferred customer value. The customers are the main focus of the organization to gain profitability as well as get success into the market.
The following are the recommendations, which are suggested to the organization to increase their revenue and gain customer trust:
International expansion opportunities: Chipotle should expand their business into international market to gain more profit. The company should expand their business into emerging market such as Asia.
Growth opportunities: The Company should offer investors growth opportunities in both long as well as short term. It expects to grow into domestic location so that there is an increase in revenue per store.
Social media strategy: The Company should promote their products as well as services among the customers through use of Facebook, Twitter and other social media networking channels.
References
Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.
Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.
Boone, L.E. and Kurtz, D.L., 2013. Contemporary marketing. Cengage learning.
Chipotle.com, 2015. Chipotle — Food with Integrity. [online] Chipotle.com. Available at: https://chipotle.com/food-with-integrity [Accessed 6 Mar. 2017].
Chipotle.com, 2016. Chipotle — Our Company. [online] Chipotle.com. Available at: https://chipotle.com/company [Accessed 6 Mar. 2017].
Ho, B., Liang, W., Chan, H. and Ma, P., 2014. STRATEGIC ANALYSIS FOR: Chipotle Mexican Grill.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Kolb, B.M., 2016. Marketing Strategy for Creative and Cultural Industries. Routledge.
Mcdonald, Malcolm. and Brown, L., 2016. 5 Strategic marketing planning. The marketing book, p.86.
Ritter, J., 2014. ” What is the role of marketing in strategic planning”?. The Business & Management Review, 4(4), p.88.
Rowell, K.M., 2016. Food with Integrity: A Financial Analysis of Chipotle Mexican Grill (Doctoral dissertation, The University of Mississippi).
Simpson, S., 2015. Chipotle Mexican Grill Inc.: Strategy with a Higher Mission or Farmed and Dangerous?. Journal of Case Studies, 33(2), p.38.
Tuten, T.L. and Solomon, M.R., 2014. Social media marketing. Sage.
Wainwright, A., 2015. Marketing Materials Made Easy: A Practical Approach to Design and Distribution. Public Services Quarterly, 11(4), pp.300-306.
West, D., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press.
Young, A., 2014. Brand media strategy: integrated communications planning in the digital era. Springer.
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