edit this powerpointGroup 3-Strategic Management
Carmichael Maison
Dang Minh
Gardner Katherine
Le Duc
Ray Allen
July 19, 2016
• This paper is to assess the restaurant Chipotle,
their strategy, mission, and performance through
a business perspective
• Throughout this paper we will discuss the various
components of the business as well as consider
and summarize the different parts of the
• The following will be analyzed: the history,
company overview, external environment,
internal environment, as well as a SWOT analysis,
and a report on the financial data
Chipotle Mexican grill
• Vision Statement: “Develop a team of top
performers who are empowered to achieve
high standards.. (Chipotle Mexican Grill, Inc.,
• Mission Statement:“Food with integrity is our
commitment to finding the very best
ingredients raised with respect for the
animals, the environment, and the farmers.”
(Chipotle Mexican Grill, Inc., 2015)”
• 1950:The Company was founded by Steve Ells in 1993.
• 1995:The second and third locations were added to Chipotle
• 1996:In 1996, the company opened five more restaurants in Denver
• 1998: McDonald’s invested in Chipotle and became the majority
• 1999: The first Chipotles were opened outside of Colorado, in
Minneapolis and Columbus.
• 2000: The company began serving naturally raised pork in its
restaurants and naturally raised chicken in 2002.
• 2004: Chipotle started using zero trans fat frying oil.
• 2006: McDonald’s divested all its investment in the company.
• 2008: The company opened ‘green’ restaurant in Gurnee, Illinois
with a six-kilowatt wind turbine on-site that generated a portion of
the restaurant’s electrical needs.
• 2009: Chipotle was awarded Platinum-level Leadership in Energy
and Environmental Design (LEED) certification by the US Green
Building Council for its Gurnee, Illinois restaurant
• 2010: Chipotle opened its first European restaurant in London, and
the company opened its 1,000th restaurant at Flower Mound,
• 2011: Chipotle launched a new restaurant concept, ShopHouse
Southeast Asian Kitchen, which was inspired by the traditional
shophouses found throughout Thailand, Malaysia, and Vietnam.
• 2012: Chipotle opened its first restaurant in Spokane, Washington.
• 2013: The company launched catering service in
Colorado and expanded its menu in the US restaurant
by adding premium Patron margaritas
• 2014: Chipotle entered into a partnership with Major
League Soccer (MLS) to become the Official Fast-Casual
Mexican Restaurant of MLS and 12 MLS Clubs.
• 2015: Chipotle announced the second installment of
its ‘Cultivating Thought’ author series with 10 new and
original essays are written by well-known writers,
authors, and thought-leaders to be featured on its cups
and bags
• The restaurant industry in the United States is usually
consisted of chain or independent limited-service and fullservice restaurants.
• Full-service restaurants, in 2013, comprising chains, for
example, Red Lobster and Applebee’s, produced almost 207
billion USD by selling drinks and food (Statista.com, 2016).
• Limited-service restaurants , on the other hand, produced
more than 195 billion in the same year (Statista.com, 2016).
• The category of limited-service restaurants comprises
renowned fast-food coffee chains and restaurants, for
example, Starbucks and McDonald’s (Statista.com, 2016).
Industry Segment
• In 2010, Chipotle’s Mexican food became the largest
food category within the fast-casual segment,
surpassing bakery for the first time. Even so, ‘Better
Burgers’ captured the fastest-growing menu category
for 2010 with 16.1 per cent growth.
• While offering a different type of food, new concepts
have the potential to unseat Chipotle’s reign as the hip
place to eat.
• In the attempt to latch onto some of Chipotle’s
success, Chipotle imitators have emerged in the market
Industry Ranking
• CMG has almost 20-year stronger brand-name.
• According to the Forbes list on CMG, the rank of
CMG is 1370 around the globe with 162 rank in
the America’s Best Midsized Employers.
• Similarly, the organization is ranked at 24 for the
most innovative company.
• As on 2015, the rank of the CMG is 435 in the
United States for the best employer. (Forbes,
Company Overview
• Chipotle Mexican Grill, Inc. (CMG) started in 1993
and operates restaurants in the United States,
two restaurants in Toronto (Canada) and four
restaurants in London (England). The company
operates over 1500 restaurants and focus in
‘Food with Integrity’.
• CMG provides a selection of traditional Mexican
dishes, e.g. burritos, tacos, burritos bowls and
salads (Chipotle Mexican Grill, Inc., 2015).
Business Level Strategy
• A differentiation strategy is followed by Chipotle. It has
premium priced products that compete with Rivals.
• For example, Panera Bread and Qdoba against and cost
leaders, for example, Taco Bell and McDonald’s. It is
believed by Chipotle that although there is a high cost of
utiliing organic ingredients, users are ready for paying extra
for healthy food.
• Chipotle’s mission of “Food with integrity” positions itself
as a high quality food provider by using gourmet, fresh and
increasing organic ingredients that efficaciously
distinguishes their items from rivals along with meeting the
demand of consumers for healthy food (Hitt, M. A., Ireland,
R. D., & Hoskisson, R. E. 2012).
Corporate Level Strategy
• Chipotle’s growth strategy includes market
development and market penetration.
• Although the company is implementing a related
diversification strategy, there is a low degree of
diversification of Chipotle for the reason that Chipotle
Mexican Grill generates over 95 percent of its
• Diversification of Chipotle is low regardless of investing
in Pizzeria Locale and launching ShopHouse Asian
Kitchen for the reason that these businesses do not
significantly add to revenues of Chipotle
International Strategy
• A global strategy is used by Chipotle. In the United States,
strategic decisions of Chipotle are integrated for its sites in
France, United Kingdom, Canada, and the U.S.
• Chipotle sells standardized products across marketpalcess
with minor changes in the food variety for dissimilar
• By making new wholly owned subsidiaries, Chipotle
entered in the international marketplaces.
• Though this is expensive, it enabled Chipotle for ensuring
the higher quality of its products that distinguishes the
brand (Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012).
Competitors and Competitive Edge
• Chipotle Mexican Grill’s competitors include Panera Bread,
Qdoba,Taco Bell, McDonald’s, KFC, Yum Brand, Darden Restaurant,
• The CMG competitive advantage is due to the quality of its
ingredients, outlet decoration and short menu.
• CMG Inc., believes in providing high-quality experience with the
design of its serving line and restaurants accepting orders by fax,
online or via iPhone.
• CMG Inc. have established close relationships with some of the top
suppliers in the industry.
• Its quality assurance department and risk management
departments develop and implement operating standards for food
quality, preparation, cleanliness and safety in the restaurants.
External Environment: General
• The United States has a population of roughly 321,368,864. The
country’s age structure is as follows:
• 18.99% range from birth to age 14; 13.64% range from ages 15 to
24; 39.76% range from ages 25-54 years old;
• 12.73% range from 55-64; and 14.88% of the population are age 65
and above. With a mean (average) citizen age of 37.8 years old, the
birth rate is 1.87 children per woman.
• There are roughly nearly 46 million Americans age 65 and older
currently. This number is expected to more than double within the
next decades.
• In addition, the aging population is expected to have a decrease in
Caucasians and to become more ethnically diverse.
• Certain parts of the country are largely populated by older
communities—especially in the MidWest and Florida.(Mark Mather,
• In the United States the income varies greatly. According
to Statista.com, 12.6 % annually make under 15,000.
• Seventeen percent fall within 50,000 to 74,999, and 13.4 %
of earners fall within the 100,000 to 149,999 range.
• Five point six percent fall in the 200,000 and over category
• According to KFF.org overall median annual income for the
fifty states generally ranks between the 50 thousand and 70
thousand on average.
• Maryland has the highest median annual household
income with $76,165.
• Mississippi has the lowest annual median household
income, with $35,521. (KFF 2014)
• The overall ethnic mix is 79.96 % Caucasian American,
12.85% African American, and 4.43% Asian.
• Predominant languages in the U.S. are English (79.2%)
and Spanish (12.7%).
• (CIAFactbook) Depending on different parts of the
country will determine the majority of ethnic
proportions. Vermont is the state with the highest
white ratio- 94% Caucasian.
• Mississippi has the highest percentage of African
Americans- 37%.
• New Mexico has the highest ratio of Hispanics-43%.
Hawaii has the largest number of Asians-53%. (KKF.org)
Demand for Fast Food
• According to Health.com, Americans consume a vast
amount of fast food—way too much.
• Defined by the government, a fast food restaurant is any
restaurant that does not have table service.
• Some states rely more heavily on fast food than others. For
example, in the state of Alabama, fast food comprises 44 %
of restaurants in the state.
• Overall, two thirds of Alabama residents are overweight,
and 60% of individuals spend their “eating out” money on
fast food.
• Some individuals are trying to push food stamp acceptance
in restaurants which can only further the obesity problem
in the state
Busy Lifestyles
• Statistics indicate that the younger generation is spending
a noticeably large amount of money eating out.
• They do not know how to cook, and, until they learn how,
they will continue to eat out. As expected in today’s ondemand culture, they want their food as fast as possible.
• Many people do not have a lot of time to cook, and that is
why the speed and low cost of fast food acts as such a
magnet for them.
• While this food is “fast,” it is usually unhealthy and does
not offer fruits and vegetables. Most people do not
consume fruits or vegetables—at least not enough as they
Societal Change
• In addition, people are at home less than ever before.
Women, in particular, are not staying at home as they did
years ago
• They comprise almost half of the workforce. According to
the Women’s Institute for Policy Research, women are the
breadwinner in 4 out of 10 families.
• That being said, it is difficult to work a full-time job and also
be able to prepare full meals when getting off work.
Currently, many households are classified as “dual income”
households. Sixty percent of households in the United
States are now dual income, which means that people have
more money to budget for food (eating out).
Minimum Wage Laws
• There are several factors that could affect the fast food’s
environment. One thing that could threaten the industry is
minimum wage laws by state.
• In Washington state, the minimum wage was raised to $15
per hour. It is a requirement for franchise restaurants are to
adopt and pay this minimum wage increase.
• This could hinder the growth of fast foods and cause them
to be very careful in which states they put locations.
• States that have the lower minimum wage would definitely
have in advantage in capturing the attention of the fast
food to put their location there.(Tice, 2014)

In 2002 there was a lawsuit against McDonalds for their unhealthy food and the
obesity epidemic helped furthered by them.
The lawsuit went on to state that the food they served was not labeled adequately
and consumers were not warned about the hidden health risks of eating the
fattening food.
The point of this article abstract from Healthaffairs discusses the publicity of the
unhealthfulness and effects on society-particularly children.
There are other cases of lawsuits against other fast-food restaurants regarding
similar situations.
Failure to warn, (negligence) and causation are all potential sources for lawsuits
regarding the foods long term effects.
This all stems back to a simple fact of if there is a demand for the fast food
although it is unhealthful, it has its’ niche in the market and some people will buy
The fast food has been compared to using tobacco products, however unlike
tobacco, eating the fast food in small quantities infrequently should not pose harm
to health.
Liability Preparedness
• Attention, prevention, operation, and mitigation are the four steps
that can be used to avoid potential legal liability issues within the
restaurant industry.
• Starting with attention, the restaurants should follow core policies
and try the best to maintain a safe and clean environment.
• They should work to ensure that for example wet floors are marked
with a sign, that when a dish breaks it is swept up immediately, and
that procedures are followed regarding the cleanliness always.
• If the franchise is following the procedures by the book, if there
were to be a claim it would be much better for the restaurant when
investigated if they were following the procedures in the first place
• Unemployment According to CIAFactbook, as of 2014 the
unemployment rate was 6.2% and as of 2015, the
unemployment rate in the United States was 5.2%.
• Approximately 15.1 % of people living here are below the
poverty line.
• The unemployment rate has fallen below 5% this year,
however the economy is still not per say booming.
• Statistics show that only about 62.7% of adult people in the
United states are working.
• The reason is being that the Baby Boomers are retiring, the
young generation is spending more time in higher
education, and some people seeking employment have
given up on finding work
• As of 2015, GDP purchasing power parity was 17.95 trillion. GDP
real growth rate as of 2015 is 2.4%.
• GDP per capita was $55,800. Gross national savings were 18.7% of
GDP. The GDP composition is agriculture (1.6%), industry (20.8%),
and services(77.6%). GDP is 16.77 trillion as of 2013, and the
inflation rate is seated at .1%.
• Household income/ consumption lowest and highest 10
percentages is 2% and 30%.
• External debt as of December 2014 was $17.26 Regarding the job
market make up, it is 37.3% comprised of managerial, technical,
and professional jobs.
• Manufacturing, crafts, extraction and transportation make up
20.3%. Sales and office jobs make up 24.2%, and other services hold
17.6% of the job market.
Wage growth
• Another factor affecting the economy is that of the lack of
wage growth.
• For a few decades, Americans have not experienced any
increase in their wages in comparison with the increase in
prices or (COLA).
• This is due to the inflation rate and the COLA increases.
• In essence, this is like Americans making the same wages
they did 20 years ago—without a pay increase.
• As the article states, the middle class is just getting by.
Currently, wage growth is only about 2.5 % yearly—which is
about half of what it should be experts say. (Long, 2016)
• Today’s technology provides people with more options and
information access than ever before.
• In the 1950’s, there were roughly 250 computers across the
globe. Now there are millions.
• Computers became smaller after the transistors replaced
valves in the late 1950s.
• When the 1960’s came, the microchip then replaced the
transistors and thereby further decreased the size of the
• The article states that in 1965 there were 20,000
computers in the world. By 1975, Steve Jobs came around
with Apple which created a computer that could be used
for personal use
Automation due to Internet and
• Due to the rise in automation, technology is moving in
on many aspects of life.
• Ranging from a wide variety of tasks, robots are being
used to perform duties that people used to do.
• Some say this is not a threat, while others are terrified
and say it will undermine jobs.
• Gerd Leonhard, CEO of The Futures Agency states the
following: “If we do this wrong, the technology
providers could end up destroying hundreds of millions
of jobs with products and services in the cloud, which
makes these businesses indispensable and very rich.”
• Adaptation Fast food around the world has to adapt to
local tastes and cultures.
• Standardization and one-size-fits all does not work for
restaurants when they go global.
• The customer is what the franchise must adapt to in order
to be successful.
• Take for example Kentucky Fried Chicken in India.
• They have vegetarian chicken and countless other items on
the menu that suit local tastes. As Sam Walton once stated”
“There is only one boss.
• The customer. And he can fire everybody in the company
from the chairman on down, simply by spending his money
somewhere else.”
Major Competitor #1 – Rubio’s
Mexican Grill
• Ralph Rubio is the founder and CEO of Rubio’s
Fresh Mexican Grill. He opened his first
restaurant in his hometown of San Diego,
California in 1983.
• This company features made-to-order burritos,
tacos, quesadillas, chargrilled chicken breast,
steak, mahi mahi, and signature Baja-style fish
• Rubio’s operates, licenses or franchises more
than 190 restaurants in Arizona, California,
Colorado, Florida, Nevada and Utah
Competitor #2 – Fiesta Group
• Tim Taft is the current CEO and President at Fiesta
Restaurant Group.
• The parent company operates its fast-casual restaurants
under the Pollo Tropical and Taco Cabana brand names.
• The company’s Pollo Tropical restaurants offer various
Caribbean inspired foods, and Taco Cabana restaurants
offer a selection of Mexican food.
• As of January 3, 2016, it had 155 company-owned Pollo
Tropical restaurants, 162 company-owned Taco Cabana
restaurants, and 35 franchised Pollo Tropical restaurants
throughout the Caribbean, Puerto Rico, and Central and
South America.
Internal Environment: Financial
• Compute each ratio within the five categories
of ratios (see handout) and interpret. You
must have comparison data to interpret (i.e.,
historical and competitor). After evaluating
each category, ascertain the company’s overall
financial health
Balanced Scorecard
• Chipotle Mexican Grill balance scorecard has several goals the firm
would and are currently achieving.
• The balance scorecard is broken into four perspectives financial,
customer, internal business process, and learning and growth. In
the financial perspective goals are set to achieve greater
profitability with comparison to competitors.
• In the Customer perspective customer satisfaction is and value are
goals to achieve in customer retention. The internal business
process perspective the main objective here is to reduce operating
costs and cost of goods sold.
• Lastly, from the community perspective Chipotle is runs and
operates the Chipotle Cultivate foundation. Chipotle also does
numerous things giving back to the community.
Problem #1: Liability of Foreignness
• Chipotle faces two large challenges in growing
through international expansion.
• One challenge is that customers in those markets
may not be familiar with either Mexican cuisine
and/or Chipotle’s brand.
• This is challenging because Chipotle faces
competition from fast casual restaurants outside
the Mexican food category, must develop the
general Mexican food category, and must
establish Chipotle’s unique positioning
Problem #2: Increased Competition
from Quick Service Restaurants
• Chipotle faces increased competition from quick service restaurants
that are looking to counter stagnant growth.
• In the U.S., Taco Bell launched its Cantina Bell menu with a celebrity
chef to better compete with the Chipotle.
• Taco Bell and other quick service restaurants have also begun
modernizing its restaurant interiors to simulate the dining
experience of Chipotle.
• In addition, quick service restaurants are adopting fast casual
restaurant traits such as Pizza Hut’s updating dining rooms that
encourage diners to eat in and KFC testing a fast casual “KFC Select”
• Enhancements from quick service restaurants to attract fast casual
customers by providing a comparable product at a lower price point
could become a threat to Chipotle.
Problem #3: Growth and Profitability
Constrained by Supply Chain
• While Chipotle promotes ethical sourcing of products without genetically
modified organisms (GMOs), these requirements mean that it sometimes
cannot fulfill all of its demand through organic suppliers.
• This forces Chipotle to sometimes source produce with GMOs when
preferred suppliers cannot meet demand. If Chipotle wants to follow a
market penetration or product development strategy in the U.S., it may be
unable to source additional products from organic suppliers.
• This could lead to increased amounts of non organic produce and threaten
Chipotle’s ethical brand.
• In addition, rising commodity costs are expected to increase Chipotle’s
overall costs.
• However, because only a limited number of suppliers can provide the
products in quantities that Chipotle requires, it cannot deflect these
increased costs.
Alternative Solution #1
• This solution should address the company’s
problem profile, not a specific problem.
• That is, you should not try to match each problem
with an alternative solution but try to generate
strategies or alternative solutions that address as
much of the problem profile as possible.
• For example, alternative solution #1 might
address problems #1 and #3, while alternative
solution #2 might address all the problems.
Alternative Solution #2
• This solution should address the company’s
problem profile, not a specific problem.
• That is, you should not try to match each
problem with an alternative solution but try to
generate strategies or alternative solutions that
address as much of the problem profile as
• For example, alternative solution #1 might
address problems #1 and #3, while alternative
solution #2 might address all the problems.
Alternative Solution #3
• This solution should address the company’s
problem profile, not a specific problem.
• That is, you should not try to match each
problem with an alternative solution but try to
generate strategies or alternative solutions that
address as much of the problem profile as
• For example, alternative solution #1 might
address problems #1 and #3, while alternative
solution #2 might address all the problems.
• Select one of your alternative solutions as the
best course of action for the company to
follow at this point in time (or the time
referenced in the case),
• And indicate the impact of the decision on the
firm’s functional areas
• (Management, Marketing, Finance/Acct,
Operations, R&D, Information Systems).
• Chipotle is a restaurant that has had successes
and issues.
• This is expected within a company. Throughout
the course of its operation, it has currently been
and still is being successful to the target market
that it serves.
• It provides a healthful alternative to most fastfood. The recent reports of sanitation issues and
customer loyalty will be one point of
improvement that Chipotle will need to work on.

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