Chipotle
Brand of Chipotle
Chipotle Mexican Grill entails a chain of fast restaurants that provide brand services across the globe, specifically the United States, United Kingdom, and Canada in more than 1,000 localities. The organization products brand includes chicken, steak, pork, guacamole, and vegetable salads among others. The organization’s mission is serving food with integrity. This has enabled Chipotle to incorporate fast food services it offers with the quality aspect in a comparatively low pricing. After its founding in 1993 by Steve Ells (Ho 1), he discovered that the Mexican tacos brand idea was predominant in San Francisco. This triggered him to return to his home in Colorado and started the first restaurant in Denver. The rate at which this restaurant grew, attracting numerous clients, elicited him to open several other chain stores in Colorado and other places across the United States in order to serve the organization brand. By 2006, Chipotle brand experienced a massive growth, therefore being listed in the New York Stock Exchange (NYSE) incorporating an approximately more than 26, 000 employees internationally (Koh et al. 320). Earlier on, one of Chipotle’s initial investors was McDonalds brand. However, in 2006, all the parties divested from the mutual association, thus, withdrawing their shares an aspect that triggered the organization to strengthen its brand. As time went by, Mr. Steve Lely, the founder of the organization, decided to make some changes in the organization’s supply chain brand. This ensured that all meat and pork brand served at Chipotle was to be naturally raised, an aspect that was realized between the years 2000 and 2002. Furthermore, the changes also made sure that there was no single trans-fat policy that was integrated in the food with integrity policy. The organization has endeavored to uphold its good food policy in the provision of its brand goods and services.
Chipotle Current Strategies
All business organizations need to have a strategic business management policy (Sekhar 1). Since its establishment in 1993, Chipotle has become one of the greatest chain forces to reckon with in the restaurant sector. The organization has experienced enormous growth. This was vivid in 2006 when the organization was listed public in 2006. According to financial analysts in the stock market, the organization has maintained a strong buy ranking. All these success, growth, and expansion are pointed towards the organization’s ever-expanding high customer base. This achievement of Chipotle is attributed to the organization’s mission strategy statement through its founder and CEO, Steve Ells, who ensured that customers experience an affordable and enjoyable food. The organization’s current success stems from the upper level management team strategy in expanding operations across the world at different places and marinating quality foods at a lower price. Furthermore, the organization’s mission “Food with Integrity,” has been practically applied by the organization in the preparation and serving of its foods, which encompass value constituents. Since the focused, strong, and enthusiastic management top level team is devoted to provide the consumers with quality and affordable products and services, the organization has enjoyed massive achievement.
Chipotle’s business model strategy, which entails plain, corporate, and competitive strategies, has also enabled its growth and stability (Bridgend, David and Ron 69). The three strategies define mechanisms through which the organization creates, provides, and attains values in its operations. The fundamental strategy that the organization has focused on is the ability to utilize all the available resources to produce effectively. The corporate strategy was mentioned in the introductory part of the section where it entails the management progression of the organization. This includes production operations until the products and services are conveyed to the clients. The organization observes strong managerial and leadership skills to ensure that corporate strategies are observed.
Under a competitive strategy, the organization focuses on the assessment of the firm’s performance. This has aided the organization to satisfy consumers and maintain balance between the demand and supply of the organization’s products, a significant factor that determines the organization’s growth and value. The organization strategies are aimed at ensuring there is excellence in operations, establishing and maintaining customer intimacy, as well as having positive products’ leadership. In operational excellency, Chipotle has been able to lead the industry in terms of prices and convenience. This has been achieved by the organization ensuring that its products are not too costly as well as opening numerous chains to ensure that their products attract large target audience. To enhance customer intimacy, Chipotle has been on the forefront to conduct market research to understand the customers’ needs and expectations. This has made the organization to be flexible in serving products that match customers’ preferences. Customer loyalty is also another aspect that is monitored at the organization. Clients are rewarded with regards to their purchase accumulated points, an aspect that has maintained customer’s loyalty and intimacy. Lastly, through the organization products’ leadership, Chipotle has been able to maintain strong quality products and services as compared to other leading firms in the industry. For instance, the organization management team ensures products’ raw materialsare natural in their mission to uphold healthy foods in the fast food industry. This is achieved through upholding mutual company goals of the Chipotle organization (Kaplan 23).
Customers
Chipotle customers are categorized in different classes. The main classification includes those who want quick food but not fast food, those who are looking for a relatively health and cheaper food, customers located in urban settings, and those who value their health in terms of food consumption among others. Following the issues of food borne diseases affecting numerous people around the world, Chipotle has become a solution to its customers. Chipotle’s objective food with integrity mission has ensured that customers get the value for their needs. Many customers flow in Chipotle’s restaurant chains because of the trust they have in the organization’s products (Ragas and Roberts 264). The organization has developed a habit of communicating honestly to its customers about their products and services, thereby not letting them down through integrity actions. For instance, Chipotle at one point made it official through announcing that it would not serve pork in some of their chain stores when one of the organization’s suppliers desecrated its standards. This was very significant in not only holding the integrity of the business but also respecting the customers’ requirements and upholding heir interest. Chipotle organization offers the Mexican style food for its customers at relatively lower prices targeting clients who disregard McDonald’s products. Furthermore, the organization’s products and services are offered in a friendly manner, thereby establishing a strong consumer loyalty.
Competitors
Chipotle restaurant is heavily disjointed and imbedded into stiff competition. Different competing firms use every style in the provision of similar and alternative products, for instance, price and menus that focus on consumer dietary needs. The competing firms also aim at taking the advantage of the opportunities found in the global market. There are several organizations that are Chipotle’s top competitors. These include McDonalds, Panera Bread, Taco Bell, and Qdoba among others. However, chipotle’s main strategy of remaining relevant in the competitive market has been simple, health fast menu at competitive prices (Pride and Ferrell 26)
Competitor Business Strategy
The organizations competing as usual have been positioned in the market strategically to achieve success. Taco Bell, for instance, has focused on cost leadership position that has seen it operate in the same manner as Yum! Brands in the market. On the other hand, Taco bell provides for a functional Mexican style menu at relatively lower prices. McDonald’s main business strategy focuses on the cost leadership offering its menu in a variety of products in different prices. Of all the organizations, Panera stands out by providing an exclusive breakfast, supper, and dinner that entails broad differentiation strategy. The differentiation factor comes in because most of the restaurants do not have the arrangement for breakfast, lunch, and dinner. Among the organizations, Qdoba’s strategy resembles Chipotles strategy by serving an alternate high quality and healthy fast foods to clients.
In the corporate strategies, Chipotle is known to operate in chain stores under a single business approach through corporate restaurants. This approach has worked very well to the organization that has seen it experience marvelous growth. McDonald, on the other hand, has come up with a dominant business approach that has seen it operate both corporate owned restaurants as well as franchises with much revenue coming from corporate owned corporations. In as much as McDonalds has moderated the risks of operating franchises, it has benefited much from developing its menu and strong brand awareness. Panera Bread applies a single business approach through franchises. It also offers catering as another way of making it excusive. Qdoba conversely applies related linkage, whereby it allows the firm to get revenue from two corporate units that share few identical attributes.
Implementation of Competitive Strategies
All the firms have implemented their strategies that are in line with their significant capabilities. These entail tactics, such as providing a variety of products as in the case of Yum! Brands implemented by both the corporate and franchised restaurants. In addition, physical location of these competitors is also another competing factor. McDonalds and Taco are known to have constructed their chains almost everywhere whereas others like chipotle, Qdoba, and Panera target specific locations like malls, and caps that make them different from other restaurants. One of the distinct ways in which Chipotle has withstood the competition is through advertisement by word of mouth. This focused on health ingredients on their products, the manner in which the food is prepared, and establishing close links with suppliers. Furthermore, the organization has gained from the shift of customers towards healthier foods as well as ethnic foods options in the competition environment. Through its ability to establish strong ties with its distributors and suppliers, the organization has been in a position to get high content and rich organic ingredients. These alterations have been significant in the organization’s advertisement both on social media and billboards that has enhanced brand awareness ahead of its competitors.
McDonalds has focused on its strong brand, and food steadiness for its growth both in the United States and internationally. Furthermore, its success has also been attributed to its capability to adapt its menu in line with foreign cultures as well as its new initiative to incorporate healthy menu options to attract health conscious customers. Jack in the box has been trying to build on what Qdoba is doing by coming up with new franchises to gain from high margins. It has also been in the business of offering products at considerably lower prices to have a continuous generation of revenue. Yum! Brands have capitalized on the strong brand name to provide products internationally at a lower price menu. It is also amalgamating different restaurants to give customers more options in their products and services. Panera has established cafes that have attractive and unique menus, which customers enjoy. In addition to that, the organization also incorporates traditional and nontraditional media to strengthen its brand image and produce fresh dough daily that has made its products stand out.
Competition in this sector seems to be growing each passing minute with the organizations expanding their menu and increasing their chain stores globally. Moreover, consumers are becoming sensitive to health issues, thereby going to restaurants that have menus with healthy options. This means that competing firms like McDonalds are going Chipotle’s way in the provision of health and quality fast foods. Several other aspects go hand in hand with this, such as lower prices. However, a competitive advantage that makes Chipotle to stand out entails the integration of several fresh constituents and sticking to its food with integrity policy despite the cost implications (Iberg 25). The organization needs to establish other competitive platforms that will give it more edge over its competitors.
Chipotle Market
The organization market value has continued to grow with the North America accounting for the greatest market value. Currently, there is a slowing trend in the organization’s products spending, which is a result of economic disparities as well as increase in prices emanating from increased costs of the products’ components. Furthermore, the decline in product spending among Chipotle’s market has also been triggered by the demand for better healthier food, which increases the nature of sensitivity that customers are placing on their health needs. Statistically, approximately 4 % of the consumers attested to be eating in a fast food at least once in every week. Consumers’ perceptions of the food products has also been strained, with a good number of them opting for flavor and quality ambiance compared to the traditional fast served burger. It is noted that customers search for fat but healthy foods, and they find satisfaction at Chipotle stores. This notion was further explained by the organizational founder by describing Chipotle as a forerunner concept in fast casual restaurant.
Before looking deeper into the market, Chipotle has a marketing objective and strategy of sourcing and serving food with integrity. The fundamental application of this statement is categorized into three factors: environment, people, and animals. The animal category is further classified into beef, chicken, dairy cattle, as well as pork. People category entails several aspects, for instance, employees, farmers, and suppliers. Environment, on the other hand, focuses on locally produced foods that are supplied to the firms and served to the clients. The organization marketing design is aimed at ensuring that its target market is made aware of the organization significance beyond serving food on the table. This is to ensure that the markets realize that in as much as Chipotle’s main aim is serving food, it also incorporates environmental conservation and sustainability efforts. This has made it to come up with campaigns that alter the consumer perception of the firm and the brand diversification. This concept is also significant in increasing the confidence of both the existing and target market to the organization, on one hand, and increasing their demand of Chipotle organization products on the other hand.
Market Segmentation
Chipotle organization categorized its market base into five different segments. The first classification entails fat food transformers that are considered to be McDonalds past customers or occasional product customers. There are various reasons that these category of market segments are considered transformers, for instance, they can reach the restaurant with convenience, taste, and preference as well as their desired need for natural food products. The second classification of the organization market entails the Mexican restaurant enthusiasts who are practically tied to the organization’s products because they enjoy the natural and home attached food made. The next cluster of market segment is healthy, natural, and homemade food enthusiasts mainly attracted by the organization’s products as a result of its sources. In addition, students also form another category of market for Chipotle products, especially due to the cost implications of the organization’s products. The last classification of market targeted by Chipotle involves low income individual consumers that are also attracted by the cost friendly aspect of the organization’s products.
Market Targeting
Target marketing is a significant procedure in the operation of Chiptole (Wylie 4). Having pointed out target market segments for Chipotle organization, the market is further divided into three main types: primary, secondary, and tertiary markets. The primary market entails enthusiasts who search for health and natural foods products and understand the significance of consuming health foods as compared to industrial manufactured fast foods. They highly regard the organizational foods and appreciate the sustainability efforts by Chipotle. They are continually keen to buy the organization’s products. Secondary target market entails food converts in response to their health demands. This behavior is triggered by the inspiration to transform their eating practices. In as much as they are motivated to alter their eating habits, this market category may also be inspired to take part in the sustainability efforts by the organization. This translates to the fact that the organization’s products will prompt them into purchasing them even more. Tertiary target market involves potent consumers who have a low income base. Another reason for this cluster of target market is driven by the fact that the chain restaurant is within their reach. Despite the presence of other competing restaurants, these cluster of consumers could be driven by the organization’s sustainability efforts and its low pricing policy into buying the products.
Chipotle has established a marketing plan entailing marketing mix elements in reaching out to all their target market. The product is well presented, which emphasizes on the food with integrity policy that translates to safe foods with taste and nutritional value. The prices have also been friendly despite recent alterations resulting from the increase in ingredients’ costs. The organization has also been open to several chain stores across different places in America and the European market. This enhances the place aspect of product marketing requirement that takes the organizational products to different places, thus, reaching a wider market base. Through promotion, word of mouth marketing campaign has been significant to Chipotle. Social media has also been important in marketing and advertising the organizational products to their target markets (Lee 83).
Chipotle Environment
The organization has different stakeholders that form the organizational environment. These include employees, farmers, government, and investors. The organization has set up transparent employment strategies to counter recent accusations of fraud in its hiring process. This has also been vivid in the company websites where employees have been emphasized “we provide opportunities for advancement and fun exciting working environment.” The organization has also been credited for quick and speedy services that are attributed to the employees’ efforts. The organization has set up learning programs that are aimed at empowering employees in their service delivery. Farmers and breeders form a significant environment or stakeholder for Chipotle organization. The organization’s farmers supply it with natural products and the firm has always strived to win their confidence. Through the organization, different organic farmers have also been motivated to expand their farming practices due to the availability of a ready market for their produce (Hitt and Hoskisson 77). This has enhanced the farmers’ social welfares and increased their incomes. The government has also been part of the organizational environment. This began from the onset of the firm when its founder Steve Ells established close links with the government. In 2009, for instance, Mr. Ells appeared before the congress in an effort to testify against all initiatives that support the use of antibiotics in ranching. In as much as this factor played a significant role in linking the organization with the government, it was also aimed at establishing the brand of the organization nationally. Chipotle’s investors also form part of its environment. Its growth and expansion has been significant through its food with value inventiveness that has increased investors’ values. McDonalds was one of the organization’s initial investors that had good relationship with Chipotle, and played a crucial role in the funding of 500 chain store creation that was more than the original 16 stores established earlier (Enz 4). This was significant in making the organization successful and its going public in 2000.
Chipotle Opportunities
An organizational opportunity analysis entails a strategic planning element that is aimed at boosting an organization’s productivity by understanding its competencies in the midst of the competition. Chipotle has several opportunities. The first opportunity is the organization entering new markets, with more than 900 restaurants in the United States and the United Kingdom. The organization is also looking forward to expand to other European markets by opening chain stores in nations like France and Germany. The organization’s rapid expansion in the United Sates is also another opportunity expanding its market. This expansive nature is also able to command the organization’s superior growth that it is experiencing currently. Furthermore, through altitudinal change by creating an aspect of healthy foods, the organization has a great opportunity to explore the expansive markets (Burke et al. 154). Currently, many people are becoming health conscious, which is being translated to the types of foods they consume to avoid food related conditions like obesity. Following its trend to offer healthy fast foods that has hit other fast food chains, the organization is presented with an effective opportune to expand and get value for its products (Stevens et al. n. p)
The organization’s opportunity is also attached to its ability to offer a variety of services and new food. The organization provides several choices for its customers, for instance, steak, chicken, free-range pork, different beans types, veggies, as well as salsas. In addition, the organization also serves tacos, chips, and beer among several others products. The organization has the potent of developing new ingredients in its current products that will give it an additional opportunity niche over its competitors in the market. Establishing a long term trend in the fast food industry by providing the Mexican foods is an opportunity in terms of consumer loyalty. In the market segmentation, some consumers are driven by the traditional nature of Chipotle’s products. By upholding this long term trend, the organization is in position to remain firm in the market and expand on its products.
Threats
One of the threats facing Chipotle organization is stiff competition. The organization has both direct and indirect competitors who entail popular fast foods restaurants. As indicated earlier, organizations like Qdoba restaurants compete directly with Chipotle. Others include McDonald, Starbucks, and Yum!Brands that have made the organization to work hard in its provision of products and services. Another threat facing Chipotles Organization is the economic slowdown, thereby disposing consumers to low incomes. Due to these effects, the restaurant industry is among the initial sectors to be hit. Most people in this situation will opt for home cooked foods rather that getting them from restaurants. The organization has one option only, which is to lower further the prices of its products, an aspect that has detrimental effects on its overall performance. Moreover, Chipotle organization is also affected by the growth of household disposable income like tax and the interest rates. These also affect the ability of people to buy restaurants produces, which affect the market demand of Chipotles organization.
Lower prices for competing firms is another threat that is facing Chipotle Organization. Competing firms like McDonalds, Taco Bell, and Pizza Hut among others are lower options value or competing products similar to Chipotles’. This is a great threat since the average consumer who wants to get food from a fast food will consider the cost factor in deciding the restaurant to go to. In addition to that, the availability of substitute’s products where consumers can get prepared foods apart from restaurants have become a threat to the organization. These include caterers, food stores, and other full service restaurants that affect the organization’s market demand. All these are factors that Chipotle has had to put up with and come up with several strategies to ensure that it remains relevant in the market.
Conclusion
Chipotle organization is among the leading fast food restaurant organizations across the globe. This has been attributed to its marketing strategies aligned, especially with its mission to serve healthy and quality foods. Despite stiff competition from other restaurants, the organization has maintained its market base with key strategic approaches that have given it a solid foundation in remaining relevant in the competition environment. The organization has significantly utilized its opportunities and it has dealt with the threats to ensure that its market brand name remains relevant and great. This is the reason the firm has continued to grow and expand over time despite several challenges and stiff competition in the industry.
Works Cited
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