Chipotle Mexican Grill
In 1993, Chipotle was launched as a fast food restaurant serving burritos, as one the specialty foods. The initial investment that had a one-page business plan was $75,000. In the business plan, Steve calculated the number of burritos that he would need to sell per day if he was to successfully prepare the meals, pay for electricity, utilities, rent, and the repayment of the loan. Chipotle Mexican Grill also specializes in the provision of varieties of extras, which include tortilla chips, salsas, and guacamole. In addition, the restaurants operated under Chipotle also serve beverages such as organic milk, fruit drinks, sodas, and a selection of beer. Through its mission statement: “Food with Integrity,” the company evokes the thought that it is dedicated towards the provision of high quality and health food products to its customers. Integrity with regard to food from the perspective of Chipotle provides the understanding that food served in fast food restaurant does not have to be unhealthy. This mission has been essential in developing a positive reputation towards the company with regard to its dedication in ensuring that food products consumer in its restaurants are growth through the natural process. The company has also been active in developing a positive reputation towards its operations with regard to its dedication in ensuring that food products consumer in its restaurants are growth through the natural process. This approach to change in perspective contributes to the possibility that more customers will be attracted towards the food products in the company due to health concerns that have led to a diversion in the number of people interested in fast foods.
Keywords: cuisine, fast foods, Chipotle Mexican Grill, profitability, sales, quality food
After graduating from the University of Colorado and later attending the Culinary Institute of America, Steve Ells, the founder of Chipotle Mexicana Grill began working as a sous chef at Star Restaurant. The desire to launch a fine dining restaurant necessitated the development of a business plan on how to start a smaller fast food business that could help finance his dream business (Villavisencio 12). In 1993, Chipotle was launched as a fast food restaurant serving burritos, as one the specialty foods. The initial investment that had a one-page business plan was $75,000. In the business plan, Steve calculated the number of burritos that he would need to sell per day if he was to successfully prepare the meals, pay for electricity, utilities, rent, and the repayment of the loan. From his calculations had to sell about 114 burritos in a day. The business was made simple business it was a part-time job. The restaurant however experienced high growth levees considering that by the end of 1993 it was selling more than 1,000 burritos a day (Krier 10).
Steve Ells founded Chipotle Mexican Grill in 1993 after acquiring $75,000 loan from his parents. After launching the business concept and beginning operations, the business was selling more than 1,000 burritos in a day. In 1995, the company began an expansion process by opening a second sorer from the profits ploughed back into the business. In 1996, the company opened a second store and a strategy aimed at funding more growth, Steve Ell’s parents contributed an additional $1.5 million while the board of directors at Chipotle raised another $1.8 million from local investors (Villavisencio 14).
After its incorporation in 1998, Chipotle Company began developing relationship with franchising companies such as McDonald. The franchisor invested $360 million in Chipotle, which allowed for more expansion by opening stores in different part of the American an international community (Villavisencio 16). By the end of 2006, Chipotle went public and as it was listed in the New York stock market, its stock raised to 100%. This was an indicator that the company was perceived as a threat in the fast food market. This explains why McDonald decided to divest from Chipotle. Chipotle currently operates more than 1700 stores globally.
Incorporation, Growth and Diversification
Chipotle Mexican Grill was incorporated in 1998. This provided a platform for expansion considering that it was able to develop and operate Chipotle Mexican grill restaurants in different locations. Chipotle Mexicana Grill was founded and incorporated on the philosophy that fast food could also be cooked to be highly nutritious unlike the junk food believed to be part of the food. The company through its managements has been successful due it ability to create and ensure the growth of an exceptional customer experience while calculating the culture of honesty and ensuring the provision of rewarding opportunities for its employees (Villavisencio 18).
In the process of ensuring diversification and market, expansion the company through its stores the company operates on a menu focused on tacos, burritos, salads, and burrito bowls. With more than 1700 operational restaurants in Canada, United States, Germany, France, and England, the company has been able to improve in term of its competitive advantage, market share and customer base (Villavisencio 18). Chipotle Mexican Grill has also been able to introduce diversification by targeting Asian customers. This explains why the company owns about 10 ShopHouse Southeast Asian Kitchen restaurants specializing in Asian cuisine. The company also operates two Pizzeria locale restaurants, which were developed as a concept of providing target customers with a casual pizza experience. For the company the process of attracting and retaining its customers is also focused on the sale of gift cards, which do not have an expiry date (Grant 114).
Chipotle Mexican Grill also specializes in the provision of varieties of extras, which include tortilla chips, salsas, and guacamole. In addition, the restaurants operated under Chipotle also serve beverages such as organic milk, fruit drinks, sodas, and a selection of beer. As a strategy of guaranteeing customers, the provision of healthy food the company only prepares meals raised without using non-therapeutic antibiotics or added hormones as a guarantee of responsible food (Katsenelson 64).
Before its incorporation in 1998, the company had to find out ways of facilitating growth and expansion as a way of acquiring a position in the fast food market. This explains the decision to acquire McDonald to invest more than 87% of funds to cater for company operations. In one of the main strategies, that has facilitated the growth and expansion of the company since its incorporation is the decagons to expand its stores (Villavisencio 22). With majority of the stores in the United States, the potential for tremendous growth lies in the domestic and international expansion of the stores. On its growth strategy, Chipotle plans to introduce more than 200 new stores annually. The popularity and the high profit levels in these stores have been increases by the ability of the company to offer its traditional products while embracing new techniques of modeling existing products with new information especially in societies with diverse cultural backgrounds. The integration of culture and cuisines in different store in its target market has been considered as a catalyst for current and future growth strategies for the company (Hitt et al 16).
One of the major objectives of Chipotle Mexican grill was to regain control of its majority shares. This was following the 1998 acquisition by McDonalds. When McDonalds acquired about 87% controlling stake in the company, it took over and had the decision and voting power on matters related to Chipotle stock (Krier 33). Inasmuch as McDonald was in control of all the major business processes of the company, it was an important aid in boosting the company’s operations by sharing its distribution networks. However, following the listing and success of Chipotle in the New York stock exchange, McDonalds complete divested from the company (Hannaford 56).
One strategy that Chipotle uses in its acquisitions is the horizontal integration. This allows the company, which allows the company to acquire smaller chains hence accessing firms that operate in an established market and supplier relationship. Through this strategy, the company has been able to eliminate competition and excess capacity within the fast food industry especially when expanding in international markets. The horizontal integration in the view of chipotle allows the company to ensure a relatively smoother transition into new markets. For instance, the company in 2010 began expensing into the UK by opening niche Burrito bars such as Pinto and Mission Burrito (Krier 35).
Vertical integration is also an acquisition strategy applied by Chipotle. Currently the company’s food cost is at 35%, which is higher than the industry average of 27%. To tackle this problem the company has been able to purchase supplier operation as a way of ensuring that maintains low production of high quality food (Krier 37)
All the products and services that define the operations of Chipotle Mexican Grill are connected to the strong mission statement: Food with Integrity. This statement evokes the thought that the company is highly dedicated towards the provision of high quality and health food products to its customers (Paiz et al 111). Integrity with regard to food from the perspective of Chipotle provides the understanding that food served in fast food restaurant does not have to be unhealthy. This explain why the company uses high quality raw materials and classic cooking approaches coupled with a distinctive interior design n its stress as a strategy of integrating different feature essential in improving the reputation of fine dining in different parts of the world. Throughout its 20 years of operation, the company has been able to fulfill the mission of food with integrity by providing the best integrated with respect for the environment, animals and farmers (Krier 22).
The process of fulfilling its mission also means that the company must always keep itself focused to its objective of making food better and improving on the efficiency levels of its operations. To this extent Chipotle has been successful in offering exquisite breakfast, dessert and other food items in its menu with the understanding that improving the present format while focusing on a better future would help the company gain popularity and ensure a healthy population (Paiz et al 114).
Because of its efficiency in other essential sectors such as recruitment, training, and retaining of employees, the company has been able to invest more on its food by increasing the quality of its ingredients. The company has improved on its food preparation process, commencing the design of more efficient equipment as a way of optimizing different eldest integral to the delivery of better food, and improved customer experience (Hitt et al 21).
It is through the high-level dedication and focus on company’s mission “Food with Integrity” that has led to the development of the belief that Chipotle is championing for the transformational and improvement of the standard quality for fast food restaurant meals. For this customer to experience high-level maximization, it will be important for the company to begin the process of investing in more locations across the world and leverage the concept of “food with integrity”
According to the management of the company, the concept of food with integrity can only be understood from the sourcing of high quality ingredients acquired from natural farms to the preparation and service of the food. Food with integrity is founded on the belief that there is a relationship between how food is raised in the farms, prepared by hands and how it tastes. The customer in this process is essential because the consumption of high quality food ensure social progression with regard to continuity of life and the ability of the society to engage in development initiatives. The mission statement guarantees that the food production and preparation process is in the restaurant is defined by freshness, simplicity, and natural production. To promote this process the company sources it ingredients from farms and concentrate on the ingredients to ensure that are of the right quality (Grant 122).
The statement: to change the way people think about and eat fast food” is the vision of Chipotle Mexican Grill. The success and transformation of the fats food industry from the perspective of Chipotle Mexican Grill is only possible when the thoughts and existing perceptions about these food products are altered (Paiz et al 111). For the company the process of realizing this vision has been necessitated by beginning with an improvement of customer experience. Through its mission of “Food with Integrity,” the company environs to realize its vision by defining it expectations for high-level transparency throughout the supply chain. This has been perceived as the best possible strategy of providing customers with the best food. Working with suppliers helps in improving customer expertise considering that the ingredients which form part of the food are sources from are sourced from areas that in accordance with the standards of the company (Grant 118).
Part of the company’s objective in realizing its vision is by engaging in corporate social responsbility. In 2011, the company launched the Chipotle Cultivate Foundation. This was a technique that the company developed to demonstrate its level of commitment in the creation of sustainable and healthy food products for the fast food industry in the future (Paiz et al 115). As an act of corporate social responsbility, the foundation has been able to demonstrate its level of dedication in changing the thoughts and consumption of fast food through the provision of resources and the promotion of stewardship among farmers. This promotes the integrity of food since it enhances animal husbandry, encourages the implementation of regenerative agricultural practices while at the same time fostering food literacy among the target population (Paiz et al 115). Through this foundation, the company has also been able to boost the food preparation process by providing additional training to its employees on matters related to food preparation. For the customers, the company, through the foundation has been able to ensure the promotion of nutritious eating by providing information about the composition of the food products. Since its establishment, the foundation has been able to enhance its commitment towards the realization of company vision by contributing more than $3 million to organizations interested in the cultivation of a biter world through food (Paiz et al 117).
As a vision of the company, changing the thoughts and consumption of fast food require the involvement of many stakeholders. The farmers form an essential part of these stakeholders because they represent part of the originators of the food ingredients. The realization of the company’s vision has been enhanced by incorporation of small-scale farmers as part of its supply chain. This has been essential in developing a positive reputation towards the company with regard to its dedication in ensuring that food products consumer in its restaurants are growth through the natural process (Barkely & Barkely 18). This approach to change in perspective contributes to the possibility that more customers will be attracted towards the food products in the company due to health concerns that have led to a diversion in the number of people interested in fast foods. The level of success of the company’s vision can be demonstrated from the 11.6% increase in the sales of the company in the second quarter of the 2015/2016 financial year. This is an indication that the company is expanding its markets while ate same time attracting more customers hence improving on its levels of competitive advantage and market share.
From the company’s ingredients statement, the objective is to produce high quality food and this explains why the company will never stop working in its objective of developing each ingredient it prepares and serves to its customers. The products provided by Chipotle Mexican grill include:
Chipotle honey vinaigrette
This product comprises of the following ingredients: red wine vinegar, black pepper, chipotle chili, cumin, and garlic and rice bran oil
The company provided varieties of salsa with the objective of meeting the diverse tastes of the customers. Salsa roasted chili corn is one of the types offered. It is composed of white sweet corn, kosher salt, red onion, roasted problano, citrus juice, and jalapeno. The company also has salsa tomatillo green chili. This is comprised of roasted tomatillo, salt, cumin, garlic, citrus juice, red onion, oregano, and roasted jalapeno. For salsa tomatillo red chili, the preparation process includes ingredients such as cumin, garlic, black pepper, red tabasco sauce, tomatillo, and red chili
The making of this product is dependent on the customers’ choice of meat or sofritas, fajita vegetables, salsa, rice, beans and guacamole coupled with sour cream cheese. Meat is an essential component of the burrito. However, the company is considered to provide high quality burritos because of responsible choice of its organic raised meat organic tofu.
This meals is served in a bowl of the customers’ choice of sofritas or meat, guacamole, cheese or sour cream
Crispy corn tacos
The preparation of this food entails three crispy corn shells with the customer’s choice of meat r sofritas, guacamole, salsa, romaine lettuce, and cheese.
Soft corn tacos
The food involves the preparation of this food entails filling three soft corn tortillas with the customers’ choice of meat or salsa. The food also includes additional ingredients such as guacamole, salsa, sour cream, and romaine lettuce
Soft flour tacos
The food products entail feeling three soft flour tortillas with the customers’ choice of meat, guacamole, sofritas, cheese, or cream. In addition, the customer can opt for romaine lettuce.
This food contains chopped romaine lettuce with the customer’s choice of sofritas, meat, beans, salsa, guacamole, cheese, or sour cream. The outstanding feature of the salads is the addition of freshly made chipotle-honey vinaigrette.
This menu allows the customer to build his own quesadilla kids meal, which comprises of seasoned fruits or chis combined with juice and organic milk.
Chips and guacos
This food is comprised of fresh fried chips. The chips are sequined with real lime and kosher salt for flavor. In addition, the natural flavor of the food is also derived from the fresh hand mashed guacamole.
Chips and salsa
This is comprised of freshly fried chips squeezed with real lime and kosher salt. The defining feature of this food is that it is paired with the customer’s choice of salsa.
The preparation of this drink is defined by the desires of the customers. This includes the integration of patron silver with sauce. Additional features of margaritas, which are highly dependent on customer taste, include tequila, blending lime and lemon juices. The margaritas can also be sweetened with the organic agave nectar.
Bottled drinks and beers
Chipotle also offers varieties of bottled drinks derived from different companies. These drinks include customer choice of fruit juice, bottled water, sparkling juices, beer, and conventional soft drinks.
Monterey jack, cheese
This product is developed using pasteurized milk, salt, enzymes, and starter cheese culture. This product is popular in the Canadian restaurants where Chipotle serves it with a blend of white cheered cheese.
This forms an essential product served in different stores owned by Chipotle Mexican Grill. Additional ingredients that comprise the chicken include rice bran oil, black pepper, kosher salt, cumin, and kosher salt. The meat and the vegetable that the company purchases come from animal that are grown through the natural process hence limiting the possibility of consuming genetically modified products. The main objective is to provide customers with healthy and sufficient meat products.
The company offers varieties of vegetable products targeting its vegetarian group of customers. The vegetable menu includes fajita vegetables, lettuce, and romaine lettuce and romaine lettuce salad.
Chipotle Asian cuisine
The flavors offered at Chipotle ShopHouse are extraordinary and bold. This is because the company emphasizes on the consumption of vegetables, roasted meatballs, braised tofu, green papaya salads, handpicked vegetables, with fresh herb toppings.
At the company’s Pizzeria Locale, the customer is allowed to experience the pizza making process, which bakes for about 2 minutes in the oven. Depending on the choice of the customer, pizza can include varieties of other ingredients such as meatballs, pork, and salads. The causal pizza allows customer to customize their food according to their taste. This company enhances this experience by ensuring that all the ingredients associated with eh casual pizza are fresh and responsibly sourced.
Steve Ells is the founder of Chipotle after graduating from the culinary institute of America. The opening of the restaurant was based on a dream of opening a fine dining restaurant. However, the challenge of opening this fine dining restaurant was lack of sufficient finances necessary for the development of the business idea. The opening of Chipotle was based on the assumption that it would provide the money, which is necessary in financing the fine dining restaurant (Wylie 15). Upon opening Chipotle, the company gained popularity from the sale of burritos, which gained an immense following emanating from customer loyalty. The need for expansion necessitated the development of a franchise relationship with McDonalds, which acquired about 87% control stake of the company (Barkely & Barkely 25). In 1998 after the incorporation of the company, Steve Ell gained control of the company making it a transformer of the fast food industry. Through its food with integrity mission, Ell has been able to build a multibillion-dollar Mexican food chain focused on the provision of fresh and healthy meals (Smith 29). He need for diversification and expansion has necessitated Ell, through the management to engage in the introduction of novel cuisines targeting the Asian population and Pizza lovers. From the perspective of Ells, the growth and expansion of Chipotle can be likened to the failure by existing fast food companies to recognize the changes in their customer’s appetite with regard to health standards (Wylie 20). From the perspective of Ells, the success of the company can be associated with high quality food products and highly trained staff. . the fine dining perspective which necessitated the creation of highly efficient way of preparing food which was different from the existing freeze heat and service of the fast food model. Currently Steve Ells is recognized in the company as the founder, the co- chief executive officer, and chair of the board (Smith 15).
Mark Crumpacker is the chief marketing and development officer at Chipotle Mexican Grill. He is in charge of all the marketing function of the company with regard to brand promotion and improvement of the sales of the company. While operating as the chief marketing officer, Mark Crumpacker gained prominence in the company began through his revolutionary approach in the sale of fast foods. The approach focused on the sustainability and quality of the resulting food products provided by the company. In addition, through his marketing efforts and the launching of the “Back to the Start Campaign,” the company was successful in advocating for the eradication of unethical practices in agriculture. Through its marketing strategies, the company has been successful in educating its customers on the production and consumption of fast food.
Monty Moran is the Co-CEO at Chipotle. Prior to this position, Moran also served as the president and secretary of the organization. Moran played an essential role in the development of the company considering that in early 1990s since he was engaged in the development of the business plan that defined the initial operations of Chipotle. An additional role played by Monty was in his involvement in the development of strategies aimed at improving the position of the company with regard to expanding its market and customer base. Together with Steve Ells, Moran was instrumental in the development of the restaurants targeting the Asian market (Wyli
Barkely, Anderew & Barkely, Paul. Depolarizing Food and Agriculture: An Economic
Approach. Cambridge University Press: Cambridge, 2014
Grant, Robert M. Contemporary Strategy Analysis: Text and Cases. Chichester, West Sussex,
United Kingdom : John Wiley & Sons Inc. 2016. Print.
Hannaford, Steve. Market Domination!: The Impact of Industry Consolidation on Competition,
Innovation, and Consumer Choice. Westport, Conn: Praeger, 2007
Hitt, Michael A, Robert E. Hoskisson, and R D. Ireland. Strategic Management: Competitiveness
& Globalization : Cases. Mason, OH: South-Western, Cengage Learning, 2013. Print.
Katsenelson, Vitaliy N. Active Value Investing: Making Money in Range-Bound Markets.
Hoboken, N.J: Wiley, 2013.
Krier, Daniel. Chipotle Mexican Grill Inc: Case Study. , Middletown, DE. 2015
Paiz, Ernesto, Dave Anderson, Ryan Barone, Brian Bollinger, Kristina Calderon, Frank Lin, and
Mark Toguchi. Analysis of Strategic Move by Chipotle. München: GRIN Verlag GmbH, 2015.
Smith, Andrew F. Fast Food and Junk Food: An Encyclopedia of What We Love to Eat. Santa
Barbara, Calif: Greenwood, 2012
Villavisencio, Jose M. Quality Analysis of Chipotle Mexican Grill. Spring term: Indiana Tech,
Wylie, Kimberly. Marketing Analysis Chipotle Mexican Restaurant and Applebee’s Restaurant.
München: GRIN Verlag GmbH, 2014.