Chipotle’s SWOT Analysis (2020)

Company: Chipotle Mexican Grill, Inc.
CEO: Brian Niccol
Founders: Steve Ells
Year founded: 1993
Headquarter: Newport Beach, California, U.S.
Number of Employees (Dec 2018): 73,000
Type: Public
Ticker Symbol: CMG
Market Cap (Feb 2020): $24.09 Billion
Annual Revenue(Dec 2018): $4.86 Billion
Profit |Net income (Dec 2018): $176 Million

Products & Services: Fast food and Beverages

Fun Fact: On Halloween, Chipotle offers a discount on any entrée on their menu if you dress in a costume.

Introduction

Chipotle Mexican Grill is a reputed American restaurant that was founded by Steve Elles in 1993in Denver, Colorado. Chipotle is known for serving Tex-Mex (Mexican American) cuisine to more than one million customers daily. This restaurant operates 2491 stores, mostly in the USA and in a few international locations i.e., Canada, France, Germany, and the United Kingdom.

The reputation of the company is strongly associated with providing fresh meal items, while its marketing and branding based on “food with integrity” focus towards sourcing its ingredient from ethically minded suppliers.

As a result, Chipotle Mexican Grill has been able to facilitate a casual dining experience with its premium ethos. It can be further reflected from assembly line service and approach towards the preparation of fresh food.

In this SWOT analysis of Chipotle, we will evaluate the latest dynamics of Chipotle Mexican Grill to gain insights with respect to its competitive advantages that allowed the company to attain dominance in the industry.

Chipotle’s Strengths (Internal Strategic Factors)

Provision of Tasty Food – Chipotle Mexican Grill is widely famous for providing a simple regular menu for its customers that comprises of salad, tacos, burrito bowls, and burritos.
Classic Method of Cooking – The restaurant adopts classic methods of cooking in preparing their food that involves fresh ingredients, cutting knives, pots and pans, and stoves and grills.
High Quality Food – Chipotle is known for using fresh ingredients in the preparation of their food, often promoted as “Food with Integrity.”
Fresh Food – Chipotle doesn’t carry a microwave or freezer in its restaurant. They have walk-in refrigerators stocked with fresh ingredients, herbs, spices, and rice, etc. And they hand-make fresh food such as guacamole, lime rice, salsa, meat every day from scratch.
Reasonable Prices – To make sure that the customers are satisfied, Chipotle Mexican Grill provides high-quality food, yet ensuring that the price being charged is reasonable for their customers. The prices for their menu ranges from $1.40 to $8.00.
Responsibly-Sourced Meat – With an immense focus towards sustainability and animal welfare, Chipotle Mexican Grill insists on using animals that are grown with care, “Responsibly Raised,” without the use of non-therapeutic antibiotics, or hormones, etc.
Maintaining Close Relationship with Suppliers – The focus of Chipotle lies clearly upon acquisition of high-quality fresh ingredients, which is necessary to ensure high levels of safety and quality at the restaurants. It is made possible through close relationships with their reliable suppliers.
Digital Friendly – Chipotle is very digital-friendly, and they have introduced an ordering app to help customers avoid long wait lines during lunch or dinner peak hours. You can order food on Chipotle’s app a few minutes before coming to the restaurant. It means that you can cut the entire line and pay for your food in a matter of seconds.

Image Source: Statista | Sales of Fast Casual Food Chain in 2017

Chipotle’s Opportunities (External Strategic Factors)

Expansion into International Markets – Chipotle has a small number of its restaurants outside the U.S. As of Dec 2018, Chipotle operated 2,452 restaurant in US and only 37 in international market. Therefore, it should utilize this opportunity to expand its brand in the international market.
Digital Orders – As of Dec 2018, only 10.9 % of Chipotle’s annual revenue ($4.86 Billion) comes from digital orders. Thus, there is a huge opportunity to further expand its online (mobile, delivery and catering) orders.
Upgrade due to Intense Competition – The restaurant industry of the US is growing rapidly with respect to its casual dining segments, quick, and fast-casual service, thus adding an opportunity for Chipotle to upgrade with respect to its ambiance and condition, brand reputation, location, service, presentation, quality, price, and taste of the food they offer.
Training and retaining top-performing employees – As the restaurant industry of the US is becoming stringent, Chipotle can gain a competitive advantage over its competitors through retentions of its employees. It can be ensured by investment in training new employees, a competitive salary, etc.
Drive-through option – Chipotle is planning to add the drive-through option in its restaurants. It will result in convenience and ensure easy access for its customers, resulting in increased sales.
Adding delivery service in partnership with Doordash – A delivery program in collaboration with Doordash will allow customers to avail free delivery on orders above $10.

Chipotle’s Threats (External Strategic Factors)

Loss of Customer Trust due to Food-Borne Illness – Chipotle went through a series of health-related incidents, ranging from norovirus to E.Coli to salmonella outbreaks, sickening hundreds of customers in several states. As a result, many customers stopped dining at the Chipotle. The company has been plagued since 2015 from the food safety scandal, which is evident from the decline in their sales in 2015 – 2016 revenue figures.