Company Information
Chipotle Mexican Grill, also commonly known as Chipotle, is a chain of fast-casual fresh food restaurants specializing in Mexican food. The company’s mission statement emphasizes the integrity of the food offered in Chipotle restaurants. Thus, the company’s mission promotes using natural and fresh ingredients with no artificial additives and preservers. The mission statement also outlines the customer’s expectations about the food quality in Chipotle restaurants. The company’s vision statement explains that by providing quality food with fresh ingredients and optimizing production and disposal processes, the company makes the world a better place.
Core Values, Ethics, and Social Responsibility Principles
The company builds its value system on ‘being real’ with customers, employees, vendors, and the environment. The ‘real’ system defines the company’s approach toward corporate social responsibility. Thus, the company constantly works on optimizing working processes to reduce waste, promote recycling, and care for the population and employees’ well-being by providing fresh, nutritious food. Furthermore, the company’s code of ethics explains how the company contributes to cultivating a better world for employees, businesses, and communities (Chipotle et al., 2021). For example, the code of ethics outlines such aspects as support of equal opportunities for all employees, a code of conduct for suppliers, and the company’s commitment to political and charitable activities.
Analysis of the Company’s Internal Environment
Strengths
The company has several internal strengths, which were formed by years of successful work with clients. Firstly, after the 2015 incidents with public health scares due to the Escherichia coli outbreak in Chipotle restaurants in Seattle, Chipotle restored its reputation and returned part of its customer base by prioritizing food quality (Paruchuri et al., 2019). Next, the company emphasizes the use of classic cooking methods and simple ingredients, increasing customers’ trust in Chipotle’s products. Furthermore, the food is reasonably priced for its high quality, which provides Chipotle with a high price value proposition. Lastly, the company currently operates more than 3,000 restaurants, which creates a vast customer coverage area and encourages brand loyalty (Wiener-Bronner, 2022). In the digital aspect, the extensive network of restaurants guarantees a broader coverage area for food delivery.
Weaknesses
On the other hand, Chipotle also has several critical internal weaknesses. Firstly, in order to fulfill the company’s social responsibility, Chipotle sources sustainable meat products from specific suppliers. However, there is currently a limited number of responsible meat supplies in the country, which makes the company more dependent on suppliers. Furthermore, the company’s strict mission and vision, which only allow plain recipes with simple ingredients, limit the possible menu list. Lastly, the restaurant chain was exposed to issues with food safety several times due to the use of locally sourced natural ingredients (Assenza & Lewis, 2019). Repetition of such events can cause an adverse reaction among consumers.
Analysis of the Company’s External Environment
Strengths
Considering Chipotle’s position in the fast food industry, the company occupies a unique niche of fast-casual food based on Mexican cuisine, with most companies operating in an adjacent niche falling behind in their reputation and presence. The only direct competitor for Chipotle is Taco Bell; however, Chipotle wins the competition due to the high-quality standards of products and prepared food. Furthermore, as the population’s demand for healthier food continues to grow, unlike other fast food chains, Chipotle is relatively safe. Moreover, according to Johnson and Hendley (2022), Chipotle presents one of the healthiest fast-food joints because no processed or artificial ingredients are used in the food. Thus, the current market situation is favorable for the development and expansion of the company and provides a significant competitive advantage for Chipotle.
Weaknesses
However, in focusing solely on the American market, Chipotle misses the chances of global expansion and development of the brand’s influence. Chipotle recently opened its 3000th restaurant in North America, but outside of the American market, it operates only 29 locations in Canada and 13 in the UK (Wiener-Bronner, 2022). The company’s limited presence in the international market reduces the influence of the brand, while other fast-food chains quickly expand to global markets through franchising. Furthermore, the company does not allow the use of the franchise model popularly applied in fast food chains because it can threaten the quality of products and harm customers’ experience. However, even though the issue of control over franchises poses a significant threat, the company may lose its right to represent the niche of fast-casual Mexican food in the international market.
Evaluation of External and Internal Environment’s Impact on Strategy
Since the coronavirus outbreak in 2020, the company’s strategy has focused on digitalizing the checkout processes. The lockdown policies created a need to quickly take the necessary measures to maintain the viability of the business under social distancing restrictions. The pandemic significantly influenced the behavioral trends and demographics of the population. A substantial proportion of workers now work from home, which allows them to order food at home instead of eating at restaurants. The trend is also supported by an increase in the proportion of Gen Z representatives in the brand’s customer audience. Thus, the external environment significantly contributed to the achievement of the company’s strategy. Internal factors, such as prioritization of food’s quality, support customers’ choice of Chipotle from several other digitally available food chains.
Strategic Objective for Chipotle Mexican Grill
In order to help the company perform at its full potential, the strategic objective should be specific, measurable, time-limited, and challenging yet achievable (Thompson, 2019). Since the company primarily associates its development with the number of restaurants in the chain, choosing the number of restaurants as the primary objective indicator is reasonable. The current strategic objective of the company is to open 7,000 restaurants in North America (Wiener-Bronner, 2019). However, the internal and external environment analysis shows that Chipotle’s insignificant presence in the global market presents the company’s main weakness. Furthermore, the lack of Chipotle’s presence in the global fast food industry threatens the company’s image as the leading representative restaurant chain of fast-casual Mexican food. Thus, the strategic objective for the company is to open 1,000 restaurants in five different countries over the next five years.
Short-Term and Long-Term Goals
Next, the process of attaining the strategic objective can be significantly simplified by defining specific short-term and long-term goals. Short-term goals generally focus on annual or quarterly results of performance improvements. Short-term goals can also help shareholders monitor the company’s progress in attaining long-term objectives. Thus, the short-term goal in Chipotle’s case will focus on developing the restaurant chain’s presence in another country. For example, the first short-term goal is to open the first Chipotle restaurant in another country in a year. Since paperwork and familiarization with the legal base of other countries will take much time, the short-term goal is both challenging and achievable. On the other hand, the long-term goal should indicate the company’s progress in achieving the strategic goal. Thus, the long-term goal is to open 500 restaurants in two countries within two years.
Collecting Data and Measuring the Success
Lastly, in order to measure the success of the strategic plan, the company will have to collect data on the performance of the company and its competitors in the global market and the country of presence. Different methods can be used to define the company’s competitiveness and success in entering a new market. For example, fast food service demand analysis will identify the company’s target audience. On the other hand, local market share data will define Chipotle’s progress in winning the customers of small local fast food chains.
References
Assenza, P., & Lewis, M. S. (2019). Can Chipotle compete by delivering “food with integrity”? The Case Journal, 15(4), 233-252. Web.
Chipotle. (2022). Our values. Web.
Chipotle Mexican Grill. (2021). Code of ethics. Web.
Johnson, S., & Hendley, J. (2022). How to order healthy at Chipotle. Eating Well. Web.
Paruchuri, S. , Pollock, T. G., & Kumar, N. (2019). On the tip of the brain: Understanding when negative reputational events can have positive reputation spillovers, and for how long. Strategic Management Journal, 40(12), 1965-1983. Web.
Thompson, A. (2019). Crafting & executing strategy: Concepts and cases (22nd ed.). McGraw Hill.
Wiener-Bronner, D. (2022). Chipotle just opened its 3,000th store. It has 4,000 left to go. CNN. Web.