Chipotle Swot Analysis Essay

Strengths

Chipotle has established the well-recognized brand in North America area, with the message: “Food with integrity.” They are well-known for providing the fresh and healthy ingredients in their menu. Also the company has strong commitment in raising animals in natural farming conditions, and against the U.S. industrial farming. The animals are fed with organic foods, without using antibiotics and hormones. That becomes the unique Chipotle strength setting apart from other traditional competitors in the fast-food industry. In addition, instead of franchising stores around the world like Panera, Taco Bell and McDonalds’, Chipotle has the total control over their chain of restaurants and product supply sources. By this way, the company

has the better management in food quality and maintains the consistent customer services. As the franchising stores usually face the pressure of production and prices competition, Chipotle tries to eliminate these challenges and focuses on the food culture and food experience. Moreover, the company has an innovative marketing approach for targeted audience: millennials. They not only incorporated very well the social media and digital presence to the marketing strategy, they also generate the interactive and engaged experience for customers.
Weaknesses
It is very important to point out some weaknesses Chipotle business has been challenged, in order to find the appropriate solutions. Even though the company has an impressive growth, it has very seasonal sales over the year. The average restaurant sales and income are lower in the first and fourth quarters. This issue can be explained due to Holiday seasons, winter weather in some areas and shortage of organically grown ingredients. To limit the seasonal factor, Chipotle can expand their network of farmers to Southern areas, where are not affected by Winter weather, and improve their productivity. Also, they can give away free burritos and tacos during Holiday seasons in shopping mall or crowded areas. Another weakness that Chipotle business team should consider is the limited choices in menu. In the product section, the company should evaluate the additional options for vegetarians, as well as desserts menu. Therefore they can deal with the different preferences of customers. Moreover, Chipotle is limited in their presence in international market. They have a total of 1,300 restaurants in North America area. The first one in Europe opened in London four years ago, and the second restaurant is in Paris in 2012. There is a lot of potential profits in the international market that Chipotle should take advantages of. The opportunity to expand business to Switzerland would help the company to increase the brand popularity in European countries.
Opportunities
In recent year, the number of diabetes and overweight people raises the alarming concern in Switzerland. “More than 250,000 people in Switzerland are registered diabetics, and the growing incidence of Type Two diabetes – particularly among young people.” (Swissinfo.ch) It is predicted to have the higher demand for the organic and healthy food. This is a great opportunity for Chipotle to expand their restaurants in Swiss market. With the mission of providing healthy and high quality ingredients, it is inevitable that Chipotle will succeed in taking over their targeted segment. In the current Swiss market, the big fast-food players are still missing, except for McDonald's taking around 50 percent of market share, and only 2 percent for Burger King. The Mexican food segment is pretty clear of competition in this country. In addition, there is a potential high growth rate in fast food industry, when people are getting busier and more time pressure in European countries. It is the right time for Chipotle to join in the competition game in Switzerland, and create their own market share. Chipotle not only pays attention to supply healthy food, but they also develop the sustainable cycle in restaurant design and farming techniques. This brings the unique characteristics to Chipotle compared to other competitors. Their design is targeted to maintain the balance of human exploitation and environmental sustainability for future generations. This is a great opportunity for Chipotle to corporate with other green organizations and promote the sustainable missions in Switzerland. Lastly, it is pretty low cost to set up business in Switzerland, and the country is well-known as one of the most stable economies in the world. As the result, Chipotle should take advantages of the above opportunities and execute their international business expansion.
Threats
Considering the market threats is very important to expansion plan, it is unavoidable for new competitors to enter the Swiss market in the near future. It would become more competitive and challenging for Chipotle for the long run. In order to minimize the impacts, the company should establish the good relationship with customers and local farms. They can offer the customer loyalty programs and exciting activities to engage customers. For the local farmers in Switzerland, they become the long-term contractors and get assistance with the farming techniques. By doing so, the company can maintain their competitive advantages. Another threat factor is the difference in culture and languages. Switzerland has four primary languages including German, French, Italian and Romansch. Even though their culture is pretty diverse in Europe, Swiss tends to follow their own rules and be cautious about outside influences. They remain conservative and ethnocentric in the way of thinking. It is fairly challenging to introduce new foreign brand to the Swiss and get them familiar with the products. It requires Chipotle to adapt their marketing strategies and communications for better effectiveness. The international expansion plan will face with the challenge of high labor cost and raw materials’ prices in Switzerland, compared to U.S. There should be in-depth analysis of cost and profit in the expansion plan. Due to the higher cost, the solution is probably setting a higher product price in this new market. However, pricing strategy of competitors should be evaluated before making the final decision. Even though Chipotle has a good branding in North America, there will be possibly a percentage of people who have never heard of this Mexican Grill brand in Switzerland. This requires a comprehensive marketing plan to reach out to the larger audience.

Promotion Strategy
Chipotle marketing strategy is non-traditional in fast food industry.

They thrive to deliver the core value of serving the food with high quality and freshness, known as “food with integrity.” In their promotion mix strategies, Chipotle concentrates on direct marketing, as creating the one-to-one relationship directly to their customers. Most of marketing efforts are managing digital media and online presence. Targeting millennials generation, the company understand the customers’ demand and behaviors. The new generation prefers connecting in digital media and online community, rather than traditional ways of marketing. Therefore, Chipotle creates interactive experience with youngsters through integrated marketing and multi-channel strategies. In 2013, Chipotle successfully launched their animated video commercial on Youtube called “The Scarecrow.” (usatoday.com) The video bring up the health danger and inhumanity of industrial food giant. It leverage the appeal to emotion, and emphasize on their message of “eat fresh, eat local.” Following the video, they launched their interactive video game that users can join in the scarecrow's journey in providing healthy alternative food to people. Chipotle’s marketing campaign indeed attracts their targeted young audience with nearly 14 Million views and also involve them in the next stage of program. The main objective of this campaign is distinguishing Chipotle branding from other giant fast-food competitors such as McDonald and Burger King, as they care about organic food supply chains. They also leverage different social media channels and mobile applications to create an online Chipotle

community.
To continue their innovative marketing tactics, Chipotle had collaborated with Hulu to release their first comedy series “Farmed and Dangerous” on TV streaming services. (The New York Times) Watchers are not expected to see Chipotle restaurants, products and company logos on the show, but they will be educated about awareness of industrialized farming. It promotes the company core value of sustainable agriculture and criticizes the cruel treatment of animals in food industry. Chipotle thrives to deliver value integration to customers, instead of product integration. The company has leveraged the successful partnership with Hulu to increase brand values and reach to new customers. In addition, they maintain brand awareness and brand message through their innovative restaurant design. The design team put efforts to incorporate sustainable materials into interior restaurant lighting, water and green energy. The Chipotle restaurant located in Gurnee, Illinois became the first restaurant ever received the Platinum Level LEED(R) Certification by U.S. Green Building Council.
As the company is looking forward to expanding business to Switzerland, it would require Chipotle to understand their new customers preference, which is the success factor of marketing strategies. The company would target the same promotion mix in this new market, which is direct marketing to deliver brand values to customers. In Switzerland, there are three primary languages including German, French and Italian, and only 0.9 percent of people is speaking Romansh. Therefore, it is crucial to translate Chipotle website in four different language options, even Romansh has very small percentage. You can not know when Romansh speaking people will arrive at company website, and leave immediately due to language differences. In terms of brand message, it is recommended to maintain the consistent content and values used in U.S. market “food with integrity”. Message should be universal to audience, due to the fact that Switzerland has a large population of foreigners up to 23.3 percent in 2012. (Federal Department of Home Affairs) More and more people in Switzerland are worried about diabetes and health concerns, in which Chipotle expansion comes in the right time to catch the trend. The company leverages the relationship with local farms, in order to supply the best quality meat and fresh ingredients. Therefore, marketing message should cover the clear sources of ingredients and their methodology to raise healthy animals. In preparation for the brand opening, Chipotle would test the market by giving out free burritos and tacos, and collect customers’ feedback and preferences. Then, they would target TV commercials, radio ads and mostly word-of-mouth techniques. This is when social media plays an important role in the marketing strategy. Chipotle fans can connect to share the restaurant experience, and refer to friends for the discount program. In this stage, Chipotle would expand their brand awareness by sponsoring football and ice hockey games in Switzerland. Also, the products can be introduced in schools and colleges, emphasizing on fast services and healthy alternatives. So, they are able to reach out to a larger range of audience. The next phrase would be managing the customer relationship and growing customer loyalty, by launching point reward programs. Everytime customers make a purchase in store, they can earn points for gift rewards.. If they answer the Chipotle questions correctly, they will be rewarded a small store souvenir. As a result, Chipotle can continue to deliver the interesting and engaged experience to their customers, which will bring them back for another time.