Chipotle Swot Analysis Essay

I think Chipotle initially thought the food poisoning was restricted to one restaurant. Unfortunately it was not. After the second incident, testing should have immediately been implemented in all stores. It was positive Chipotle worked with state and federal health officials and conducted the deep cleaning in all restaurants.

Other core competencies are being able to shift to healthier food choices that were of value to its customers. Chipotle also was able to create a brand awareness and at the same time educating customers on choosing healthy food.

SWOT is strengths, weaknesses, opportunities, and threats.
S- Strength for Chipotle is the fast food/fine-dining experience
W – Weakness for Chipotle is the fact that very little advertising/marketing

O- Opportunities for Chipotle are for them to advertise the organic, health food choices they offer.
T-threats for Chipotle are the fact there are several competitors that own a large portion of the market share.

The SWOT analysis uncovers the opportunity for a greater marketing campaign as well as expanding their products and services to set them further apart from their competitors.

Chipotle’s secondary value chain component is their ability to hire and develop managers. As well as their ability to handle the rapid growth they encountered.

A chief component of Chipotle’s strategy at the beginning was:
• High quality of ingredients
• Reasonable pricing
• Management’s commitment to “Food with Integrity”
• Chipotle’s development of long-term relationships with the suppliers
• Level of service, fast-fine food
There are strategy adjustments that Chipotle has incorporated since the food poisoning issue. These adjustments are:
• New food safety procedures – the implementation of bar codes on their ingredients in order to have the capability to trace the food. Also, the new practice of prepping steak and chicken after vegetables.
• Increased store audits – they hired a third party to audit the restaurants
• Investment in staff and management – ensuring they have great customer service to attract new customers
• Aggressive marketing campaign

Chipotle’s competitive strategy is their innovative menu – differentiation.

An innovative product can increase product differentiation and value (V); can strengthen buyer demands – boosting sales. Another strategy is Chipotles ability to offer organic ingredients at an appealing price point.

Moe’s Southwest Grill has franchised restaurants and Chipotle has company owned restaurants.

Chipotle’s financial and operating performance:
• Chipotle was able to increase their profit margin from 2007 at 10% to 2010 at 15.7%. However there was a slight decrease to 15.4% in 2011
• CAGR – from 2007 – 2011 Chipotle’s total revenue increase at a compound annual growth rate by 20.2%
• Net income increased from $70.6 million in 2007 to a high of $214.9 million by 2011 – CAGR (32.1%)
• Net cash from operations rose from 2007 at $146.9 million to 2011 at $411.1 million
• Ratio improved to 3.18 in 2011 from 2.75 in 2007
• CAGR – 16.1% (average annual sales rising from 1.085 million to 2.013 million

Chipotle is in a strong competitive position. Taco Bell is the strongest and has the highest name recognition. Qdoba and Moe’s are the

weakest.

• Continue to have a third party audit the restaurants for food safety issues.
• Continue to strategically open restaurants
• Monitor competitors menu items and continue to improve and increase food options
• Continue with company stores – no franchising.