Operating Expenses Projections.
This section is dedicated to explaining the assumptions that are used to forecast the operating expenses of Chipotle from 2017 to 2021. All the expenses are estimated as a percentage of sales revenue. The table below summarizes all the assumptions that are used to forecast different operating expenses.
Food, beverage and packaging costs As shown in the graph, from 2012 to 2016, the costs of food, beverage and packaging were the most significant costs for Chipotle, around a third of its total sales revenue. Hence, for 2017 to 2021, it is assumed that these costs will still be the most prominent costs for the company. Moreover, the historical data of 2012 to 2016 are used to calculate the average costs of food, beverage and packaging, as a percentage of revenue. It is assumed that this average is applicable for 2017 and onwards. Thus, from 2017 to 2021, food, beverage and packaging costs are forecasted to be 33.8% of Chipotle’s sales revenue.
Labor costs As demonstrated in the graph, labor costs increased as a percentage of revenue in 2016, to 28.3%. This was due to lower sales in Chipotle
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For example, Chipotle incurred higher loss on disposal and impairment of assets because they company wrote down the value of the long-term assets of its ShopHouse restaurants, which were 15 non-Chipotle concept fast food restaurants, since the company was seeking strategic alternatives for the concept. Another example is Chipotle’s decision to not implement an internally developed accounting software, which lead to higher loss on disposal and impairment of assets in 2015 (CMG, 2017). As demonstrated by these two examples, loss on disposal and impairment of assets are often unusual and non-recurring. Thus, no projections are made for this extraordinary item, that is loss on disposal and impairment of assets are assumed to be zero for 2017 and
External environment analysis plays an important role in shaping the overall industry. It helps keep the business ahead of its competitors and providing opportunities for implementing innovative ideas. Based on demographic, Chipotle focuses majority of its sales on “Millennials”, who are between the ages 18 and 24. “Serving high quality food with reasonable prices” and the ability to customize your meal with a variety of different options in a fast paced environment is something many consumers are attracted to especially the younger generation. Chipotle’s first restaurant was established in Colorado but now they have restaurants all throughout the United States, Canada, United Kingdom, and so much more, located primarily in urban areas.
New restaurant openings and comparable restaurant sales increases are important factors contributing to Chipotle’s increase in revenues in recent years.
1.3 Market Segment Chipotle is classified in the restaurant industry as fast casual, a combination of the quick serve and the casual dining segments. Fast casual restaurants have the following attributes: high quality food, upscale atmosphere, higher check averages between $7-$11, and pay at the counter (What exactly is fast casual?, 2008). 2.0 Market Opportunity Analysis 2.1 Market Trends The restaurant industry grew to $403.5 billion in 2010, a growth of 2.1% from 2009 (Consumers still thrift when dining out, 2011).... ...
... increasing slowly. Currently, Labor costs have been increasing speedily for over 45% of manufacturing costs. From the previous three years, no increase in the productivity levels of the workers has been seen. If it keeps happening, the company will lose its price advantage over its rivals.
Chipotle is my favorite place to eat. As I am sure it is for other people. Chipotle is a fast food Mexican grill. They are most known for how big they make your burritos. Now it is fast food but it isn’t actually fast, they’re like a restaurant but without the wait. They serve all naturally raised meat and organic beans. So there food is pretty healthy and worth eating. The employees are always nice and it just a great place to eat over all. Chipotle is a great choice for a quick fast food stop because it gives great service, atmosphere, food and value. My experience there is always a good one.
Chipotle competitive advantage or Strengths has come from the ingredients that come from sustainable sources. According to the MarketLine article about Chipotle Mexican Grill SWOT analysis "Chipotle serves food using naturally raised meat (pork, beef and chicken) and dairy cattle... in 2014 the company served over 155 million pounds of naturally raised meat." Chipotle cares for their customers because they are not giving us food that has hormones and addictive substances. Their competitive advantage has changed the company culture and mission Statement nowadays they called it now food with integrity, the idea that their food is made with the respect for the animals and the
With a unique appeal, a healthy and delicious product, and a powerful social message that made our target customers feel great about eating Chipotle over more traditional fast food, we have pioneered the fast-casual restaurant model our customers admire. Furthermore, our food sourcing is a rewardable effort and it is what we and our customers respect.
When Chipotle first opened in 1993, the goal was to serve quality food fast, but not be considered “fast food.” To avoid falling under the fast food stigma, Chipotle strives to find the best ingredients with respect to animals, farmers, and the environment. In order to achieve these goals, Chipotle has created a matrix organizational structure that is divisional by location and functional by authority. Chipotle recently expanded internationally to the United Kingdom, Germany, and France, each following strict guidelines assigned by corporate employees from their headquarters in Denver, Colorado. Similarly, each location is functionally organized according to authority: regional manager, district manager, store manager, assistant manager, and
Chipotle is continuing to stay ahead of the curve and putting their focus now on the sustainability and farm to table concepts that are continuing to gain in popularity.
Similar to a fast food restaurant, but more upscale with a better dining experience. Ells idea of keeping the menu simple with limited items to prepare delicious food efficiently helped to create a kitchen different from other fast food chains. Food preparation areas in Chipotle’s kitchens are similar to those of fine dining restaurants. Menu items are prepared from scratch and with fresh ingredients. Even the meats are prepped with marinades. Creating such recipes is very labor intensive, but having limited items to prepare assists in keeping the cost down. The focus on menu integrity is one of Chipotle’s advantages and is a key element to their marketing strategy. One way Chipotle is able to control their ingredients and maintain menu integrity is by controlling their suppliers. After working with certain suppliers, they created a list of approved vendors for the individual restaurants to purchase from. One reason was to try and help control costs. Healthier food items cost more and Chipotle wanted to keep the cost of their meals low for their customers, so they built relationships with certain suppliers. Eventually, they began to use distribution centers across the country that only purchased ingredients from their approved suppliers (Gamble, Peteraf, & Thompson, Jr., 2015). This approach separates Chipotle from competitors like Taco Bell. Serving high quality food at a competitive price point against other fast food
The main significant difference between Chipotle and others is they support green, they use recycled plastic for their utensils and napkins. Most of the hardware material like trash cans, tables chair and some decoration materials made out of recycled and salvage material. Chipotle’s politics towards recycling attracts a good amount of hipster crowd. We are living in a depletory reality, the resources in our hand are not going to last much longer and we already damaged the entire globe’s ecology with our existence so we have to start recycling from some point. The younger generations are more aware of recycling and ...
Depending on the legal parameters, countries may be required to adhere to strict laws and regulations which can leave small room for interpretation and improvising. For tax purposes, US companies are allowed to use faster depreciation and straight line depreciation for financial statements; Starbucks chooses to use the straight line depreciation. When paying taxes, adj...
Have you noticed the price of your avocado or guacamole lately? There is an avocado shortage impacting consumers; including grocery stores and restaurants. Hass avocados are primarily grown in California and Mexico. With the recent worker strike in Mexico and predicted drought during the California growing season the demand for avocados is larger than the supply for avocado’s causing an increase in price. The price increase is so significant ($30 per box to now $90 per box) that restaurants are remove the item from the menu, increasing prices or substituting the product. Many grocery stores are also selling the avocado’s in ½ quantities to support customer demand. The good news is that Chipotle does not have plans to remove the product or increase
This includes two marketing campaigns and the increase cost of the average order is represented by the $0.50 increase. The average food order price has risen to $10 because of the food meal bundles and increasing the price by including cents and making the prices
Every company has some kind of Revenue and they all have costs that are associated with running the company. It is also true that if a company wants to increase their Revenue, their costs will increase too. It is every company’s goal to maximize revenue and either through Production or Services, and minimize cost. These things are easy to figure out, but actually identifying the production and figuring out how it will increase or decrease with change is very difficult.