Situation Analysis: Chipotle Mexican Grill

Chipotle

Strategic Profile and Case Analysis Purpose

Chipotle Mexican Grill founded in 1993 by Steve Ells became known as the fast-casual dining in the restaurant industry (Hitt, Ireland, & Hoskisson, 2013). It was the first of its kind when Ells first opened his first restaurant and brought the idea of made-to-order burrito. The concept is so simple, and the consumer is in control of what ingredients goes into their burrito. “The immediate success from Ells’ first restaurant allowed him to repay the $80,000 loan that he borrowed from his father within a month of opening” (Hitt, Ireland, & Hoskisson, 2013, p. 71). Furthermore, this gave him the confidence to open his second restaurant in just two years.

Chipotle’s business model is so attractive

Who would have thought that technological trends play a role in the food and service industry? Because Chipotle’s service is a hybrid between fast food and casual dining, it is in the organization’s best interest to leverage the technology that is currently available to their consumers. According to Chipotle, they’ve improved customers wait times by 50 percent since they’ve introduced digital orders (Kell, 2017). For people who are constantly on the go, Chipotle is a fast and healthy alternative that is better than fast food.

Demographic Trends. Chipotle’s major consumers are the millennials. According to Washington Post, the millennial generations (born between 1981 – 1996) make up the largest demographic of fast casual dining because they view fast food choices as unhealthy (Ferdman, 2015). With the price point of fast-casual ranging between $9 and $13, the millennials would pay almost twice compared the cost of fast food which is around $5 for a healthier choice (Ferdman,

Any successful organization with profitable goods and/or services pose the risks and threats of new entrants from competitors. Chipotle is very vulnerable because of the mishaps that hit the organization in the last two years. Competitors will use this as a perfect opportunity to gain market share by offering food that are safe to eat.

Threat of Substitute Products or Services. When Chipotle first introduce the fast-casual dining model, it was one of the first in the industry. Since then, others have followed the same concept and consumers now have a variety of choices from Mexican, American, Italian, Mediterranean to Asian cuisines. Today, Chipotle is not just competing against competitors who offers the same ethnic food but also against competitors who provides food from other countries.

Bargaining Power of Customers. Chipotle consumers have the upper hand in this situation because of the choices available to them. There are a wide variety of choices they can choose from at different price points. Chipotle’s challenge is to regain their consumer’s trust and provide food and/or services that is unique to their