SWOT Analysis for Chipotle Company | In Depth Discussion

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Key Summary

Background of Chipotle

In 1993, Steve Elles established Chipotle Mexican Grill in Denver, Colorado. Over the years, the brand has grown to become a well-known American eatery. For more than a decade, Chipotle has been recognized for its Tex-Mex (Mexican American) food.
The brand has over 2724 branches in the United States, France, Canada, Germany, and the U.K. Without any doubt, Chipotle is the largest Mexican fast-casual restaurant chain in the world.

“Food with integrity” is the company’s marketing slogan, which emphasizes the importance of acquiring its ingredients from ethically-minded suppliers. Due to its premium ideology, Chipotle Mexican Grill has been capable of providing an enjoyable and comfortable meal experience. Adequate preparation of fresh meals is indeed a great quality of this trend.

For the purpose of this article, we are going to share Chipotle’s strengths, weaknesses, opportunities, threats, and other internal factors that have contributed to the development of the firm.

SWOT Analysis of Chipotle

Chipotle’s Strengths

Strong financial performance

Investors have flocked to Chipotle because of its strong sales. In 2020, its revenues increased by 7.1%. It went from $5.6 billion in 2019 to $5.9 billion. Previously, the firm was responsible for a 14.83 percent increase in 2018 and an 8.68 percent increase in 2017.

In 2021, the company saw a 23% increase over the same period last year. Investors are drawn to its rapid expansion. This is a huge benefit for the company because it will help them gain the trust of more investors and get the money they need to grow the brand.

Growth in the Digital Realm

In 2019, all of Chipotle’s locations began using “mobile order pick-up” and “digital make lines.” Now, the data on clients can be managed better, so the company can target more specific customers.
Customers can now request a table and food using the company’s smartphone app before they even arrive at the eatery. Since the brand had been spending on digital technology, it was easy for a lot of people to start using the company’s digital platform.

High-Quality Products

Chipotle’s food is based on traditional cooking methods, and the food is delicious, fresh, and of the highest quality. Differentiating factors like these help define market segments and provide individualized service. This is why it matters to maintain the largest market share. Chipotle’s best selling point is that it sticks to traditional Mexican food and only uses regular tools to serve it.

Burritos, salads, tacos, and burrito bowls make up the brand’s basic menu. As a further investment, the company’s motto is “food with integrity” to emphasize the superior quality of its meals. Indeed, the brand is marked by high levels of excellence.

Business Practices That Are Socially Responsible

Chipotle is known for its organic, locally sourced, and sustainable goods. The company’s reputation will benefit as a result of this. In addition, it portrays the business well as it is concerned about the well-being of its customers.
When it comes to their meat, they only use animals that have been raised according to strict guidelines.

Innovation and marketing

In addition to the company’s strong remuneration package, it also boasts its marketing with different innovation processes. Customers may try new things before they go on to the restaurant.
In order to inform its product development, the corporation conducts extensive customer research. In addition to confirming the market’s approval of a new market, a sampling and tasting program also serves as a marketing tool for the company in growing sectors.

Chipotle’s Weaknesses

In order to gain an advantage in the market, competitors often target your weaknesses. That is why the management of a company must be aware of a firm’s current flaws, which are known as weaknesses.

Food options are limited

As far as the menu goes, Chipotle only serves burritos and tacos. There is just Mexican food and tastes on its menu, which is the only core product it offers. As a result, the company’s consumer base is limited to people who enjoy Mexican cuisine and those who would like to try it for the first time.

As a result of this, the firm misses out on the possibility of serving more customers by limiting its menu options. Their customers wind up spending a lot more money on their competitors, like Panera Bread.

Multiple Vendors

There are several sources for Chipotle’s meat and poultry products.
These products, on the other hand, are extremely vulnerable to contamination and, if this is known, can result in significant financial losses for the company.

High Sodium Levels in Products

For most of us, salt adds taste and spice to food, but for certain people with high blood pressure, there may not be a need.
For those in peak physical condition, the high sodium content in Chipotle meals is a boon.
Chipotle is recognized for its high salt content, which contributes to an increased risk of cardiovascular disease. Those with high blood pressure, on the other hand, should provide salt-free foods. They can also use lemon, which is acidic but has no salt.

Food safety issues

As many as 1,000 people got sick after eating at Chipotle burrito eateries in 2018.
People are less likely to go to restaurants that have been linked to food-borne disease outbreaks, which is a big problem.
A $25 million settlement was reached in April 2020 between Chipotle and the Food and Drug Administration for food safety breaches.

Expansion Across Other Regions

Mexicans have spread around the world as a result of capacity and a unique brand. It is now possible to look at substantial market sizes and grow to such locations.

Digital Expansion

Growth in digital is projected to continue. For instance, Chipotle has already established a digital kitchen that demands employees. This will obviously lower operating expenses in leasing premises and recruiting workers.

Changes in Customer Preferences and Innovation

Chipotle’s goods need further innovation to ensure their long-term viability and sustainability. When it comes to experimenting with new items, the corporation has a wide variety of tastes and preferences from which to choose.

Collaborations

Business partnerships, acquisitions, and collaborations offer enormous potential for the company’s growth strategy.

Opportunities for Chipotle

Online Orders

In 2018, online orders accounted for approximately 11 percent of the company’s revenue. The introduction of mobile, catering, and home delivery services can enhance or expand their business in this industry.

Extension into Global Markets

Chipotle’s global presence is very limited, so in order to maximize profit, they must concentrate on opening stores in specific regions. Their international presence consists of 37 stores outside the United States. However, the expansion will allow them to expand their marketing.

Drive-through Option

Chipotle also intends to add a drive-through option to its restaurants. This is required for the enhancement of sales and profits. This will spare customers time and minimize the inconvenience of queuing up.

Training of Employees

As the restaurant industry continues to grow, Chipotle must invest in employee and worker training to remain competitive. They can boost the salaries of their employees to achieve the highest levels of productivity.

Advance due to Stiff Competition

Chipotle needs to improve its atmosphere and conditions like quality, price, taste, and service if it wants to compete with its rivals. Because of this, they can now get their work done quickly while maintaining professional relationships with one another.

Threats

Recruiting and maintaining top talent may be difficult

The labour market is experiencing difficulties as a result of the rising number of restaurant businesses around the world. Chipotle Mexican Grill may find it difficult to retain its current workers and talents.

Increased levels of competition

Chipotle might come under further pressure from the growing rivalry in the industry. Other firms, such as Tex-Mex, are applying all their strategies to control the business industry. This may have unfavourable implications for the company’s market share.

Fined due to violation of child labour laws

Chipotle was fined $1.4 million in Massachusetts in January 2020 for violating regulations on child labour.

Market Uncertainties

Uncertainties in the global food market had a negative impact on the food industry in 2020. Chipotle’s quarterly profits fell from $88 million in 2019 to $76.38 million. This resulted in a decrease of 16 percent in March alone. If this continues, maintaining the largest market share in the industry may be very difficult for the firm.

FAQs

What is Chipotle SWOT analysis?

The Chipotle SWOT analysis demonstrates how a known business capitalizes on growth opportunities. It can demonstrate how the company capitalizes on its strengths to seize opportunities while addressing its weaknesses.

Who is Chipotle’s target customer?

Chipotle’s ideal customer is a young adult (or young professional) between the ages of 18 and 28. Many of these individuals view cooking as a hobby and prepare most of their meals at home, focusing on using fresh and nutritious ingredients.

Who is Chipotle’s biggest competitor?

Of all the fast food restaurants, Taco Bell is the closest rival to Chipotle. At over 7,300 stores strong, Taco Bell towers over Chipotle, which is just waiting for its moment to blow.

What is Chipotle’s business model?

Core to their business model is the enhancement of the fast food experience in all of their locations. Chipotle offers customers value through its high-quality food, spotless atmosphere, and prompt service, combining the best of fine dining and quick service.

Final Thought

Chipotle is the number four brand in its industry. It also has solid finances, a well-established digital presence, and a high-quality product. These advantages, along with others, help the company mitigate disadvantages like a limited product offering and competitive pressures.

Resources used

• https://www.wsj.com/articles/chipotles-online-sales-surge-amid-coronavirus-11595452308
• https://blog.avada.io/resources/chipotle-marketing-strategies.html
• https://bstrategyhub.com/chipotles-swot-analysis/
• https://www.reuters.com/article/health-chipotle/chipotle-to-pay-25-million-to-resolve-u-s-food-borne-illness-probe-idUSL2N2C929K
• https://locations.chipotle.com/