Chipotle SWOT Analysis 2021

Chipotle SWOT Analysis 2021

Chipotle SWOT Analysis: Chipotle was established in Denver, Colorado by Steve Ells in 1993. The company sells burritos and burrito bowls as well as tacos, burritos, burritos with tortilla chips, burrito bowls, and burrito bowls. It was founded by Steve Ells in 1993. 

Chipotle is proud of its responsibly sourced ingredients that are free from artificial flavors, colors, and added hormones. Chipotle was the first national restaurant brand to source organic ingredients. 

Chipotle is the only national restaurant to use responsibly-raised meat. In all aspects of its business, the company adheres to its “Being Real” value. 

To help the environment, the company strongly supports recycling. Over the past 25 years, the company has seen tremendous growth and now there are 2,710 Chipotle restaurants as of September 30, 2020 

Chipotle’s U.S. restaurants are concentrated in California (426 restaurants), Texas (234 restaurants), Ohio (197 restaurants), Florida (183 restaurants), New York (163 restaurants). 

Chipotle SWOT Analysis

Background of Chipotle

Company’s Name Chipotle Mexican Grill, Inc.
CEO Brian Niccol
Company Type Public
Year Founded 1993
Number of Employees 64,570 (2017) (approximately)
Annual Revenue US$ 5.586 billion (2019)
Founder Steve Ells
Area Served Worldwide
Headquarters Newport Beach, California, US
Operating Income US$ 443.958 M (2019)

 Strengths Of  Chipotle

Chipotle SWOT Analysis

  • The Provision of Tasty food Chipotle Mexican Grill is well-known for offering a simple, regular menu that includes salads, tacos, and burrito bowls.

  • Classic Method for Cooking The restaurant uses traditional methods to prepare its food. This includes using fresh ingredients, cutting and slicing knives, stoves and grills, and stoves.
  • High-Quality Food –Chipotle prides itself on using fresh ingredients when preparing its food. This is often promoted as ” Food with Integrity.”
  • Fresh food – Chipotle does not have a freezer or microwave in its restaurant. You can find fresh ingredients, herbs, and spices in their walk-in refrigerators. They also hand-make fresh foods such as guacamole and lime rice, salsa, and meat every day.
  • Reasonable prices – Chipotle Mexican Grill offers high-quality food at a reasonable price. Their menu prices range from $1.40 to $8.00.
  • Large Network of Restaurant Chains- In 2020, Chipotle had 2,724 restaurants around the world. The majority were located in the USA, but there were 40 locations across Canada, France, Germany, and the UK.
  • Responsibly-Sourced Meat – With a huge focus on sustainability as well as animal welfare, Chipotle Mexican Grill insists that animals are raised with care and “Responsibly Raised” without using non-therapeutic antibiotics or hormones.
  • Maintaining a Close Relationship With Suppliers – The main focus of Chipotle is clearly on the acquisition of high-quality fresh ingredients. This is essential to ensure that restaurants are safe and of high quality. This is possible because of their trusted suppliers.
  • Digital Friendly-Chipotle has introduced an ordering app to reduce wait times during peak lunch and dinner hours. Order food from Chipotle’s mobile app in just a few minutes. This allows you to cut down on wait times and pay your bill in just seconds. Chipotle’s successful adoption of eCommerce increased its revenue by 7.1% in 2020 from $5.6B to $5.98B in 2019, while other restaurants were struggling to stay afloat. The robust digital platform that Chipotle has built since 2017 allowed most of its restaurants to remain open for orders-to-go. Its digital sales contributed 46.2% to total sales revenue for 2020. 

Chipotle’s Of Weaknesses 

Chipotle SWOT Analysis

  • The dependence on a small number of suppliers – Chipotle Mexican Grill relies upon a small number of suppliers for its main ingredients. These include chicken, pork, beef, and fish. The entity’s focus on quality is integrity. However, it has led to major controversies such as the 2015 outbreak of E.Coli.
  • High sodium Content – Chipotle has high sodium food. This can cause high blood pressure.
  • The menu has limited food options –Chipotle does not offer a wide variety of food items, as the menu is limited to burritos or tacos. Their customers tend to spend more at competitors’ outlets like Panera Bread.
  • Unfavorable pricing – These are difficult times for consumers and they want to get the most value for their money. In 20 of its biggest markets, Chipotle decided to increase the delivery price by an average of 9.9%. example costs $8.95 to pick up and $10.10 to deliver. An analysis of 25 chains revealed that Chipotle raised the delivery cost of most popular orders in July 2020. Chick-fil-A and other restaurants like Chick-fil-A also increased the delivery menu prices by 29.8%, compared to a 20.3% increase by Starbucks or 19.6% by McDonald’s. The pricing strategy of Chipotle is not favorable and could force loyal customers towards its competitors.  
  • Poor Food Safety In 2018, more than 1000 people became sick from eating at Chipotle’s Burrito restaurants. Chipotle was charged with violating food safety. They agreed to pay $25,000,000 in April 2020. This is the largest ever food safety fine the U.S. Justice Department has ever issued. This is a serious weakness as customers are reluctant to eat at restaurants that have been linked to food-borne illnesses. 
  • More Reliance on US Market Chipotle currently has 2,724 locations. The majority of restaurants are in the US. There are only 40 locations outside the US, including 6 in Canada and 19 in the UK. Other locations include France and Germany. It is risky to rely on the North American market. Any market challenges can have a major impact on the bottom line. 

Opportunities Of Chipotle 

Chipotle SWOT Analysis

  • Expansion to International Markets –Chipotle operates a few restaurants outside of the United States. In December 2018, Chipotle had 2,452 restaurants in the US, and only 37 internationally. It should take advantage of this opportunity to grow its brand in the international market.
  • Digital Orders As of December 2020, 46.2% of Chipotle’s annual revenues ($5.98 billion) come from digital orders. Pandemics have accelerated the shift to digital sales. Chipotle saw a significant increase in online sales in 2020. Its growth was 174.1% in 2020. There is still a lot of opportunities to expand online orders (mobile, delivery, and catering).
  • Intense competition prompts The US restaurant industry is expanding rapidly in terms of its casual dining segments, quick and fast-casual services. This presents Chipotle with an opportunity to improve its ambiance, brand reputation, location, and service.
  • Training top-performing employees and keeping them there – As the US restaurant industry becomes more competitive, Chipotle can achieve a competitive advantage by retaining its employees. You can achieve this by investing in new employees and offering a competitive salary.
  • Drive-through (Chipotle).- Chipotle plans to expand its drive-thru option (also known under Chipotlane) at its restaurants. This will increase sales and provide convenience for customers. Chipotle will open 100 Chipotlane restaurants in 2020.
  • Delivery service will be offered in partnership with Doordash and Uber Eats. Customers can get free delivery if they order more than $10. Chipotle saw a significant increase in digital sales (174% year-over-year) thanks to its effective e-commerce adoption, new strategic partnerships with Uber Eats, and Grubhub.
  • Offer healthier options The number of health-conscious customers is growing rapidly. In January 2020, Chipotle introduced its Lifestyle Bowls which offer healthier diets such as keto and paleo. These new menu options attracted more customers and were a popular choice among customers who already frequent the restaurant. Chipotle can attract more customers by offering options that are focused on health and well-being.

 Threats Of Chipotle 

Chipotle SWOT Analysis

  • Customer trust was lost due to food-borne illness –Chipotle suffered a series of health-related incidents that included salmonella outbreaks, norovirus, E.Coli, and E.Coli. This caused hundreds to become ill in many states. Many customers stopped eating at Chipotle as a result. Since 2015, the company has been plagued by a food safety scandal. This is evident in the drop in sales between 2015 and 2016.
  • Law Proceedings against Chipotle The false claim made by Chipotle about the low-calorie content of its food could affect the brand’s reputation.
  • Recruiting and keeping employees is difficult – The labor market is tightening due to growing restaurant demand and the strengthening of the economy. Chipotle Mexican Grill was conducting a one-day hiring spree to attract new workers.
  • Supply chain problems –Hundreds of Chipotle faced difficulties with their pork supply due to strict policies in the animal raising and feeding of animals.
  • Chipotle was penalized $1.4 Million in January 2020 for violating child labor laws in Massachusetts. The New York Times states that Chipotle allows 16-17 year-olds to work more than 9 hours per day. This is in violation of Massachusetts state law.
  • Market Uncertainties In 2020, the global market uncertainty negatively impacted the food industry. Chipotle saw its sales drop 16% in March, resulting in a decrease in quarterly profits of $76.38 million in Q1 ended March 31, 2020. This was despite having $88 million in Q1 2019, and $76.38 in Q1 . Chipotle’s sales rebounded in Q2 of 2020 and Q3 in 2020. However, it needs stability in the market for its growth and profitability to return to pre-crisis levels.  
  • Employee collectives and stronger unions – A threat to any business that relies on a workforce is stronger workers’ unions and more collectives. A federal appeals court was convinced by leaders of Chipotle’s workforce to revive a collective-action lawsuit that had been filed by more than 500 employees. Chipotle will need to spend millions to meet federal overtime requirements if the court rules in favor of employees. Chipotle’s profitability is at risk from stronger unions. 
  • Growing Competition – The growing competition in Tex Mex may pressure Chipotle, which could have negative consequences for its market share.

FAQ

What is Chipotle’s SWOT analysis?

The results of Chipotle’s SWOT analysis show that the company must follow the correct strategies to succeed in the highly competitive market. They must work on their weaknesses to eliminate the risks they pose. Also, the Chipotle SWOT Analysis shows that companies can expand by strengthening other areas.

What is Chipotle’s competitive advantage?

Two key competitive advantages for Chipotle are customer captivity and no debt. Most companies in the restaurant industry need to borrow money to finance rapid expansion.

Who are chipotles, main competitors?

Qdoba Mexican Foods, Moe’s Southwest Grill, and Rubio’s Coastal Grille are Chipotle’s main rivals. Taco Bell, although it is more fast-food-oriented than fast-casual has begun to compete with Chipotle by improving the quality and quantity of its food.

What makes Chipotle so successful?

The small menu is a key to Chipotle’s success. First, Chipotle stocks only fresh ingredients so there’s always the chance of food spoilage. Because there are fewer ingredients on hand, the small menu helps reduce waste. Second, small menus mean quick service.

What is Chipotle best known for?

The company is well-known for its marketing and brand of Food With Integrity, its commitment to providing fresh meals, and sourcing ingredients from ethically-minded suppliers.

How does Chipotle differentiate itself from competitors?

Chipotle’s business strategy is to differentiate themselves from other companies by creating a unique strategy like a brand and food. They are proud of their slogan “Food with Integrity” They aim to be the healthy, fast-casual alternative.

Is Chipotle an ethical company?

Chipotle Mexican Grill wants to present itself as an ethical business that supports family farms, humanely raised animals, and promotes transparency. Greg Peterson, a farmer who has compared Chipotle to reality. They claim they offer food that is better than fast food.

Conclusion  

It can be concluded that Chipotle has a brand positioning that is focused on sustainability. They mainly use real and responsibly sourced ingredients. 

Chipotle is strong in its innovative and creative marketing strategies to increase its reach. Chipotle Digital Kitchen is also promising because of its ability to withstand this pandemic and any future opportunities.

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