Strategic Management Group:
Appalachian State University
Professor Scott Hayward
Chipotle Mexican Grill – Strategic Overview within its Competitive Environment
Chipotle Mexican Grill (CMG) is a fast-food company that offers create-your-own menu items,
such as taco, burritos and Mexican style bowls. CMG has positioned itself to offer healthy
ingredients and is more socially responsible than the average fast food chain. The company was
initially widely successful, however, their sales drop substantially when they had to deal with
contaminated ingredients in their food. In order to regain sales and customer support, CMG has
increased their marketing efforts and changed some of the ways the company operates to make
sure all food is fresh and safe to eat. Chipotle’s competitive environment consists of all restaurants
and fast food chains, in particular, other Mexican style restaurants, such as Moe’s Southwest Grill,
Qdoba, and Taco Bell. They also compete with companies like Panera Bread and Starbucks who
offer a casual atmosphere and quality ingredients.
While CMG has made some adjustments to boost customer confidence and overall sales, their
mission has stayed the same. The company says after being open for twenty-three years their
“devotion to seeking out the very best ingredients we can—raised with respect for animals, farmers,
and the environment—remains at the core of our commitment to Food With Integrity” (Chipotle,
2017).
Industry Background
The industry background of Chipotle is not necessarily what people think of when someone
mentions fast food. Chipotle and a few similar competitors are changing the way people think
about fast food. The direct industry consists of what most would consider a higher quality fast food
approach with the option for a more upscale fast food dine-in option. Chipotle and their direct
competitors in this industry provide good quality Mexican style cuisine, that offers fresh and
quality ingredients at an affordable yet fair price for the quality of food that someone is purchasing.
The industry is trending upward, as chipotle has seen increases upwards of 10% in the last two
years. Some barriers to entry in this industry include high start-up costs, loyal customer bases,
strong brand identity for well established popular firms, and patents.
Competitive Set
The competitive set for Chipotle would include companies that compete directly with them in
many different possible areas. These areas could include similar areas, similar products, and
similar customer bases. Since Chipotle is a national brand and is spread throughout the country,
they have wide national competition from firms in the fast food industry. There are also other
companies that provide similar products in a similar fashion to the way Chipotle does. Since a
number of different companies provide similar products as chipotle, customers have a direct choice
on what they desire from each competitor and can form opinions on which they prefer. The
competitive set would not necessarily include seasonal restaurants such as food trucks, street
vendors, etc.
The Roots
Chipotle first opened their doors in 1993 with the bold intention of being a fast food restaurant,
without succumbing to the underwhelming fast food experience. To accomplish this, founder Steve
Ells went to the Culinary Institute of America in New York and took his education with him to
make Chipotle what it is today. However, contrary to the chain’s modern day popularity, it started
with humble beginnings. The first Chipotle, in fact, was opened in Denver, Colorado through a
loan that Mr. Ells received from his father. At first, in order to pay back the loan, Chipotle’s
estimated sales a day needed to reach 107 burritos. Quickly, as the restaurant gained popularity, it
sold over 1,000 burritos a day (Daszkowski, 2016). This came as a turning experience for Steve
Ells, as his intentions were to use the profits from Chipotle to open a fine dining restaurant.
However, after seeing the chain’s successes, he decided to put the entirety of his focus on Chipotle
Mexican Grill instead.
Chipotle started their mission through using quality ingredients and specific cooking techniques,
paired in an attractive environment in their locations. The Chipotle directors wanted to make each
