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CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-14
B. Review of Mission and Objectives—Current mission and objectives are
appropriate in light of the key strategic factors and problems. No
change is necessary for Chipotle’s mission or objectives.
VI. Strategy Alternatives and Recommended Strategy
A. Strategic Alternatives
a. Cost leadership via company-owned farms or joint venture with
local suppliers
i. Pro: reduced pricing will allow firm to compete on both
b. Growth through the entrance into the food truck market
i. Pro: eliminates competitive advantage that competitors have
obtained by entering the food truck business
ii. Con: Formation of new business arm required
c. Growth through global expansion—CMG only has 11 restaurants
internationally in 2014. Yum brand, which includes Taco Bell, has
a presence in more than 100 countries. Just India and China alone
i. Pros: increased brand awareness internationally, revenue
growth.
ii. Cons:
1. International supply chain per CMGs sustainability
2. Operation costs can be higher due to the social,
political, or legal environment in each country.
4. Tastes may not appeal to local audience and
customizations to menu and ingredients may have to be
made.
d. Delivery Service: not currently employed
i. Pros:
1. A delivery service would allow Chipotle to reach an
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
ii. Cons:
1. Could be costly to implement
e. Ordering Kiosks: not currently employed
i. Pros:
1. Decreased wait time for customers as you have more
kiosks than employees taking orders (ordering tablets
could also be located at tables in eat in locations).
ii. Cons:
1. Increased costs as installing the necessary
components will be expensive.
Recommended Strategy
a. Growth through entrance into the food truck market
i. Chipotle aims to “to change the way people think about and
eat fast food.” The food truck market is able to
successfully compliment Chipotle’s mission while continuing
ii. Through entrance into the food truck market, Chipotle will
be able to continue to compete with cheaper fast food
iii. options. Loyal customers will recognize the branch and
b. Increased efficiency through the implementation of ordering
kiosks
i. Ordering kiosks equipped with Squares (or another pay
application) located at the front counter or at each table
will reduce customer wait time. This will increase the
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-16
number of customers that are able to order at any one time,
reduce the potential for error (as you are eliminating the
ii. The greatest benefit that Chipotle will reap from the
implementation of mobile kiosks in the long term will be
the increased amount of data that Chipotle will have access
to about their customers. Once a sufficient amount of data
has been achieved, Chipotle will be able to construct
iii. Chipotle prides itself on its hip and trendy brand image,
and right now we live in a world that is increasingly more
VII. Implementation
A. Programs to be developed to implement recommended strategy
a. Growth through entrance in the food truck market
i. New marketing program needs to be developed by the
marketing department so that customers are aware of
Chipotle’s entrance into the food truck market.
trucks in the same manner as physical stores.
b. Kiosks
1. Chipotle should recruit a board member who has past success
in the creation and implementation of kiosk or cloud
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
B. Are the programs financially feasible?
a. Growth through entrance in the food truck market
i. Entrance into the food truck market is feasible. Chipotle’s
strong balance sheet allows the company to deal favorably
with economic cycle and focus on expansion.
b. Kiosk
i. Kiosks are financially feasible if done in a slow,
calculated way.
1. Not all restaurants will have a high enough volume to
warrant a kiosk pay system, as such the
implementation of such systems should be done on a
restaurant by restaurant basis.
iv. Priorities and timetables—long term
1. Not all restaurants need the help of kiosks, as
cashiers are not always the bottleneck.
2. A pilot program should be launched in the ten busiest
locations. After a period of one year after the
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-18
b. These statistics may allow for targeted
advertisements, promotions, and products in
given markets.
C. Standard operating procedures
a. Growth through entrance in the food truck market
i. New standard operating procedures will need to be developed
through operational functions to ensure the food trucks are
serving Chipotle’s customers in the same manner as the
b. Kiosk
i. Necessary Standard Operating Procedures—for restaurants
with a kiosk system implemented, IT staff should be on hand
during business hours to explain the system to customers,
VIII. Evaluation and Control
A. Information systems capabilities
a. Growth through entrance in the food truck market
i. Current information system is capable of implementing the
recommended strategy.
ii. Sales numbers and targets will be able to be pinpointed by
this new effort; direct marketing campaigns can be tracked
1. Ability to track sales on the go, peak items, peak
times, etc.
b. Ordering Kiosk
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-19
ii. Performance results are able to be pinpointed. For example,
the performance results determined from data analytics, as
in the case of throughput rates, helped Chipotle draw
B. Adequate control measures
a. Growth through entrance in the food truck market
i. Each food truck should be monitored and supervised.
1. Important to keep the same pace, energy, and quality
ii. The performance of the sales derived from the food trucks
can and will be monitored; an increase in sales will have
an increase in Chipotle’s bottom line performance.
iii. The current managers of Chipotle locations will have
authority to take corrective action in reference to the
b. Ordering Kiosk
i. Current control measures seem to meet the need for the
organization. For example, forecasting techniques used in
supply chain and inventory management seem to work well for
the organization.
ii. Chipotle has already implemented certain programs that will
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-20
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-21
Exhibit 1—External Factor Analysis Summary (EFAS)
External Factors Weight Rating Weighted Score Comments
Opportunities
* Societal issues as a means of innovation and
increased productivity
0.15 5 0.75
Leveraging society concerns for
competitive advantage
* Expanding fast-casual market 0.15 4 0.6 Well positioned in market
Threats
* Fluctuation in commodities market 0.20 3 0.6 Directly affects prices of product
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
Exhibit 2—Internal Factor Analysis Summary (IFAS)
Internal Factors Weight Rating Weighted Score Comments
Strengths
* "Food with Integrity" 0.10 5 0.5
* Socially responsible culture 0.05 5 0.25 Attracts socially responsible consumer
*their brand not only represents their high quality product
but also a way of life
0.05 5 0.25
CMG’s marketing efforts reflect their overall
mission to promote a healthy and
sustainable company that offers a premium
d li h l hi h i i
* wholly owned restuarants
0.03 4 0.12
Better control over operations
*revenue and operating margin has steadily increased from
2004 – 2013
0.05 5
0.25
cash reserves increased steadily from 2003-
2013, allowed CMG to open 40 new
restaurants each quarter without adding
any debt to the balance sheet,
*stong balance sheet
0.05 5 0.25
allowed the company to deal favorably
with economic cycle and focus fully on
expansion
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-23
Internal Factors Weight Rating Weighted Score Comments
Weaknesses
*did not use traditional media “sustainable effort”
0.04 3 0.12
didn’t use traditional marketing such as
McDonalds or Wendy’s but they did put
out a TV ad and a radio ad
Exhibit 3—Strategic Factors Analysis Summary (SFAS)
Strategic Factors Weight Rating
Weighted
Score
Duration Comments
* “Food with integrity” (S) 0.11 5 0.55 Long
* Employee promotion from within (S) 0.05 5 0.25 Long Highest retention in the industry
* Product is easily replicated (W) 0.10 2 0.2 Medium High price point increases threat
* Expanding fast-casual market (O) 0.12 4 0.48 Medium Well positioned in market
* Increasing health conscious consumer (O) 0.10 5 0.5 Long Well positioned in market
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
7-24
Exhibit 4
Financial Ratio Analysis: Liquidity
Ratios
2013
2012
2011
Current Ratio
3.34
2.93
3.18
Financial Ratio Analysis: Profitability
Ratios
2013
2012
2011
Net Profit Margin
10.19%
10.18%
9.47%
Gross Profit Margin
26.59%
27.11%
25.96%
Financial Ratio Analysis: Activity
Ratios
2013
2012
2011
Inventory turnover
246.44
246.14
254.63
Days of Inventory
2.02
2.03
1.94
Net working capital
turnover
6.88
7.59
6.60
Financial Ratio Analysis: Leverage
Ratios
2013
2012
2011
Debt to Asset Ratio
23.4%
25.3%
26.7%
Debt to Equity Ratio
30.6%
33.9%
36.5%
CASE 19
CHIPOTLE MEXICAN GRILL INC.:
CONSCIOUS CAPITALISM BY SERVING ‘FOOD WITH INTEGRITY’
Financial Ratio Analysis: Other
Ratios
2013
2012
2011
Price/Earnings Ratio
$63.45
N/A
