Running head: CASE STUDY 10

Chipotle Mexican Grill Case Analysis

Kevin McDougall
6/14/2016
Professor Sarah Williams-Stokes

Chipotle Mexican Grill Case Analysis

Chipotle was founded by co-CEO and Chairman Steve Ells in 1993 with his first restaurant opening up in Denver.
McDonald’s acquired an initial ownership stake in the company in 1998 and then controlling interest in early 2000.
In 2005 McDonald’s decided to take the company public and as a result the entire company was disposed of by McDonald’s in October of 2006.
Steve remained at the helm through it all and convinced other top executives that the company needed to continue on their foundational strategy of improving throughput of their daily operations.
In 2007 Chipotle had total revenues of $1,085,782 and by 2013 the amount had increased to almost three times that ($3,214,591).
Part of the success of Chipotle was that they had a very simple menu.
The concept of not having complicated menus only recently changed when the company started testing a vegetarian menu item called Sofritas in only 7 restaurants in the San Francisco Bay area.
Despite some temptations, breakfast has remained off the menu for now, but Steve has been toying with the idea.
As part of their strategy, Chipotle promoted that their food was prepared fresh and made to order.
The kitchen was visible to the serving line and setup in a way that customers could actually see their orders being made fresh and on the spot.
The design of the serving line and kitchen was all a part of reaching the desired throughput that set Chipotle apart from all of its competitors.
The strategy for operating its restaurants was based on the “the front line is key.”
The direct interaction and hospitality given to the customer and the speed in which they were served would set them apart.
Everything from site location and even the operational aspects of the restaurants has been key to their success. The company has a site selection team consisting of real estate managers that conducted all the research for each proposed site.
The company would then come up with predictive sales analysis based on proprietary formulas that included targeted returns for the new location and if the model was positive the company built there.
As a fast-casual chain of Mexican restaurants, Chipotle really only has two main competitors and they are Moe’s Southwest Grill and Qdoba Mexican Grill.
Moe’s was founded in Atlanta, Georgia in 2000 and acquired by Focus Brands in 2007.
There were 500 Moe’s restaurants in 37 states and the District of Columbia by 2013.
Moe’s menu and operations closely resembles that of Chipotle’s except that their menu had more items and included two dessert options.
Another competitor was Qdoba restaurants which opened in Denver in 1995.
The company was acquired by Jack in The Box, Inc. and grew to 615 restaurants in 46 states, the District of Columbia, and Canada by October 2013.
Sales revenues went from $961,000 in 2011 all the way up to $1,017,000 by 2013.
Qdoba was the second largest fast-casual Mexican restaurant in 2014.
The functional setup of the serving line was also similar to that of Chipotle and Moe’s.
The menu offerings of Qdoba are also similar to that of a Moe’s or Chipotle’s as well.
The site selection was conducted based on analysis of population density, traffic, competition, visibility, accessibility, parking, surrounding businesses, and the opportunity to penetrate other markets.
The hiring, retention, and development practices of Qdoba’s was to provide a “Career Map” to its employees with detailed education requirements, skill sets, and performance expectations.
There was a four-tier management structure for company-owned Qdoba restaurants.
The strengths of Chipotle Mexican Grills is that they feel sticking to the simple and basics is what will continue their success and that could also be a weakness.
Resting on the morale’s of the past and not taking measures to change and be innovative, such as their menus, could be a major downfall of Chipotle.
The opportunities of Chipotle are the possibility of catering and expanding their menu items to include desserts.
Their threats are that as they rest on their morale’s, other Mexican restaurants are poised and ready to take up their profits.