Syndicate 7

Annisa Natasha Marsha (29120187)

Annisa Kusumawardani (29129233)
Farid Ardika (29120020)
Zurratul Ikhsan (29120067)
 Case Summary
Chipotle Mexican Grill, Inc. ("Chipotle"), an American restaurant chain, entered the
controversy about labeling genetically modified organisms in March 2013, becoming the first
restaurant chain in the United States to mark its menu products containing GMO ingredients.
Many facets of the Building Common Values (CSV) model are illustrated in Chipotle's
effective company and marketing strategy. The experience of having high quality food
prepared quickly and eating in a restaurant atmosphere that was more upscale and
attractive than typical fast food establishments drew customers in.
Chipotle’s large target customer base and high quality products direct ut’s broad,
differentiated approach in the Mexican fast-casual market. Beside his uniqueness, Chipotle
also serve high-quality, fresh ingredients and conventional cooking methods to make tasty,
budget-friendly dishes that are cooked to order and ready to eat. Chipotle introduced a new
product to its market to further differentiate itself. Chipotle in a perfect position to exploit
growth opportunities with strategies that can profitability and sustainability.
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 Company Succeed in The Past
- Farm-to-table-to-consumer supply chain is becoming increasingly renewable. It launched a
multi-pronged campaign to “change the way people think about food,” expanding on their
initial “Food with Integrity” vision.
- Beginning with a friendly consumer website and social media presence, the “Cultivate a
Better World” campaign focuses on emotionally engaging with customers and sharing the
tale of why Chipotle sources sustainable foods.
- Chipotle founded the Chipotle Cultivate Foundation, a non-profit organization committed to
three food-related issues: supporting family farms, improving animal care and pasturing,
and improving nutrition and reducing childhood obesity.
- Chipotle held the first "Cultivate" festival in Chicago to foster community and put together
"food, producers, chefs, artisans, thought leaders, and musicians" in a target market.
- Chipotle's Farm Team, an invitation-only loyalty program, has been extended. Customers
earn points by playing online games that teach about food supply and development, rather
than by buying food. The reward points can then be redeemed for restaurant discounts. 3
 Company’s Problems
“
- Chipotle faces ongoing problems, such as suppliers of healthy
ingredients having limited inventory while demand from consumers
grows, which may result in a scarcity of resources or a shortage of
ingredients, as well as a price rise.
- Many rivals have sprung up with the same idea as Chipotle

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External Environment (Porters Five Force)

Threat of Entry Moderate – the market is already saturated with many

alternatives to Chipotle. However, that is not to say another might
open up.

Power of Moderate – There are multiple channels in which Chipotle could

Suppliers receive its products, but there are fewer organic suppliers (higher
costs).

Power of Buyers High – While the buyers do not drive prices down, they have the
power to simply choose another restaurant to dine at.

Threat of High – Consumers have many options including eating at any

Sustainability other restaurant or eating at home.

Rivalry High – The pure number of other options to dining offers so many
alternatives to Chipotle (Moe’s, Qboda, Panera Bread)

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 External Environment (PESTEL)
Political Not much of a relevant factor regarding Chipotle. They rely on purely
organic products so in case the FDA approved more intense regulations
regarding the fast food industry, Chipotle’s product would not change.
Economic As a fast food restaurant, economic changes have a large effect on the
profitability of Chipotle. To this extent, being in the volatile food industry
has its pros and cons. In case beef or natural prices of ingredients
increase due to inflation, scarcity or a number of factors, the price of the
food products will have to increase as well which might cause customers
to purchase elsewhere. At the same time, if the opposite holds true,
profits and sales could increase drastically as well. Other factors include
interest rates, levels of employment and price stability.

Social These factors include the norm of society and certain fads that
stereotype different segments of the market. For example, in recent
years many US customers have become more health conscious about
what they eat. This is a positive factor for healthier high end fast food
restaurants like Chipotle as they are more likely to purchase than a place
like McDonalds. It is also important to know the market segment you
attract the most. In this example, Chipotle appeals to the younger
generation “Millennials” rather than crowds like baby boomers.
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 External Environment : PESTEL

Technology Not as applicable to chipotle as most other companies. Chipotle is a

food based and service driven company that relies on face to face
interaction with its customers rather than online marketing or
advertising. However, there are processes such as Supply Chain
Management or other factors that could be looked at in more detail
Environment Chipotle is an environmentally friendly company based on providing
organic products to customers.
Legal This is an important factor in analyzing Chipotle. It is similar to that
of the political forces. Certain FDA and legal restrictions might harm
the organization and make it harder for products to be available.

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Internal Environment : Resource Based Analysis
Tangible Intangible
People/Assets People/Assets
- Specialized Employees/Talent - Brand equity
- Inventory - High Quality - Reputation
Ingredients - Customer Loyalty
- Restaurant - Word Loyalty
- Equipment - WOrd of Mouth
- Patents - Technical Expertise
- Website and Technology
System/Process System/Process
- SUpplier contract - Wholesome Supplier
- Reinvestment - no dividends Relationships
- Speed of services - Diversity and education
- Cleanliness of Restaurant - Health Awareness
- Employee Benefit
- Sustainability

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 VRIO Framework Analysis
- Specialized Labor/ Talent
Not a significant resources, easily trainable employees and model can be adapted by others
- High Quality Ingredients
Key focus point. Chipotle has built their brand on this notion. Although not rare, Chipotle has
been able to make high quality or high price to the masses in a way that others have not.
- Burrito Standardization Process
Another key aspect for Chipotle’s success. Allowas for a customized product in a timely
manner
- Fast Casual Dining Experiences
Another important capability for Chipotle. Although the are not unique in offering a fast casual
environment, they are the first to do so successfully in the Mexican space, allowing them to
attract a large customer base compared to Taco Bell for instance.
- Brand Reputation/Word of Mouth
Huge for Chipotle. They do very limited traditional advertising, thus this had been a huge part
of their expansion. 9
 Chipotle’s SWOT
Strength
- A unique mission that resonates with a large
client base
- Wide restaurant chain of 1,316 restaurants that
increase its market presence
- Optimized operational efficiency – solar panels,
lean workforce
- Streamlined supply chains – certified suppliers,
CAFOs
- Full ownership of the restaurants, no franchise
Opportunities
- Opening new restaurants in underserved regions
globally
- Expanding its menu list to offer customers more
choices
- Capitalizing on the growing demand for healthy
natural food – health conscious customers
- Franchise partnerships to expand its reach
- Installation of solar panels to cut production costs
Weakness
- Higher menu costs relative to competitors –
Taco Bell
- High production costs – naturally raised meat
sources
- Small-sized restaurants with no freezers or
ovens
- Concentrated only in the US and Canada
- Narrow menu list – limited choices
Threats
- Stiff competition in the fast casual segment –
Taco Bell, Qdoba
- Volatile food commodity prices globally
- Economic instability – curtails consumer
spending
- Raising food prices may drive away customers
- Comparatively high production costs – reduce
profit margins
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The Five Generic Competitive Strategy
(applied) - Differentiation Strategy
- Chipotle features a commitment in “Food with Integrity” that serves their menu
with natural and tall quality fixings.
- Not as it were for being customer-friendly, Chipotle too employments this
campaign to spare the supportability of the environment, creatures, and
agriculturists.
- Chipotle accepts that individuals will still purchase its solid nourishment in spite
of the fact that its cost may be a bit higher.

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 The Five Generic Competitive
Strategy (proposed) - Differentiation &
Cost Focus Strategy
- With this methodology, there are a couple of conceivable outcomes for the
competitors to take after this approach.
- The differing qualities of buyer inclinations for menu choice, vibe, estimating, and
client benefit gives eateries especially wide scope in making a separated item
advertising.
- For taken a toll center procedure, by constraining its menu so Chipotle might
center as it were few fixings, since their new fixings are categorized as tall cost,
the company may cover its costs by stocking less fixings that they utilized.

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Hambrick &
Fredrickson’s
Strategy

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Hambrick & Fredrickson’s Strategy
1. Arenas
- Location in 43 states, distric of columbia, canada, london, paris and frankfurt
- Healthy high quality fast good product with customization
- Busy people productive age segment and vegetarian
2. Differentiators
- Fine dining convenient place
- Customization and unique menu with open kitchen
- High Quality, Healthier product and Fast serving
3. Vehicles
- Open ShopHouse and Pizzaria Locale with partnering two Collorado restaurant
- Join Venture under McDonald in early years, later it become independent

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Hambrick & Fredrickson’s Strategy
4. Staging
- Fast and rapid expansion across the country and in number of different type of
location (business district, mall, airport and military base)
- Survey and analyze location and place 2nd restaurant to cover more in one
areas
5. Economic Logic:
- Maximizing throughput of the restaurant, not the profit margin
- Sell in large scale supported with many branch across the nation
- Minimize cost with fix cost efficiencies (low cost A model restaurant) and create
good supply chain management with supplier

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THANK YOU

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