Essay on Marketing Opportunity: Chipotle Mexican Grill

Average annual sales for Chipotle restaurants, which open all year, have increased strongly, jumping from $1.085 million in 2007 to 2.169 million in 2013. A CAGR of 12.24% is the result of this growth.

Chipotle Mexican Grill is one the fastest growing restaurant businesses in the United States. Chipotle Mexican Grill was founded by the current CEO, Steve Ells, in 1993. Chipotle headquarters are located at 1401 Wynkoop Street, Denver, Colorado 80202. The company operates in the restaurant industry and more specifically the fast casual Mexican restaurant market.

In the year of 2005, the total revenue of Chipotle was $627.7 Million dollars. "Chipotle Mexican Grill Inc. (CMG-$53.50 a share) was a January spin-off with an initial public offering price of $22 -- from McDonald's, the largest retailer of hamburger buns in the world. By year-end 2004, CMG had 387 locations, generated $470 million in revenues and earned 21 cents a share."(Berko) Last year, CMG had 485 locations that produced $627.70 million the growth revenue was at 33.40% in 2005. "pushing tacos, burritos, salads, plus huge helpings of tired rice and boring beans reporting net income of 78 cents a share. This year, CMG expects to earn 71 cents a share and, according to Prudential Securities, CMG will report $1 billion in 2007 revenues (that's a lot of beans) and post higher earnings of 98 cents a share." (Berko) Although Chipotle is at an all time high I believe that it may well be trading its shares at to high of a price. Mcdonalds the best and most efficiently run profitable fast food restaurant is trading their shares at 17 times earnings. Today Chipotle is trading at an outstanding $56.07 Per share. I don't believe Chipotle is worth anything over $30 a share. Although the price of chipotle stock is too high there should still be a hefty revenue at year end 2007. Predictions suggest 1 Billion dollars. For 2005

Due to the fact that Chipotle is worried about providing customers with the best possible ingredients and in the same time, concerned of taking care about environment, animals as well as farmers, which in this case, are the main suppliers, we can encapsulate Chipotle in a Sociocultural segment.

Chipotle is facing numerous challenges due to the fact that E. coli outbreak which requires the corporation from the key stakeholders to keep it under control and apply the new food safety protocols which can aid to bring the regular customers back. Although the main cause remains a mystery, Chipotle’s E. coli outbreak has been authoritatively declared officially over by the experts. However, since the poisoning outbreak, the impact of the reduced number of customers affects the profit which the company used to enjoy before such eventuality (Scholes 27).

In 2015, Chipotle experienced something that shook the company to the core. According to Susan Berfield, a writer for the Bloomberg Report (2015), a total of 500 people in various parts of the

Chipotle plans to keep its menu simple, but the combinations of fresh ingredients create countless meal varieties for customers. The majority of the food products are fresh and prepared from scratch using kitchen stoves, grills, pots, pans, knives, and other utensils.

To date all restaurants are company-owned and not franchised. Restaurants cover forty-three states in the U.S., Canada, England, and France. The only variation to the original model has been an increased environmental awareness and a “Test Restaurant” in Washington D.C. that serves Asian-Style fast casual food.

Chipotle Mexican Grill, Inc. is a “fast-food service restaurant” under limited service category. It was formed in 1993 and went public in 2006. It has the largest market share in the Mexican-type food segment with a net income of more than

Chipotle first opened in Denver in 1993 with a simple idea behind it, “food served fast didn’t have to be “fast-food” experience”, (Chipotle Mexican Grill, 2015). Prior to CEO Steve Ellis opening the restaurant chain, he himself was a chef. Since its creation, Chipotle has become a phenomenon in the restaurant industry and has experienced tremendous growth since it went public in 2006 with over 1,600 restaurants in Canada, United Kingdom, Germany, and France, with the majority located in the United States (Chipotle Mexican Grill, 2015).

Changes in customer preferences, general economic conditions, discretionary spending priorities, demographic trends, traffic patterns and the type, number and location of competing restaurants have a moderate effect on the restaurant industry (Chipotle, 2010). One example of customer preferences being a driver in the industry is the “Whole Food-ism Movement” which has put a large focus on organic, antibiotic-free, and non-processed foods (Mansolillo, 2007). Consumers now look for healthier options when eating and an overall healthier lifestyle. Chipotle has been able to benefit from this movement by carrying on their “Food with Integrity” mission (Chipotle, 2010).

Chipotle has recently approved the project for a new product expansion. The products that will be now offered will be red chile and green chile. This project was approved for many reasons. The project will help boost Chipotle’s sales overall. It will also add more menu items to Chipotle’s current offerings. Chipotle can capitalize and eventually also add more locations pending project success. There are so many more benefits from product expansion than risk. This definitely makes the project more feasible. I am confident that this new product expansion will bring favorable results. It will result as the stepping stone to more successful product launches.

Steve Ells is the founder and CEO of Chipotle. Steve is a trained chef and opened his first Chipotle store in 1993 at a former Dolly Madison ice cream store in Denver, Colorado. His goal was to serve high quality, delicious food quickly and in a “fast-casual” setting (Ells).

Thus, Chipotle must find a way to differentiate itself from other western restaurant chains, while integrating itself into the Chinese culture. It can use its capital and reputation for using local and sustainable ingredients to build a strong brand—a core competency that will give it a competitive advantage in the Chinese market. In a large, international city like Shanghai, local street food is cheap, but people will still want to dine at higher-end western restaurants because of that entails a higher status (Maxfield,

CMO Mark Crumpacker stated, fast-food marketing typically is a game of trying to obscure the truth; The more people know about fast-food, the less interest they’d want to be a customer. Chipotle’s mission statement “Food with Integrity” reflects its focus on fresh ingredients; great food with a socially responsible message made them one of the first organic oriented fast-food restaurant