Chipotle SWOT Analysis

Chipotle Mexican Grill is a well-known American restaurant founded in Denver, Colorado, in 1993 by Steve Elles.

Steve Ells opened the first Chipotle restaurant in Denver, Colorado, in 1993. The company’s primary products include burritos, burrito bowls, organic milk, sodas, tea drinks, tacos, tortilla chips, salads, fruit drinks, beer, and margaritas.

Chipotle serves Tex-Mex (Mexican American) cuisine to over a million customers daily.

Chipotle is committed to only serving natural, wholesome foods that do not contain artificial colors, flavors, hormones, or preservatives.

There are 2724 Chipotle restaurants throughout the country and a few overseas locations in Canada, France, Germany, and the United Kingdom.

Chipotle was one of the first big restaurant chains to include organic foods. Chipotle is the first national restaurant chain to use solely responsibly raised meat.

While its marketing and branding efforts emphasize “food with integrity” emphasize the importance of buying ingredients from ethical suppliers, the company’s reputation rests heavily on its commitment to supplying fresh meal items.

The firm operates following its “Being Real” value. Additionally, the organization is committed to recycling its garbage to benefit the environment.

Chipotle Mexican Grill’s premium mindset allows it to offer a casual dining experience.

The company has developed significantly over the last 25 years, and by the end of September 2020, there will be 2,710 Chipotle restaurants.

It is further represented in assembly-line service and the approach to food preparation.

Chipotle SWOT Analysis examines the company’s current dynamics to gain insight into the competitive advantages that enabled it to achieve industry dominance.

Chipotle SWOT Analysis

CompanyChipotle Mexican Grill
Year foundedJuly 13, 1993
IndustriesFast Food & Restaurant
CEOBrian Niccol
HeadquarterNewport Beach, California, United States
Areas servedUnited States, United Kingdom, Canada, Germany, and France
Market Cap$44.79 Billion

Strength of Chipotle

An organization’s or firm’s strengths are its competencies; chipotle has its strengths, as do all other companies.

Tasty Food Provision

Chipotle serves a typical Mexican menu with flavorful, high-quality, and fresh ingredients.

This distinct element determines market segments and thus ensures a tailored service.

Chipotle’s primary catch is traditional cooking with classic cutlery.

Chipotle Mexican Grill is well-known for its simple regular menu, including salad, tacos, burrito bowls, and burritos.

The menu consists of burritos, salads, tacos, and burrito bowls.

Furthermore, the company has invested in the quality of its food; its slogan is “Food with Integrity,” highlighting the superior quality of the food. 

Dedicated to social responsibility

Chipotle takes care of its ingredients, obtained sustainably, and are mostly organic.

Chipotle is environmentally friendly, organic, and locally sourced goods. This enhances the company’s brand image.

Additionally, it portrays the corporation as being concerned about the health of its clientele and the community as a whole.

The company ensures that its meat comes from animals that have been grown following specific criteria.

This contributes to its positive brand image and demonstrates that it cares about its neighborhood and environment.

Chipotle ensures that the meat they offer is also raised following established standards.

Additionally, any changes were made to the components used in food, regardless of how little.

A strong sense of corporate social responsibility helps businesses build brand equity, brand recognition, and employee productivity. This is a significant strength for the business.

Chipotle is also quite upfront with its customers, as they reveal temporary modifications in their menu ingredients in the event of supply limitations.

Affordable Prices

Chipotle serves freshly produced cuisine that is often more expensive. However, they charge their consumers relatively reasonable prices.

Chipotle Mexican Grill serves high-quality meals at a reasonable price to ensure customer satisfaction.

Their menu is priced from $1.40 and $8.00.

Fresh and Clean Meat

Recently, there has been a lot of talk about animal welfare and how it is important to treat animals humanely before slaughtering them.

Chipotle Mexican Grill adheres to sustainability and animal welfare principles by only using responsibly raised animals without using non-therapeutic antibiotics, hormones, or other medications.

These things make Chipotle chickens and pork wary. Therefore, they favor suppliers who treat their animals humanely on their farms.

Chipotle is extremely conscientious about meat and animal welfare. Dairy and poultry farms are verified not to have used hormones, steroids, or antibiotics to accelerate animal growth. Meat prepared properly is beneficial to your health.

Digital Growth

“Mobile order pick-up shelves” and “digital make lines” are now available at all Chipotle locations since 2019.

This allows the organization to manage its clients’ data more effectively and target them individually.

The company offers customers the option of reserving tables and food through its digital app well before their arrival.

It was easy for the company to transition during the epidemic to use its digital platform at a large scale since it invested in digital technology for years.

This early foray into digital innovation positioned the organization well for the pandemic, enabling it to perform significantly better than its contemporaries.

Chipotle will introduce its Chipotle Digital Kitchen in November 2020, available for pick-ups and deliveries only.

This allowed the corporation to open smaller locations in smaller metropolitan areas.

The company increased its digital revenue by 133.9 percent year over year to $869.8 million in the first quarter of 2021.

The company earned 50.1 percent of its total revenue from this segment. Digital services will become more necessary as the pandemic expands into new forms, work practices, and socialization evolution.

Thus, digital innovation will continue to be a crucial strength for the organization in the near and distant future.

Weakness Of Chipotle

Weaknesses are also a company’s internal defects, which managers must be aware of. It doesn’t matter if they are unaware of their strengths; what matters is that they are aware of your limitations. 

Competitors frequently target your weak points to gain an advantage in the market. Therefore, knowing what your weak points are is essential. Here are just a few of them:

Food options are limited

Chipotle’s cuisine is limited to burritos and tacos.

Its primary product is a Mexican menu, with only Mexican cuisine and flavors on its menu.

This confines the company’s customer base to individuals who adore Mexican dishes and flavors, as well as those who may wish to experience them.

This limits potential clients to those who enjoy Mexican cuisine or wish to try it.

This results in a missed opportunity cost for the business, as it could have expanded its menu offerings and served a larger audience.

The result is that their customers spend a great deal more on their competitors, such as Panera Bread.

Multiple Vendors

Chipotle relies on various suppliers for beef, pork, and chicken ingredients.

These items, however, are sensitive since they are easily infected with E. coli, which can be costly for the corporation because each tainted batch must be recalled.

High Sodium Levels in Products

Salt enhances the flavor and spice of food for all of us, but it may be unavoidable for some blood pressure patients.

Chipotle meal items are salty and heavy in sodium, beneficial for young, healthy people.

Chipotle is well-known for its high salt level, contributing to high blood pressure.

However, those with elevated blood pressure must offer certain salt-free items. Alternatively, they add lemon, which is sour but contains no sodium.

Unfair Pricing

A difficult economy has made consumers more concerned than ever with getting the best value for their money. 

Chipotle chose to raise its delivery menu prices by an average of 9% across its 20 largest regions.

Pick-up costs $8.95, while delivery costs $10.10. Chipotle hiked the delivery charge for popular orders in July 2020, according to a study of 25 locations.

The price of Chick-fil-A’s delivery menu increased by 29.8%, while Starbucks increased its price by 20.3%, and McDonald’s raised theirs by 19.6%.

Chipotle’s pricing approach is undesirable and may drive away loyal customers.

Food safety issues

Chipotle burrito restaurants became the source of illness for almost 1,000 people in 2018.

Chipotle agreed to pay $25 million in April 2020 to settle for food safety violations.

The US Justice Department has never sanctioned a food safety matter with a significant fine. 

Customers are wary of eateries associated with food-borne illness outbreaks, which is a significant drawback.

Opportunities For Chipotle

Opportunities are external circumstances that a firm can leverage to grow market share and profit. Several significant opportunities include the following:

Digital Orders

Chipotle’s mobile app orders reached $257 million in 2019, representing 18.3 percent of total sales.

Chipotle’s digital sales will be 46.2% of its annual sales by December 2020 ($5.98 Billion). The pandemic has accelerated the shift to digital sales to a great extent.

Chipotle has a significant opportunity to improve its online ordering and delivery system, as it is a developing industry with the potential to earn more money.

Chipotle greatly increased its internet sales in 2020, growing 174.1 percent. Nonetheless, there is significant room for growth in its online (mobile, delivery, and catering) orders.

Online ordering is more convenient than Uber Eats, GrubHub, or DoorDash.

Global Market Expansion

Chipotle has hotels and restaurants in several countries, but its primary focus is on the United States. The number of locations is relatively small, about 37 to be exact.

Globalization has allowed Mexicans to establish themselves all over the world. 

Chipotle may consider expansion of major markets and geographically in certain regions.

That is a relatively low figure for a multinational brand, given the size of the international market.

Chipotle’s Chipotle Digital Kitchen can expand its presence in Canada, Europe, and Asia.

Chipotle must continue to expand its commercial operations globally, similar to McDonald’s and King Burger, rather than relying entirely on the US market.

Drive-through service

Chipotle intends to extend its drive-thru window (dubbed Chipotlane) in its restaurants.

Drive-through is a business where consumers do not have to exit their vehicle; they can shop while still inside.

It will result in enhanced convenience and accessibility for its clients, which will result in increased sales—chipotle plans to open 100 locations using Chipotlanes by 2020.

Chipotle just opened a drive-thru window in Yuma, Arizona, and the firm plans to expand the option to other towns as well.

Delivery Service

A changing socio-economic environment and technological advancements are leading to people accumulating wealth.

Food is delivered to individuals’ homes nowadays instead of traveling and standing in queues.

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Chipotle recently teamed with DoorDash to offer delivery; it needs to invest more in this service to remain competitive in the industry.

The increase in digital sales by Chipotle in 2020 is largely due to better e-commerce adoption and a strategic partnership with Uber Eats and Grubhub.

Changing customer preferences and innovation

The company and its food products need more innovation to ensure continuity and sustainability.

A corporation has a large sample size to test and develop new products based on changing customer preferences.

Threats Of Chipotle

Some external influences and factors can hurt Chipotle business. Here are some of the threats:

Chipotle has also made deceptive claims about the low-calorie content of their products; the reality is far from that. It should exercise extreme caution in such legal proceedings.

Chipotle’s erroneous claim about the low-calorie content of its cuisine may hurt the brand’s reputation.

Strong Competition

The corporation faces severe competition from direct and indirect competitors in its industry.

The increased rivalry in the Tex Mex sector may pressure Chipotle and negatively affect its market share.

The spread of Mexican food ranged from upscale restaurants to casual diners, establishing brands to newcomers. All of these entities are vying for a piece of the same pie.

Market Uncertainties

Global market uncertainties got badly hurt the food business in 2020. Chipotle’s March sales fell 16 percent, resulting in quarterly profits from $88 million in Q1 2019 to $76.38 million in the quarter ending March 31, 2020. 

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Chipotle has returned to profitability and growth in Q2 and Q3 of 2020, but it needs market stability to revert to the high levels of profitability and growth attained before the crisis.

Supply chain inconsistency

Regulations on animal protection continue to tighten, making it increasingly difficult for businesses to find a regular and stable supplier.

The result is that it jeopardizes the entire business since customers come to your restaurant to eat.

Employee Retention Problems

Chipotle does not invest much in its employees’ careers; it often hires temporary staff. They tend to let people go rather than keep them.

Conclusion of Chipotle SWOT Analysis

Having reviewed the Chipotle SWOT analysis in detail, it is evident that threats pose a significant risk to its survival.

This is because of looming lawsuits, the company’s reputation, and the increasing competitiveness of the market.

Chipotle must be extremely cautious while maximizing opportunities at the same time.

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