Essay on Case Study 3 Chipotle

Submitted By jeh22
Words: 1032
Pages: 5

Jessica Hawthorne
Dr. Ecklund
Chipotle Case
October 30, 2014
2. The SWOT analysis reveals a lot about Chipotle Mexican Grill’s situation and future prospects. The first strength that Chipotle has is that their food is all locally sourced. They serve top quality, nutritious ingredients. The dairy products such as the sour cream and cheese come straight from the milk from the cows that were not given recombinant bovine growth hormone. The beans that are served are organically grown and some are also grown by farmers. Also, Chipotle’s meats are naturally raised and their vegetables are all organic. The next strength is their quick service. They prepare their food lines in a way that customers can just pick what they want as they walk toward the cash register, to make things run smoothly. Management focused on the speed of at which customers moved through the line more than anything else. They wanted the customers to receive their food as quick as they can while also getting great tasting food. Their hopes were that the customers would love the speed of the food and want to come back because they were the quickest and tasted great as well. The next strength is their upscale dining compared to other fast food places. Next, are the weaknesses that Chipotle faces. The main weakness I found is the limited selection of food dishes they serve. Their menu is very limited but that is because they wanted to have a simple strategy. The menu consists of burritos, burrito bowls, tacos, and salads. They also have soft drinks, fruit drinks, and milk. The customers have the choice to customize their burrito, burrito bowl, tacos, and their salads. The options they are given are their choice of four different meats, marinated chicken and grilled chicken, steak, carnitas, and barbacoa. The options also include pinto beans, vegetarian black beans, rice tossed with lime juice and fresh chopped cilantro. Also, there is sautéed peppers and onions, salsa, guacamole, sour cream, shredded cheese, lettuce, and tortilla chips seasoned with lime juice and fresh salt. As you can see there are not as many options as other fast food places may have. The opportunities that Chipotle has are that they attract customers who care more about food nutrition. The fact that all the ingredients are locally grown helps attract these customers. Also, they are healthier than places such as McDonalds or Wendy’s. The next opportunity is that they offer their customers the option to order online. They can place their orders through fax, online, or through an iPhone application. This is great for them because it helps them in their quick customer service. Also, most other fast food places do not even have this option available for their customers. Technology is used a tremendous amount today and people of all ages are using it; therefore this was a great opportunity for Chipotle. Finally, I will discuss the threats that Chipotle faces. The first threat is their prices compared to other fast food restaurants. Also, other fast food has cheaper options like dollar menus and Chipotle does not have any cheaper options to offer their customers. The next threat is the shortage of organically grown food and natural meats. This can turn into a big problem for Chipotle because there are known for their food being naturally grown and that’s the only thing they serve.

ROE = profit after taxes / total stockholders’ equity
2007 – 70,563 / 562,110 = 12.6%
2008 – 78,202 / 622,590 = 11.1%
2009 – 126,845 / 703,461 = 18%
2010 – 178,981 / 810,873 = 22%
2011 – 214,945 / 1,044,226 = 20.6%
*The ROE ratio indicates that that the ROE increased every year since 2007 up until 2011.
Operating Profit Margins = operating income / sales revenues
2007 – 108,183 / 146,923 = 7%
2008 – 124,039 / 198,507 = 4.8%
2009 – 203,705 / 260,673 = 10%
2010 – 287,831 / 289,191 = 10%
2011 – 350,562 / 411,096 = 8.5%
Net Return on Total Assets = profit after taxes / total assets
2007 – 70,563 / 722,115 = 9.8%