Chipotle has experienced great success with its “Slow Food, Fast” business model. They serve high quality, organic, and fresh foods quickly in a different atmosphere (fast-casual) then the traditional fast food restaurant. Steve Ells’s vision is to serve quality food from natural sources in an open kitchen. The problem with Steve’s business model is the high quality food brings difficulty managing the supply chain with risks of shortages and price unpredictability. Steve’s business model is also very sensitive to high competition from fast food restaurants and their new healthier menus. If Chipotle does not address these issues Chipotle can expect a downturn financially affecting their future growth and earnings.
The purpose of this paper is to examine Chipotle’s current performance and identify any strategic and operational changes required to ensure continued success in the current fast food restaurant environment.
Chipotle’s vision is, “Food with Integrity”. However, in their current situation they are experiencing difficulty meeting this goal. Chipotle has some business problems, in the financial, operational, and marketing areas.
Financial Issues: Total operating expenses exceed 80% of their revenues from 2007 through 2012. This includes an increase to food and beverage expenses from 30.56% in 2010 to 32.62% in 2012 of their total revenues, because of their higher costs for organic produce and naturally grown meats. As well as higher labor costs ranging from 26.66% in 2007 to 23.50% in 2012.
Organizational issues: Chipotle’s strategy, using organic produce and naturally grown meats was temporarily diverted from their vision in 2011 when the demand for organic produce and natural meats was higher than the farms’ ability to supply their market. From this limitation, they had to move away from their vision and used factory raw materials.
Competitive issues: Increased competition from franchised restaurants like Taco Bell and Moe’s Southwest Grill, has changed Chipotle’s advantage of serving high quality foods. Their competitors have healthier choices and advertise more efficiently and effectively. In additional, their menu is not as limited as Chipotle’s menu.
Future Outlook As stated in the shown in financial