1

Does chipotle Mexican grill have any core competencies and if so, when are they?
Ans: - Chipotles limited, focused menu is one of their core competencies because it is central to its
operations and provides a unique value to the customer. Chipotles competitors have a difficult time
competing against or imitating this competency because the times on Chipotles menu are tested and
proven. Competitors dont have the time or ability to test this concept or perfect their menu items.
Chipotle on the other hand has been able to apply this limited menu style to the other ventures such as
their two Shop House locations in Washington D.C
Another core competency is their dedication to high quality ingredients such as the organic cultivation of
produce and naturally raised meat. Chipotle meets high customer expectations with their Food with
Integrity campaign. None of Chipotles competitors have taken as strong of a stance, nor have they
moved as quickly to increase their efforts for sustainable, humane cultivation of their ingredients.
Chipotle has and continues to lead the way in this area of fast-casual dining. Another key factor to the
success of Chipotle is the speed and effectiveness at which their friendly and multi-skilled crewmembers
serve customers. Crewmembers are trained at every position so they are able to jump in and help any
other member at any time during preparation or service. The crewmembers, along with the serving style
maximize efficiency because the crew is energized and motivated to move customers through the line
while working as a team. Competitors have a difficult time imitating this largely in part due to the
distance between their associates.
2. What does a SWOT analysis reveal about the attractiveness of chipotle Mexican grill situation
and future prospect .
Ans :Strength
A) Chipotles
commitment to
creating an
experience sets
it apart from
competitors. The
Chipotle
experience
includes friendly
employees
welcoming
customers to its
restaurants with
upscale exteriors
and sleek,
modern interior
designs
B) These simple
designs have

Weakness
A) The
limited
nature of
Chipotles
menu may
drive
customers
to
competito
rs. Also,
there are
few
promotion
s for
frequent
customers
to enjoy
B) Chipotles
brand

Opportunity
A) Chipotle
is at an
advantag
e because
its food
offerings
already
cater to
health
conscious
consumer
s. As the
trend of
consumin
g natural,
organic
foods
continues
to grow

Threat
A) One
major
threat
Chipotle
faces is
the
volatility
of crop
yields
and their
prices.
This risk
is
heighten
ed by the
fact that
health
consciou
s

2
lowered
development
and construction
costs while
positioning
Chipotle as a
restaurant in
consumers
minds
C) Chipotles
limited menu
requires minimal
employee
training and
advertising
expenses while
increasing
efficiency in
preparation and
throughput. In
addition,
customers can
customize their
meals by
interacting with
enthusiastic
crewmembers
and selecting
natural, fresh
ingredients to
add to their
meal.
D) By 4 using
organic
ingredients, cage
free animals,
and fully
committing to
its Food With
Integrity
campaign,
Chipotle can
attract
consumers with
similar values.

loyalty
program,
Farm
Team, is
an
exclusive
offering
that sends
invitations
to
customers
based on
their
passion
not on
frequency
of
purchases
C) Users can
receive
deals on
meals
once they
gain
access to
the
website
and
participate
in games
and
surveys.
Since
these
rewards
require
more
effort to
receive,
customers
may
prefer a
competito
r who has

domestic
ally and
abroad,
Chipotle
s target
market
and
profits
will do
the same.
Western
Europe
could
provide
substantia
l business
consideri
ng
American
fast food
chains
such as
McDonal
ds and
Kentucky
Fried
Chicken
have
penetrate
d those
markets
and
succeede
d. It is
also
possible
that as
suppliers
become
aware of
this trend,
they will
use
environm

consume
rs and
other
chefs are
also
purchasi
ng these
limited
natural
and
organic
goods.
This has
made is
difficult
for
suppliers
to meet
their
growing
demand.
As a
result,
some
Chipotle
restauran
ts have
returned
to using
convent
ionally
raised
meats in
2011 and
2012
which
could
hurt the
image
B) consume
r demand
for meals
at
restauran

3
E) Lastly, Chipotle
has
differentiated
itself through its
marketing
initiatives
including the
use of print,
online, outdoor,
transit, theatre,
and radio
advertisements.
Chipotle has
also been
involved in
various
community
events where
stores have
opened and even
started its own
food and music
festival called
Cultivate to
educate
attendees about
sustainability
and cooking. It
has stayed up to
date with
technological
advancements,
allowing
customers to
place orders by
phone, fax,
online, or on an
iPhone. It has
also been
mentioned in
articles and on
television,
generating
positive

cheaper
prices or
provides
more
opportunit
ies to save
money
D) Lastly,
Chipotles
marketing
departmen
t creates
short
films
instead of
commerci
als for
television.
This
limits
their
reach and
effectiven
ess
because
consumer
s have
short
attention
spans and
many will
not go out
of their
way to
find these
films
online.

entally
friendly
and
sustainabl
e
methods
for their
crops,
therefore
increasin
g the
number
of
potential
suppliers
for
Chipotle
B) Chipotle
s new
chain,
Shop
House
Southeast
Asian
Kitchen
is another
tremendo
us
opportuni
ty. By
providing
the same
simplestructured
menu,
layout,
and
ambiance
as
Chipotle,
consumer
s can
easily
understan

ts
fluctuate
s due to
macroenviron
mental
forces
such as
the
economy
and
technolo
gy.
During
an
economi
c
downtur
n
consume
rs are
extremel
y
cautious
of their
money
and are 5
hesitant
to spend
on items
that are
not
necessiti
es
C) With
technolo
gy, there
are no
limits to
the
informati
on that is
shared
with

4
publicity and
increasing brand
awareness
amongst
consumers.

d how the
restaurant
works
and the
upscale
dining
image it
is
promotin
g. Testing
Shop
House in
DC was a
strategica
lly
intelligen
t decision
because
now
Chipotle
executive
s can
learn
about
consumer
preferenc
es and
what it
will take
for this
chain to
be as
successfu
l as
Chipotle.

consume
rs online
including
the
ingredien
ts and
recipes
Chipotle
uses.
This
could
motivate
people to
stay
home
and
prepare a
dish
themselv
es,
causing
the
restauran
t to lose
business.

3 what are the primary and secondary component of chipotles value chain?
Ans:Primary value chain

5
a. Primary Activities Supply Chain Management:
Supply chain management from manufacturers, Chipotle has built up strong long-term
relationships with reliable food industry suppliers.
Chipotle keeps a list of approved suppliers, which contains ones that can meet their
quality specifications and guidelines.
Operations: Chipotle has employed a Quality Assurance department that monitors
quality and food safety. This department sets Chipotles standards for everything from the
suppliers they buy from, the distribution centers they control, and the food they serve.
Distribution: Chipotle uses distribution centers to make purchases from suppliers. There
are twenty-two distribution centers that are independently owned and operated in
different regions that supply ingredients and other supplies to all Chipotle restaurants.
Chipotle is planning to add more distribution centers as they expand.
Sales and Marketing: In February 2012, Chipotle ran its first commercial on television
during the Grammys, which was a short film called Back to the Start. Chipotle also
gains publicity from favorable articles about their food and service. Chipotle has been
trying to connect with the public through social media to facilitate direct communication
with its customers. One part of their marketing strategy involves the use of promotional
activities in newly opened restaurants to raise awareness about the new store opening.
Service: Chipotles biggest goal with service is to have a customers order ready as
quickly as possible. They do this by using a service line that the employee and customer
can move through efficiently as the customer tells the employee what they want. This not
only helps the customer have an easy and quick experience with ordering food, but it also
lets the customer see the fresh food and ingredients that are used to create it.
Secondary component
Product R&D, Technology, and Systems Development: In 2003 and 2004, Chipotle
started their Food with Integrity campaign. This campaign involves Chipotle
researching ways to use organically grown ingredients. They researched farming
companies who practiced animal ethics and cared about the environment. This effort was
to ensure that they receive fresh and pure products that are healthy for their customers.
Human Resources Management: In each of its stores, Chipotle employs a general
manager, an apprentice manager, one or two hourly service and kitchen managers, and an
average of twenty full and part time crewmembers. The general managers hire and 6
maintain crewmembers with a strong work ethic. Chipotle seeks to hire individuals who
are very enthusiastic and team oriented to ensure a very positive work environment.
General Administration: Internally, Chipotle has a team of real estate managers who
research potential locations for new restaurants. A lot of time and thought is dedicated to
this process for things such as projected sales in an area and targeted return on
investment. In 2011 alone Chipotle opened 150 restaurants. Chipotle is also looking to
expand globally by opening stores in places such as Paris, France. Chipotle has started a
new project by opening Shop House, which serves Southeast Asian cuisine.
4 :-what are the chief component of chipotle strategy ?
Ans :Chipotles Strategy for Success considering the elements of Porters Five Forces,
Chipotle has employed a differentiation strategy that is proving to be successful in their

6
industry. From their unique ingredients and meals, to the distinctive experience they
provide and commitment to Food with Integrity, Chipotle will continue to stand out
from other fast-casual chains and attract customers.
5 which one of the five generic competitive strategies discussed in chapter 5 most likely
approximate the competitive approach that chipotle Mexican grill is employed.
Ans:-Porters Five Forces affects Chipotles success. Competition Among Existing
Rivals is moderate due to the low number of true competitors, increasing consumer
demand for healthy, quick meals, and their product is differentiated by quality and most
importantly, experience. The Threat of New Entrants is low because it takes a
significant amount of time and a great product to develop the brand loyalty that Chipotle
has. There are high barriers to entry considering the suppliers they use as well their
presence domestically and abroad. The threat of substitutes is moderate because there
are a variety of Mexican food options available and customer switching costs are low.
However, this does not include the experience Chipotle offers. Power among Buyers is
low because there are few large buyers, increasing consumer demand, and variable
substitute availability depending on location. Power Among Suppliers is high because
there are few that offer natural, organic ingredients and Chipotle has a number of
requirements they look for potential suppliers to possess.
6 what chief difference do you see between chipotles strategy and the strategy being
employed at Moes southwest grill?
Ans:- Chief Differences Between Chipotles & Moes Strategies A chief difference
between these competitors strategies is that Moes franchises its restaurants, whereas
Chipotle does not. As stated earlier, Moes has a larger menu, however this can result in a
longer working line and often times a separate kitchen. These expanded distances result
in degraded communication and ultimately decrease efficiency. However, because Moes
provides chips and salsa with meals, unlike Chipotle, some consumers may view Moes
as the best-cost option. Lastly, although Moes utilizes natural ingredients and cooking
methods, it does not market this aspect as much as Chipotle. Rather, it offers frequent
promotions including the weekly Moes Monday deal on burritos.
7: Financial analysis using financial ratio
Answer:
Financial & Operating Performance Chipotles outstanding financial and operating
performance, displayed in Figure 5, has made it one of the restaurant industrys leading
companies. It has shown consistent growth trends and impressive operational data. Since
2007, Chipotle has shown revenue growth at an average rate of 20.2% with net income
also growing at a compound rate of 32.1%. Between 2007 and 2011, average sales grew
by $928,000. In 2006, Chipotle went public with the initial offering price set at $22 per
share. As of late 2012, Chipotles stock has traded in the upper ranges of $380 to $385
per share. In the 2011 fiscal year, Chipotles financial power became more evident,
starting with an impressive Operating Profit Margin of 15.45%, which climbed by 5.49%
since 2007. Chipotles Earnings per Share in 2011 was $6.89, which grew by $4.73 since
2007. These financial gains can be attributed to operating efficiency and increased market
share. Because of CEO, Steve Ells goal to maximize customer throughput, Chipotle

7
was able to expand and now serves over 800,000 customers per day with the average
customer tab being around $9. 7 Chipotle has also shown consistent expenses since 2007.
The reasons for this are because of its increased operations around the world. Chipotle
has operations in over 40 states in the United States and also holds operations in British
Columbia, Canada, and the United Kingdom. With this international expansion, Chipotle
showed increased: Food, Beverage, and Packaging costs of $738,720 in 2011 compared
to $346,393 in 2007, Labor costs of $543,119 compared to $289,417 in 2007, and Other
Operating costs of $251,208 which also increased from $131,512 in 2007. With revenue
consistently growing faster than expenses, Chipotle has shown net income growth of 20%
in the most recent year. With Chipotles basic five-element strategy proven to be one of
integrity and competitive uniqueness, the idea behind the company will continue to drive
financial and operational success.
8 Analysis of Competition
a. Rival with Strongest Resources & Capabilities Of all Chipotles competitors, Moes
poses the largest threat. Although Moes is newer and has a smaller presence, specifically
420 restaurants in 26 states, it does offer a larger menu. For example, it provides
quesadillas, fajitas, nachos, rice bowls, and desserts in addition to the same items
Chipotle offers. It also has a kids menu and a variety of vegetarian, gluten free, low
calorie, and side dishes. Food quality, efficiency and customer service is most comparable
as well. b. Chief Differences Between Chipotles & Moes Strategies A chief difference
between these competitors strategies is that Moes franchises its restaurants, whereas
Chipotle does not. As stated earlier, Moes has a larger menu; however this can result in a
longer working line and often times a separate kitchen. These expanded distances result
in degraded communication and ultimately decrease efficiency. However, because Moes
provides chips and salsa with meals, unlike Chipotle, some consumers may view Moes
as the best-cost option. Lastly, although Moes utilizes natural ingredients and cooking
methods, it does not market this aspect as much as Chipotle. Rather, it offers frequent
promotions including the weekly Moes Monday deal on burritos. c. Can Chipotle
Compete Effectively Against Taco Bell? Recently, Taco Bell introduced the Cantina
Bell menu, which consists of new ingredients such as black beans, cilantro rice, and
corn salsa. These new items seem to mimic more upscale chains including Chipotle,
Moes, and Qdoba. With that being said, Taco Bell has not come close to being a true
competitor of Chipotle. In September 2011, a survey found that it had the lowest score in
terms of food quality and atmosphere. It has also experienced a decline in the amount of
restaurants due to underperforming, which could be a result of people seeking a better
alternative in Chipotle. Despite Taco Bells recent breakthroughs in their menu including
the Doritos Locos Taco and their new breakfast menu, it seems that consumers now
prefer the healthier and better quality option of Chipotle.
9: Recommendations
There are a number of recommendations Chipotle can apply to have continued growth
and success. First, they need to gain power over supplies rather than vice versa. They
could achieve this by integrating backwards. Specifically, they can invest in their 8 own
farms to cultivate products and raise meat to their specifications. Another option is to find
more local suppliers by utilizing a team to conduct regional searches. Second, Chipotle
could experience tremendous success in Western European countries such as France and

8
Germany considering companies such as McDonalds and KFC have already penetrated
those markets. Third, Chipotle should consider selling breakfast burritos or other meals
that are quick and simple to make. By offering this at similar prices and on weekends,
consumers may be more enticed to try it. Fourth, Chipotle can apply its business model to
creating restaurants of other cuisines, like Shop House, at a time thats best suited for the
company. This could greatly increase net profits and revenues in the long term. Last,
Chipotle should continue to reach out to communities in restaurant locations.
Specifically, they could partner with agricultural schools to provide student scholarships,
and planting gardens in schools.