SWOT analysis is a simple yet critical tool needed by brands to have an insightful look at their internal strengths and weaknesses and gain insights into the pertinent opportunities and threats in the marketplace that face the company. Chipotle Mexican Grill is among the most reputable developer and operators of restaurants that focus on tacos, burrito bowls, burritos, and salads. Basically, the brand seeks to bring Mexican cuisine into America.
This SWOT analysis will give insights into the brand’s strengths, weaknesses, opportunities, and threats.
Chipotle – At a Glance
Name | Chipotle Mexican Grill, Inc. |
Website | http://chipotle.com/ |
Founders | Steve Ells |
Chief Executive Officer (C.E.O.) | Brian Niccol (Mar 5, 2018–) |
Headquarters | Newport Beach, California, United States |
Type of Corporation | Public |
Year Founded | July 13, 1993, Denver, Colorado, United States |
Revenues (2019) | $5.985 Billion |
Key Products/Services | Fast-casual Food |
Key Competitors | Taco Bell, McDonald’s, Domino’s, KFC, Shake Shack, Chik-fil-A, Papa John’s International |
Chipotle’s Strengths
Strong Financial Performance
Chipotle has been recording industry-leading revenues that have attracted investors to the company. The company registered a 7.1% revenue growth in 2020, from $5.6 billion in 2019 to $5.9 billion in 2020. Previous years recorded 14.83% growth in 2018 and 8.68% in 2017. The first quarter of 2021 registered a 23% from a similar quarter in 2020. This strong growth is attracted, investors. This is a critical strength for the company in gaining investor confidence and as well securing the necessary funding for the company’s expansion plan and for product innovation and growth.
Digital Growth
Chipotle launched its “mobile order pick-up shelves” and “digital make lines” in 2019 in all its branches. This allows the company to better manage its customer’s data and thereby target customers individually. The company’s digital app allows clients to order a table and food way before they get to the restaurant. Since the company had been investing in digital technology for years, the company had a seamless experience transitioning to large-scale use of its digital platform during the pandemic. This early leap into digital innovation gave the company better gearing during the pandemic, which saw it perform much better than its peers.
In November 2020, the company launched the Chipotle Digital Kitchen that is meant for pick-ups and deliveries only. This way, the company was able to set up smaller stores in smaller urban centers. In the first quarter of 2021, the company registered a 133.9% year-over-year growth to $869.8 million in its digital sales. This accounted for 50.1% of its total sales. Given the pandemic is continuing to evolve into more variants, the need for digital services will continue to increase with the paradigm shift in work practices and socialization. Digital innovation, therefore, remains a critical strength for the company for the foreseeable and distant future.
Strong Product Offering
Chipotle offers a traditionally cooked menu, tasty foods, top quality, and fresh foods. This is a differentiating factor defining market niches and thereby ensuring personalized service. Traditional cooking is the main catch for Chipotle with classic cutlery.
The brand’s menu is simple and comprises burritos, salad, tacos, and burrito bowls. The company has, in addition, invested in the integrity of its food products; its motto says “food with integrity” to highlight the exceptional quality of the food. high-quality standards
Strong Corporate Social Responsibility
Chipotle prides itself in green, organic, and freshly sourced products. This adds a feather to the company’s brand image. In addition, it projects the company as caring for the health of its clients and the community at large. The company ensures that its meat is sourced from animals that were raised according to particular standards.
Additionally, if there were any changes in the ingredients used for food, however slight it is, the company must make such a disclosure. A strong sense of corporate social responsibility increases brand equity, brand recognition, and productivity among its employees. This is a major strength for the company.
Innovation and Marketing
Apart from the company’s robust reward company, the company also has an innovation process that is ‘stage-gate. With this program, the company first tastes new items on its menu in test markets before launching them. The company does a lot in consumer research to inform its innovation. While the tasting program confirms the acceptance of a new product in the market, it also works to market the brand into the new markets.
Chipotle’s Weaknesses
Limited Scope of Menu
The company is mainly limited to the Mexican menu. This limits the company to serve only those customers that love Mexican foods and flavors and those who may want to try out Mexican foods. This becomes an opportunity cost for the company as it would have broadened its menu offering and served a wider audience.
Multiple Suppliers
Chipotle depends on multiple suppliers for products like beef, pork, and chicken, among others. These products, however, are sensitive since they easily contract E-coli which can be costly for the company as it has to recall every batch that is contaminated.
Chipotle’s Opportunities
More Expansion in Different Geographical Regions
With globalization, Mexicans have settled in numerous places all over the globe. As a result, Chipotle could consider significant market sizes and expand to those geographical regions.
Digital Expansion
Digital growth is expected to continue to be on the rise. For example, Chipotle already has its digital kitchen that requires smaller spaces and fewer onsite personnel, which means lower operational costs in leasing premises and hiring labor.
Innovation and Changing Customer Preferences
More innovation in Chipotle’s products is critical in ensuring continuity and sustainability of the company and its food products. With changing customer tastes and preferences, the company has a huge range of tastes and preferences from where to experiment and come up with new products.
Strategic Collaborations
The company has a huge opportunity in strategic partnerships, acquisitions, and collaborations for its expansion plan.
Chipotle’s Threats
Strong Competition
The company faces fierce competition in its industry from both direct and indirect competition. There are luxury eateries, simple eateries offering Mexican foods, established brands, and new entrants. All these are struggling for a share of the same market.
Lose of Trust from Consumer
In 2015, Chipotle faced an outbreak of E-coli. This seriously damaged the company’s image and therefore. Any repeat of such could seriously cause untold damage to the company’s image and profitability.
High Employee Turnover Rates
The industry is characterized by high employee turnover rates. This is a threat for the company as the cost of training and developing employees keeps on rising.
Supply Chain Issues.
This has become a particular strain during pandemic times when there are lockdowns and restrictions of movement. Handling food items is a sensitive matter that could lead to contamination. This only goes to drive up supply chain costs further.
Conclusion
Chipotle is a strong brand and ranks 4th in the industry. In addition, it has a strong product, great digital positioning, and strong financials. These, among other strengths, give the company leverage to overcome its weaknesses like limited products on the menu and as well face the threats in the market.