S. W. O. T. ANALYSIS STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATSCHIPOTLE MEXICAN GRILL

Steve GreenePrinciples of Management 101-140 Mr. Ron Hoffman, InstructorGreenville Technical CollegeJuly 25, 2016

PRESENTATION OUTLINE Business Overview

Chipotle Strategic Management

3 Strengths

3 Weaknesses

3 Opportunities

3 Threats

Do Strengths Outweigh Weaknesses? Do Opportunities Outweigh Threats?

2 Short-term Business Strategies

3 Personal Observations

CHIPOTLE BUSINESS OVERVIEW Chain of about 2000 fast-casual Mexican food restaurants.

Cafeteria style design, limited order selections.

Started in 1993. 100% ownership. No franchises.

Successful store growth. Good profit margins. Huge market share.

Fulfills public interest in healthy food, sustainable agriculture, and animal welfare.

Recovering from 2015 food contamination outbreaks.

STRATEGIC MANAGEMENT

Mission Statement

Vision Statement

Grand Strategy - Defensive

THREE STRENGTHS

Good Financial Strength.

- Strong balance sheet

Customer experience and food order personalization.

- Made by you

Throughput efficiencies.

- “Four Pillars of Great Throughput.”

THREE WEAKNESSES

Not Franchising.

- Incurred all of the 2015 sales shortfalls.

Limited Supply Chain.

- Small farms had challenges ensuring optimal food safety conditions.

- Limited number of qualifying suppliers lowers Chipotle pricing power.

Dependence on the U.S. Market.

- U.S. consumer discretionary spending

THREE OPPORTUNITIES

Sales growth of the fast-casual restaurants.

- Over 11% increase in 2015

U.S. Demographics.

- “Generation Y” and Hispanic demographics.

Diversification.

- More Menu Choices

- Sister Restaurants

THREE THREATS

Public Perception. - More outbreak cases could ruin perceptions of Chipotle food quality.

Stronger competition in the fast-casual category. - June 2016 Harris Poll.

Increased Sales Promotions. - Food discounts and advertising campaigns needed to regain customer trust.

DO STRENGTHS OUTWEIGH THE WEAKNESSES? YES.

2015 revenue and earnings growth, 10% and 7% respectively.

First-mover advantage from 1993 still creates barriers for competition.

Improving food safety procedures in its stores and supply chains.

DO OPPORTUNITIES OUTWEIGH THREATS? YES.

Extensive sales promotions are bringing loyal customers back.

Similar restaurants bounced back from worse contamination cases.

Wall Street analyst positive ratings. Sequoia Capital’s July 2016 investment.

Strategies to help Chipotle further succeed in the short term. First of two.

Spending $10 million in 2016 to help its smaller food suppliers ensure safer foods. Spend more.

Make thorough specifications of qualifying foods in long-term contracts with existing suppliers.

Keep up barriers making it more challenging to compete on a differentiated niche.

1) Continue to strengthen supplier relationships.

Michael Porter’s Differentiation Strategy. A business strategy to offer products or services that are of a unique and superior value compared to those of competitors, but to target a wide market.

Strategies to help Chipotle further succeed in the short term.

2) Further improve food safety program.

Use more DNA testing to identify harmful bacteria.

Thoroughly train its employees on food safety.

Further centralize food preparations to gain greater process control.

More actively oversee the operations for preparing and cooking of pork, chicken, and steak.

Three Observations on Completing this S.W.O.T. Analysis.

No news is good news.

Inspect what you expect.

Consider franchising.

Conclusion and Questions

Presentation Sources: SWOT Analysis: Chipotle Mexican Grill, Inc.Value Line. Written be Jason Dalavagas February 22, 2016http://valueline.com/Stocks/Highlights/SWOT_Analysis__Chipotle_Mexican_Grill,_Inc_.aspx#.V3QJ0zHOezl

Chipotle Mexican GrillWikipedia, the free encyclopediaNumerous contributors with many contributions in 2015https://en.wikipedia.org/wiki/Chipotle_Mexican_Grill

CDC Rejects Chipotle's Contention That The Center Botched the E. Coli CrisisNewsmax of Bloomberg News. No author listed.May 6, 2016 http://www.newsmax.com/US/CDC-rejects-chipotle-contention/2016/05/06/id/727637/

Chipotle Dethroned as America's Favorite Tex-Mex Brand.CNNMoney. Written by Aaron SmithJune 10, 2016 http://money.cnn.com/2016/06/10/news/companies/chipotle-mexican-food-rank/index.html

Chipotle Still Hasn't Answered One Question about the Business — And it Could Mean Doom for the Company.Business Insider. Written by Hayley PetersonJune 13, 2016 http://www.businessinsider.com/chipotle-recovery-update-2016-6

Chipotle's Tipping Point for the Natural and Organic Food Industry.CNBC. Presented by Jim CramerJune 16, 2016 http://www.cnbc.com/2016/06/16/