Case study: Chipotle Mexican Grill

Chipotle Mexican Grill is the largest domestic fast-casual Mexican. Founded in 1993 in Denver, the company has expanded geographically.

By December 2013, Chipotle Mexican Grill operated approximately 1,600 restaurants in 43 states, Canada and the United Kingdom. Sales for 2010 were over $ 1.8 billion, and Chipotle was ranked 60th in the Fortune’s list of the 100 fastest-growing companies. Its menu products include gourmet burritos bowls, salads, chips, crispy and soft tacos, rice and beans prepared by high-quality ingredients (organic and sustainable raw materials). The restaurant offers more than 65,000 menu combinations. The company builds its business on providing a great product and unique customer experience. The core value of providing quality products was formed by its founder Steve Ells, who attended Culinary In statute of America. Therefore, from the beginning Chipotle was committed to using food from local, and preferably organic, farms. Since its start-up in 1993, Chipotle has been greatly successful, expanding into a corporation with $ 8.5 billion. Its growth is a direct result of focusing on quality, consistency of its services and the differentiated value of its products. The company is distinguished by its unique way of doing business and advertising. Unlike most fast-food restaurants that rely on advertisement strategies such as limited-time price reduction, Chipotle focuses on promoting its quality ingredients

Innovativeness and Leadership

Chipotle philosophy of “food with Integrity” has been a major driver of its success. “Food with integrity” has the critical component of social innovation. It drives chipotle to look continually for new and better way of improving its product so as to increase customer experience in a beneficial way to the customer, company and the community. In 2007, Chipotle started suing Polyface farm as its pork supplier in Charlottesville, Virginia. Polyface is a local organic farm made by the famous author Michael Pollan. Although the shift to organic pork supplier was slow, meticulous planning and critical logical changes were necessary. The company had to adopt new cooking methods, buy new transportation vans and work with a firm to produce the exact quality of the product required in the company. In addition, Chipotle had to contend with high prices of raw materials.

Unlike other faster food restaurant, Chipotle distinguishes itself from the rest by the way it markets its product through public relations. This marketing strategy is less expensive and is relatively accepted by consumers. The company has an online platform. A combination of online engagement, local events and promotions, and select sponsorship, the company is able to increase its visibility as it expands into new markets (Einstein, 2010). In order to remain committed to its philosophy of “food with integrity,” Chipotle promotional and advertising activities are health-cautious. The company is involved in sponsoring various sporting activities including cycling that are in tandem with the organization commitment to health. Consequently, the company has widely succeeded in using word-of-mouth promotion. The Chipotlefan.com is an interactive platform through which Chipotle customers use to exchange their experiences. The non-traditional marketing strategy is aimed at winning millennials by using innovative ways and technologies. The young target (18-34 years) are not affected by the traditional marketing strategies. Unlike big brands that use national advertising campaigns through convectional broadcasting, Chiptole advertises through in-house strategies that are less expensive and effective in appealing to the target population. The company uses social media, animated online videos, interactive online games, benefits concerts and other non-convectional strategies to advertise. According to Hitt, Duane, & Robert (2010), chipotle involves its customer in the experience rather than advertising to them. It is making it easy for its customers to share their experience through the word-of-mouth and other convenient ways. Chipotle has successfully established its brand around an in-built audience that is ideal for its customer experience strategy.

Additionally, the “Food with Integrity” philosophy offers Chipotle significant and sustainable competitive advantage. According to Phillips (2012), there is an increased awareness among consumers of what they eat and how food is prepared. In relation to cultural values and concerns for quality and health, food consumers resonate strongly to fresh organic foods that offer perceived health benefits. Despite the normative economic mandates that price discounting as a necessary in boosting sales, Chipotle continues to record health operating metrics with little industry staple techniques of price discounting (Philips, 2011). The Company uses its commitment to high-quality ingredients and quality integrity that provides a unique differentiation strategy. Chipotle has extended its competitive strategies beyond price competition by focusing in quality, variety, and healthfulness of its menu products. It is an insightful of competing in the market considering that organic, raw materials are expensive.

It is evidence that Chipotle is capitalizing on the current movement toward health eating and by recognizing the untapped market of organic foods, Chipotle appeals to the health-conscious society. In order to compliment its movement to sustainable food and business, Chipotle is one of the leading companies to support green restaurants. Consequently, Gurnee, IL Chipotle Company was awarded Platinum certification that is the highest Leadership in Energy and Environmental design (LEED) rating. The restaurant use energy is serving innovations including wind-powered turbine electricity and high-efficiency appliances and plumbing features. Similarly, Chipotle selects the location of its restaurants strategically closer to bust stops and uses green-only housekeeping product to reduce its carbon print. The emphasis on green business has given Chipotle a unique competitive advantage that is driven by the massive growth of consumers’ demand in the green economy. Trends in the business sector indicate a strong paradigm shift toward green economy. From the time when it opened its first store in Denver to a dozen of years later, Chipotle offers only two basic menu items (burritos and tacos). According to Louis & Kurtz (), the company still sells only those three categories of entrée although its search for the best ingredients is unending. The CEO said “focus on just a few things, and do them better than anybody else.” This approach has enabled Chipotle to focus on improving the quality of the existing products and diversifying ingredients rather than focusing on producing a large variety of products without focusing on quality. However, in 2014, Chipotle embarked on a strategy to expand its brand. After focusing on Mexican Grill for over 20 years, the company opened six Asian fast-casual restaurants that include the ShopHouse in California, Maryland and Washington area. The ShopHouse concentrates on the food and culture of Malaysian, Vietnamese, Thailand and Singapore (ShopHouse, 2014). Customers are allowed to create their bowl filled with rice, noodles, salad and a variety of meats. Similar to the traditional open kitchen model, the bowls are filled through an open assembly trough freshly produced products that are sourced locally. At Chiptole, Moran is dedicated to fostering a company culture that acknowledges and rewards top performers and prepares them for future leadership roles. The innovative approach has enabled the company to produce a more stable workforce that runs the restaurants professionally. The Moran restaurateur program is used to identify and promote the best employees from within and create effective mentors for upcoming managers and employees. According to Forbes (2011) 60% of Chipotle’s restaurants are managed by individuals who have gone through the Moran program that support professional development within the institution.

In 2013, Chipotle launched the controversial yet success “scarecrow” campaign. The aim of the scarecrow campaign was to provoke emotional responses to unethical food practices among its competitors. The Campaign was in contrast with practices in most fast-food restaurants that serve foods that have been criticized as “unhealthy.” The video was among the most shared video (55th in 2013) and contributed significantly to Chipotle viral social marketing.

Creating and maintaining a good customer experience is a key requirement in sustaining business strategy and competitiveness. Chipotle relies on effective execution of superiors services. Although the company serves a huge market and deals with a large volume of customer, the assembly-line execution enables the business to serve hundreds of customers within a very short period. An ingenious setup of the restaurant line enables to deliver services exceptionally good. It reduces waiting time. Efficiency in production and service is accomplished through the “Four Pillars of Great Throughput.” The implementation of the pillars helped the organization speed up its delivery time. The four pillars consist of the expediters, line breakers, mise e n place and accesses in their place. Chipotle places expeditors in places where customers can get their menu as the go. The role of the linebackers is to patrol the countertops, serving-ware, and bins of foods. The mise en place constitutes the Chipotles zero tolerance policy. The policy ensures all products are ready before peak hours. The aces pillar is a commitment to having each Chipotle branch consider its top servers on the most strategic position during peak hours.

The unique customer experience provided by Chipotle is another source of competitive advantage. The service model has several points of interactions with the customer plays a critical role in building and retaining a positive relationship with the clients. In its stores and interactive websites, the organization aims at offering more that food to its clients. The interactive ordering process gives customers control over the entire burritos-making process. They are involved in selecting ingredients, and they have a chance to observe as the burritos are made from scratch. In addition to observing the experience, the effective delivery model is time-saving and improves customer services in cases of re-ordering. The concept of open kitchen has also increased transparency in the organization and engagement with the clients. The entire processing and packing of burritos is done in front of the customer to create a sense of engagement and participation. The concept also contributes immensely to the philosophy of “food with integrity” by allowing customers to witnesses the ingredients being used in the preparation of burritos.

Leadership that drive innovation

Leadership is defined as the “process of changing and organization from what it is to what the leader would have it become.” Therefore, by definition, the concept of leadership includes some innovation. Leadership styles, and behaviors of entrepreneurs affect innovation in business organizations in several ways. Entrepreneurs, like the leaders, may produce creative ideas, stimulate innovation in evaluating creative ideas of employers, or promote innovation through creating an innovative, culture. Consequently, they play active roles in idea generation and implementation, which are integral processes of innovation creation. According to Yadav et al. (2007), CEO’s attention is the major driver of innovation even when the intention of the CEO is not always creating innovation. The innovative culture at Chipotle has been supported by the founder and the co-CEO Steve Ells, who attended Culinary In statute of America. His passion for a fast-food restaurant to provide him cash for establishing a large restaurant formed the basic idea for the birth of the multi-billion restaurant chain. The 40-years old entrepreneur has been at the heart of the success of the company providing the much-needed support to employees.

Phillip and Gully (2010) noted that pursuing a growth strategy requires the development of current talent and the acquisition of additional talent. For example, the growth-oriented chains such as Chipotle Mexican Grill open new stores that require additional management, employees, and even product distribution staff. The success of a growth strategy depends in the firm’s ability to find and retain the right number and types of employees to sustain its intended growth. Consequently, Chipotle has been relying on its effective human resource management strategy that supports internal growth of talent.

 References

Eisten M (2012). How corporate America blurs the line between what we buy, who we are and those we help. The University of California Press, Los Angeles.

Louis E & Kurtz D (2010). Contemporary business update. John & Wiley Publishers, USA.

Hitt Duane I M., & Robert H (2010). Strategic management: Concepts and cases: Competitiveness and globalization.

Muhammad J & Naeem A (2012). Leadership styles as predictors of innovative work behaviors. Pakistan Journal of Social and Clinical psychology. Vol. 9 (2); 17-22

The American Business Award. Retrieved from

http://www.stevieawards.com/pubs/awards/403_2658_22005.cfm on 11/5/2014

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