Be honest over here. Whenever you feel hungry and want to grab a quick delicious bite, you think of a few key go-to places to satisfy your cravings. Chipotle has to be one of those places! You love it, we love it, and the world loves it. Is all the love worth it? We will find out in this Chipotle SWOT Analysis.
Chipotle is not as old as some other competitors in the game as it began in 1993 in Colorado, America. For those of you who have not had it, they sell Mexican food primarily at their chains as the name suggests and they are very famous for live cooking their burritos and tacos. They are best known for popularizing casual dining in the USA.
Interestingly, McDonald’s was one of the brands to become an investor for Chipotle in the early 2000s. Because of this investment, they were able to grow their market share very quickly helping them spread all over. Eventually, McDonald’s separated itself from the brand but by then they had achieved a lot.
Before going ahead, we should make clear a few things. You already know what SWOT stands for but do you know which of these four factors in the analysis are internal or external? Well, all factors which can be controlled within the entity being discussed, in this case, a company, are called internal factors. Similarly, all other factors which are outside of the influential sphere of the company are called external factors. They occur on their own.
Strengths and weaknesses are internal factors of the company because they can be controlled by the management and stakeholders of the organization. On the other hand threats and opportunities are external factors because they cannot be controlled in any way by the people on the inside and happen when they happen.
This concept can better be explained using a simple example. Think of some of Chipotle’s strengths. Let’s say they have good food; this is directly controlled by the chefs in the chains so one can say it is a strength of the restaurant as it gets them many customers.
So it will be an internal factor. Now let’s say that Chipotle has some severe competition in the market. Competition cannot be eradicated at will and neither can it be controlled in any way by the insiders. This threat of having competitors is an external factor.
Now that all of this is well understood, it’s time to move on ahead and talk about Chipotle in detail especially in terms of their business acumen; are they successful? Are they not? Do they need to improve in any way? All of these questions can easily be given an answer to, based on a detailed SWOT analysis.
Every brand becomes who they are in the minds of their consumers because of some important strengths they have especially over other similar businesses. Let’s see what makes Chipotle great. Here are some of the many strengths they have.
It goes without saying but like other huge businesses in the food industry, Chipotle has a very strong brand name in today’s world.
Having good brand equity is always a strategic goal for organizations to achieve in order to avoid becoming redundant or worse, irrelevant. This is surely one of the biggest strengths for the restaurant to have.
Strong Set of Suppliers
I think a restaurant of all businesses especially hits the jackpot if it manages to find good, safe, and reliable suppliers of raw ingredients.
Chipotle has a very strong supplier network which has enabled them to maintain good safety standards so they don’t mess with anyone’s health. They only work with their chosen suppliers to avoid any mishaps with the food they eventually serve to customers.
This has made it possible for the chain to maintain a very high standard of safety regulations.
Corporate Social Responsibility
Chipotle is known for having really good efforts towards its corporate social responsibility. They make sure that all the meat that is used by their restaurants is ethically sourced; they make sure that all the animals are raised keeping in mind the properly established standards.
Moreover, they are very transparent with their customer base; if they change a few ingredients because of limited supply they will inform people beforehand so no expectations are missed.
Although Mexican food is available around every corner now, Chipotle has this policy of cooking everything in the traditional Mexican form. They do not make food in batches like many other places do to save time. Instead, they make their food with a lot of love and care to avoid any disappointments.
Well, it kind of is impossible to achieve perfection so a brand as big as Chipotle has its bad share. It is important to know about weaknesses in order to avoid them. Here are some of the biggest ones.
Hear us out, there is nothing wrong with Mexican food, in fact, it is one of the best cuisines in the world. The weakness part arises from the fact that they serve Mexican only which limits the potential of growth to only those people who love this cuisine.
If they expand their menu to include some other items, they can attract a newer customer base and enjoy bigger profits.
Moreover, the menu is also limited in Mexican food options. Sometimes people just want to have something new.
Unlike other fast-food chains, Chipotle does not have a global presence. In fact, they are only found in countries located in the West.
Their expansion strategy is very slow if it exists at all. They need to have a bigger presence at least in a few more countries to be able to have a bigger mark on the world.
Suppliers are Limited
Yes, we know very well that this was listed as one of their key strengths above and it is. but the other side of the coin tells us that having limited suppliers gives them the upper hand; they have higher bargaining power and you just have to go with it in order to avoid upsetting them.
Suppliers can negotiate prices, rates, and other business details according to what best suits them when they know that you don’t have many alternatives or substitutes.
No matter how big or successful one can get, there are always opportunities for betterment and growth. The key is to identify them and exploit them when they best appear to be useful. Here is how Chipotle can grow.
Expand Their Restaurants
Chipotle has a very big potential to be successful in European as well as in Asian markets. They should avail this grand opportunity to have a bigger customer base.
People all around the world love good food. Mexican cuisine is already very popular with the masses so why not make the most of it? This move will also give them a strong standing against their competitors.
Fast food chains always offer something additional to customers aside from their main menu items. It can be something as insignificant as a bowl of rice or a corn cob (as in KFC) but it ultimately adds a lot of value to a restaurant’s offering.
Chipotle should include a few non-Mexican food items as well, for the people who don’t like Mexican or are not inclined enough to pay for it. It will help the restaurant in a great way.
Although a few branches of Chipotle introduced a drive-through for customers to pick up food on the go, most of their restaurants have only sit-in options. A customer not looking to get out of their car to go into a store/restaurant to have food will never come here.
They should introduce more drive-through options at their restaurants to enable people to come as they please.
This is where the brand needs to be extra cautious; avoiding threats. When not dealt with timely, threats have the potential to actually destroy the prosperity of a business. Here are the biggest threats they have.
Like any other brand, Chipotle is also exposed to many other competitors. Some of their direct competitors are Qdoba Mexican Grill, Moe’s Southwest Grill, Rubio’s Coastal Grill, and Baja Fresh.
Taco Bell also is a Mexican food giant which offers great competition. Competitors can always have a bigger market share and we already know that Chipotle does not have a global footprint.
They have come under fire with the legal regulations a few times. Some prominent examples are the lawsuit in 2020 when they were sued and had to pay 20 million USD because of the thousands of foodborne illnesses their food caused from 2015-2018 in the USA.
Another lawsuit tells about the experience some of their employees had from 2017-2019. Apparently Chipotle changed their employees’ schedules without any prior notice to them, irrespective of whether they could make it to work.
They also claim that Chipotle often did not count for sick days. Chipotle has not confirmed any of these allegations as of yet.
If you have managed to stay with the article till the very end, we thank you for your time and hope that you enjoyed what you read and that you know more about Chipotle than you did before.
Chipotle has managed to create a good name for them considering that they only started in the ’90s. In this analysis, we have seen that Chipotle has a good bag of strengths enabling them to prevail; having strong brand equity and good CSR practices are top of the list don’t you think?
Other than that, we have also addressed some weaknesses which they have; the limitation of their presence, their menu, and their suppliers. Interestingly, two of the future opportunities they have can eradicate two of their current weaknesses.
They do have some threats to take care of; having lawsuits is a big no, especially of the magnitude that they have. They need to have a better strategy to take care of these allegations and shortcomings on their part that leads to such allegations.
All in all, they have a lot of good going on for them, so Chipotle still has a lot to show us in the future. They are here to stay!
A SWOT analysis helps one in understanding an entity be it a business, organization, or even a country at large in a better way.
Knowing the four core factors and how they affect the status of the existence of the said entity is very important and can help in making important decisions for the future, both for investing or improving. This is why it is very useful to know how to do a SWOT on your own.
If you are new to the concept, you can take a look at the various examples out there to know how it works. If you want, you can also take help from a template to make your first SWOT easier and less intimidating.
In fact, there is a tabular format for SWOT analysis which can further simplify the process because you can compile and present your findings in a much more clean and concise format. So get to work and draw out your first SWOT! Good luck to you!