Chipotle SWOT Analysis 2024: A In-Depth Analysis Report

Mexican food has a rich history spanning pre-Columbian civilizations, Spanish colonialism, and global influences. As a chef, the founder of Chipotle loved it, as millions of people love these types of food. Keeping that in mind, Chipotle was founded and has grown into a giant company and chain of fast-casual restaurants. With 30 years of history, the company has become a go-to place for thousands of people and a loyal customer base because of quality products and affordable prices. But, recently, the company has faced many issues that we will learn about in this Chipotle SWOT analysis.

Chipotle: Company Overview

With the idea of providing high-quality, customizable food made with fresh ingredients and prepared in an open kitchen, the company started its journey in 1993 by Steve Ells with a single restaurant in Denver, Colorado.

Interestingly, the company’s flagship store was founded in an abandoned ice cream store. From that, it now has 3,182 stores in five countries, the United States, Canada, the United Kingdom, France, and Germany.

With $8.6 billion in revenue and 104,958 employees in 2022, Chipotle continues serving millions of people annually, using organic and locally sourced ingredients.

Product & Services of Chipotle
Tacos | Mission burritos | Mexican style cuisine

Chipotle Competitors
Qdoba Mexican Eats | Moe’s Southwest Grill | Baja Fresh Mexican Grill | Rubio’s Coastal Grill | Chick-fil-A | Taco Bell | McDonald’s

Did You Know?

Chipotle’s 75 restaurants are equipped with solar panels that provide almost enough power to run these locations.

Strengths – Chipotle SWOT Analysis

Quality Items: Without great products or market offerings, no company can sustain 30 years in the market, and Chipotle is the perfect example of that. Using fresh ingredients, constant recipes, and maintaining quality is what made the brand popular and grow this far.

Positive Brand Recognition: One of the biggest strengths of Chipotle is its positive brand recognition through various activities. They do many CSR programs that helped them build a positive brand perspective in customers’ minds, and now it’s paying off with strong customer brand loyalty.

Affordable Menu: If we look at the menu of Chipotle, we can see that its menu is very affordable, whether you’re catering for a group of people or just a few bunches. Constantly providing quality products at affordable prices was another strategy to become a go-to place for many customers.

Strong SCM: As a restaurant, the company needs to have an effective and efficient supply chain at work if they provide fresh foods with fresh ingredients. And Chipotle has set an example in the industry of how to do that with various initiatives and wild card strategies.

Digital Strategy: The world is going through a massive digital transformation, and using it to grow business has become more prominent than ever. Collecting customer data, effectively using it to understand customers, and having a proper website to meet and fulfill customer satisfaction has paid off by increasing online sales.

Steady Finance: Even during the pandemic year, the company’s revenue has increased by 7.13% from the previous year. And, if we see the revenue and profit data over the decade, we can see that the company has been blessed with a steady cash flow which helped them grow.

Weaknesses – Chipotle SWOT Analysis

Low Variety: It’s difficult for many companies to keep consistency with quality food and expand menu items. And it happened to Chipotle as they are struggling to offer a large variety in its menu. As a result, the company can’t target or attract customers besides those who don’t want Mexican items.

Uneven Revenue Market: By 2022, Chipotle has a total number of 3,182 stores worldwide. But the issue is that only 44 stores are outside of the USA, which means more than 97% of the revenue comes from the USA market alone, making it over reliant on the US market if something happens.

Supplier Bargaining Power: Suppliers are the key to keeping a healthy supply chain, and the brand aims to provide healthy food. But with only a few suppliers handling the entire chain and not having any alternative can jeopardize that plan at any moment, which puts the company in a very vulnerable and weak position.

Food Safety Issue: In 2018, Chipotle faced a food safety issue when over 600 people became sick with norovirus after eating at one of their Ohio locations. They had to end up paying a fine of $25 million due to the incident, the largest ever imposed on a restaurant chain for a food safety violation. Even though they did everything to prevent this, the damage was done.

Opportunities – Chipotle SWOT Analysis

Global Expansion: Chipotle only has branches in five countries, and those are the USA, UK, Canada, Germany, and France. But Mexican food’s popularity is growing worldwide, and it’s the perfect time to expand the company globally, not just because of more revenue and presence but also because of serving food to a customer base.

More Variety: As the menu is limited to a few categories and options, it’s time they start another section in the menu that serves related but different items that can attract a diverse customer base. That will bring more foot traffic to the restaurants and give customers more options.

Healthy Options: People are more aware of their health these days and want to eat traditional foods but healthily, and the preference number is growing every year. To cater to this segment, Chipotle can introduce new dishes for these people with a few healthier options on the menu, bringing new customers and placing the company in a unique position in the market.

Strategic Collaboration: Pandemic has made it a habit of all of us to order food online, and it stayed. As Chipotle’s online sales are increasing, so is the demand for delivery. The company has partnered with various delivery services to tackle this much traffic and recently with ASAP. More of these types of strategies and collaboration with other stakeholders can make the process more effective.

Employee Training Program: Employers are one of the primary keys of a business, and better training programs can make the employees more skilled. The company’s core business is traditional Mexican food, which requires better training. Chipotle is doing as much as possible with new training programs and parental leave.

Threats – Chipotle SWOT Analysis

Security Breach: In 2017, Chipotle Mexican Grill experienced a cyber security breach in which hackers stole customers’ payment card information from its point-of-sale systems, affecting over 2,200 Chipotle locations in the USA. As a result, Chipotle ended up paying more than $30 million in legal fees, credit monitoring, and other expenses.

Tough Competition: There are major players in this space which Chipotle has to compete with, such as Qdoba, Moe’s Southwest Grill, and Freebirds World Burrito. Although Chipotle remains a leader despite this competition, with a market share of around 16.3%, the market is getting more competitive every year.

Lawsuits: Chipotle has faced several cases in recent years, including ones related to foodborne illness outbreaks and discrimination allegations. In 2021, NYC filed suits against the company because various labor law violations led the company to pay $150 M to settle the case.

Supply Chain Disruptions: Several incidents in Chipotle’s supply chain have been disrupted, causing the company millions to fix these issues. The supply chain disruptions affect Chipotle’s ability to maintain its customer base and revenue streams. As a result, it creates a bad impression of the brand.

Child Labor Issue: Chipotle was found to have employed minors without work permits, allowed them to work too many hours, and failed to provide proper breaks in 2020. As a result, they ended up paying $1.4 million for over 13,000 child labor violations.

[Bonus Infographic] SWOT Analysis of Chipotle

Recommendations for Chipotle

With a unique idea and quality food to serve the customers, the company has a long history. But, there are some sections where they can improve their game, and here are some recommendations.

• The company’s priority should be expanding to other continents with the growing demand for traditional Mexican food.
• Bringing more variety in the menu will attract customers and other target markets.
• The healthy option should be another priority, too, with the growing awareness of healthy foods.
• To avoid further supply chain disruption, they should have more suppliers to better bargaining power in the company’s hands.
• More strategic collaboration among delivery and other third-party stakeholders could bring the process up to speed.
• A better employee training program will result in better and more skilled employees, thus serving customers better.

Frequently Asked Questions (FAQs)

Final Words on Chipotle SWOT Analysis

Chipotle’s strengths helped and leveraged to grow and expand in the highly competitive market, with quality items, positive brand recognition, an affordable menu, a digital strategy, and steady cash flow. On the other hand, there are many weaknesses in the organization that they need to overcome and tackle threats to survive in the market and to continue to succeed and thrive in the years to come.

References

• Wikipedia contributors. (n.d.). Chipotle Mexican Grill, Inc. Wikipedia.
• Kelso, A. (2021, April 26). How Chipotle’s Environmental, Social, Governance Work Is Paying Off. Forbes.
• Thier, J. (2021, April 27). Chipotle focuses on supply chain “wild card.” Supply Chain Dive.
• CHIPOTLE ANNOUNCES FOURTH QUARTER AND FULL YEAR 2022 RESULTS. (2023, February 7). Chipotle.
• Chipotle Mexican Grill Revenue 2010-2022 | CMG. (n.d.). MacroTrends.
• Akhtar, A. (2021, October 29). Fitness buffs say Chipotle’s supply chain issues are messing with their gains. Business Insider.
• Ortiz, A. (2020, April 21). Chipotle to Pay $25 Million Fine for Tainted Food. The New York Times.
• López, A. M. (2022, April 28). Countries that most prefer Mexican cuisine. Statista.
• Health and Wellness Food Market Size, Share, Growth & Trends Analysis Report, Competitive Landscape and market is growing at a CAGR of 9.3% by 2029. (2022, July 12). GlobeNewswire.
• Chipotle partners with ASAP.com for on-demand delivery. (2022, November 28). Fast Casual.
• Chipotle Announces Bonuses, New Training Programs And Expanded Parental Leave For Employees. (2018, February 7). Chipotle.
• Whittaker, Z. (2019, April 18). Chipotle customers are saying their accounts have been hacked. Tech Crunch.
• Chipotle Mexican Grill Agrees to Pay $25 Million Fine to Resolve Charges Stemming from More Than 1,100 Cases of Foodborne Illness. (2020, April 21). U.S. Food And Drug Administration.
• Phillips, W. (2022, April 7). Chipotle’s ethical chicken goals delayed by supply disruption. Supply Management.
• Yaffe-Bellany, D., & Zaveri, M. (2020, January 28). Chipotle Is Fined $1.4 Million in Vast Child Labor Case. The New York Times.