Introduction
The Chipotle grill is a big chain of restaurants which was founded in the year 1993 by Steve Ells. At its inception, it operated exclusively in Denver and Colorado within the U.S. However, it has expanded over time and spread its services to other regions such as the entire United States of America, United Kingdom, Canada, and France. The business is headquartered in the Denver, United States of America. The major areas of specialization for chipotle are the burritos and Tacos.
Strengths
The strengths behind the recent success and persistent improvement of the chain can be attributed to a number of factors:
- Large dynamic employee base.
The company for instance had a total of 37,310 employees at the close of the year 2012. The large number of employees is responsible for the service provision and improvement of the same across all the areas of operation. It provides the grill with adequate human resource from where diverse ideas and opinions are generated for the survival of the business. The restaurant also has a special field team which does not operate directly from the restaurants but act as outside support team in the market. The field team serves as a back up to the team in the restaurant (Bohm, 2008).
- A well-organized wide market/ Client base and regional diversification
The geographical region of operation for the restaurant is vast covering the United States, The United Kingdom, Canada and France. The restaurant covers an approximate 500 locations in the regions of operation. The large client base is responsible for the high rate of return on the company. For instance, it made net revenue of US$2.71 billion, courtesy of the client base over the United Kingdom, United States, France, and Canada (Bohm, 2008).
- The mode of operation and distribution
Unlike other big entities in the world, the constituent restaurants of the Chipotle grill are company owned but not franchised. This mode of operation ensures that the company enjoys all the returns on its own without having to share with other investors. It also eliminates other risks associated with franchising such as scheming. The company also operates an online ordering for delivery of the products. This increases the efficiency of the business (Bohm,2008)
- A wide variety of products and a positive brand image.
The restaurants serve numerous types of products as dictated by the client needs in any particular market. Such products include salads, tacos, burritos, burrito balls and fajita Burritos. These factors are responsible for the wonderful client loyalty.
Weaknesses.
These are the fault lines for the restaurant which hinder the attainment of full success. They are as follows
- High prices for their products and brands.
This is a common phenomenon whenever natural ingredients are used in the production of any commodity. The use of natural meat and other organically generated ingredients for cooking is a reason for the high prices which at times could serve as weak avenues upon which competitors have always capitalized by reducing their prices. This in turn results in reduced volumes being sold. A good example is chicken which goes for $5.70, steak $5.95 and carnitas $5.95. These prices serve the rich while the poor who live below one dollar per day can never afford (Bohm, 2008).
- The small geographical coverage.
The restaurants are biased to the U.S and Canada only. They are really concentrated in the regions as opposed to the global expansion strategies which could expand their operations to other regions. The geographically diverse competitors will enjoy absolute advantage in those areas where the restaurants do not operate and intensify competition in the few areas of operation (Bohm, 2008)
- Lack of product diversity.
The menu choices are only limited to five types of products and this could be another area upon which competitors can rely to beat the restaurant by simply providing a wider variety of products. A globally competitive company ought to have a really wide variety of products to serve different markets effectively (Griffin, 2008) .
Opportunities.
These are the opportunities which the company can still exploit to achieve additional growth and expansion in their operations. They represent the untapped opportunities at the disposal of the company:
- Potential geographical expansion.
- Product diversification
- The company has an opportunity to pump more resources to its operations in a bid to expand their menu by adding more varieties of products. This will serve as a good avenue to capture a bigger market share and stand a good chance to beat the competitors by a landslide. More varieties of products mean more customers which automatically translate into more incomes for the company. The company can also invest in some inorganic foods to win that part of customers who prefer such foods. The company can for example invest in the manufacture of soft drinks to supplement the foods offered (Griffin, 2008).
- The increased health awareness among customers in the modern day.
Threats
These represent the potential issues that pose imminent dangers to the company’s success in different ways.
- Competition.
Just like any other business entity, the company is faced by the daily threat of competition from the other players in the industry such as McDonalds who broke away in 2006 and are even dealing in similar goods such as tacos at lower prices. The competitors are always on the move to ensure that they always beat the company at all costs and they maximize the use of any opportunity they get. Competitor strategies include product and regional diversification and they all serve to the peril of the company. Other competitors are the Qdoba Mexican grill who re also trading in much similar goods such as Burritos. Qdoba are also using natural ingredients for their products, thus are a potential threat to the success of Chipotle restaurant.
4. Constantly changing prices of raw materials
The natural and organic ingredients used by the company have recently been victims of very volatile and unstable prices in the world market. The prices have been constantly changing and this compels similar changes in the prices of their products. The advent of inorganic ingredients by the competitors exposes the company to a risk of collapse. A good example is the increased prices of meat due to the shortage of animal sources. This has really forced the company to end up in high prices which are not favorable to the consumers.
5.The global financial and economic instability (Fine,2009) .
The financial and economic environments define the ground on which every business stands. The recent crises in the economies of the world have not spared the business either. Constant inflation and unpredictable demand patterns have really served to cripple the progress of the company to a great extent. For example, at the strike of the global financial crisis of 2008, the company was adversely hit (Griffin, 2008).
The company can exclusively major on its strengths to minimize the weaknesses by employing gradual but systematic and consistent diversification strategies: both geographical and product diversification. The company will rely on the existing brand loyalty and market base to exploit any available opportunity in the market (Griffin, 2008).
References
The Chipotle website,
<http://www.chipotle.com/en-US/Default.aspx?type=default>
W. Bohm, (2008), The SWOT analysis, Druck und binding: Books on demand, GmbH, Norderstedt, Germany.
R. W. Griffin, (2008), Management, Cengage learning, New York, USA.
L.G. Fine (2009), The SWOT analysis: using your strengths to overcome weaknesses, using opportunities to overcome threats, Amazon Books, New York, U.S.A
