Lia Manno

BUS 470
March 11, 2016
Case Study 3: Chipotle

1. Does Chipotle Mexican Grill have any core competencies and, if

so, what are they?
By definition, core competencies are part of a companys
strategy that allow a company to grow and expand in new
and different directions. Core competencies keep competition
fresh with in a certain sector, and allow a company to keep
ahead of their competitors. In regards to chipotle Mexican
Grill, their main core competency is their customer base;
Chipotle is famous for offering delicious Mexican food that is
also healthy. Chipotle offers organic and wholesome options,
which allows them to target those who are interested in a fast
Mexican dish, along with those who are seeking a fast and
healthy option. The Mexican fast food joint makes it well
knows to they public that they strive to use the best of the
best when it comes to their ingredients. They stress the
importance of food with integrity which includes organic and
wholesome, and non-GMO ingredients. Aside from their
delicious yet healthy menu options, Chipotle manages to offer
their food at affordable prices.
2. What does a SWOT analysis reveal about the attractiveness
of Chipotle Mexican Grills situation and future prospects?
Chipotle Mexican Grill is not only a company, but a brand.
Chipotle has managed to create a brand for itself based off of

its organic and healthy fast food menu options; this is one of
the companys strengths. Chipotle has managed to
differentiate themselves from competitors by offering these
healthy options, and recently this has been a huge benefit for
the company due to the rising health craze trend.
A weakness would be the companys recent E-Coli scandal.
This scandal has damaged the company and has hurt them
not only financially but has effected their reputation as well.
Although their weakness has done much damage to the
company I believe that it has opened doors to the company in
terms of various opportunities. If chipotle is smart they will
use this weakness to strengthen their company and to come
back stronger than ever. They can reinforce their food with
integrity motto and gain back they trust and confidence of
their customers as well as attract new customers.
A threat that Chipotle faces is their small and limited menu
options. The company focuses on serving Mexican cuisine and
this seems to have put a ceiling on the companys growth.
There are multiple other ways for the company to grow and
expand but when it comes to their menu options they are
limited to menu options, and price volatility with ingredients.
3. Which one of the five generic competitive strategies discussed in
Chapter 5 most closely approximates the competitive approach
that Chipotle Mexican Grill is employing?
Of the five generic strategies presented in chapter 5 the one
that best approximates the competitive approach that

Chipotle Mexican Grill is employing would be broad

differentiation. The broad differentiation strategy involves
creating a competitive edge over competitors, and chipotle
has definitely managed to do this. They have managed to
offer menu options, which is considered fast food, yet
healthy; it also most sounds like an oxy-moron. Today people
tend to associate fast food with being unhealthy and cheap,
but chipotle broke this stereotype and manages to bring fast
health and fairly priced food to its customers.

4. What does an analysis of the data in case Exhibit 1 reveal

about Chipotle Mexican Grills financial and operating
performance? Use the financial ratios in Table 4.1 of Chapter 4
as a guide in doing the calculations needed to arrive at an
analysis-based answer to your assessment of Chipotles recent
financial performance. In addition to the ratios in Table 4.1,
there are occasions when you will also need to calculate
compound average growth rates (CAGR) for certain financial
measures. The formula for calculating CAGR (in percentage
terms) is as follows: CAGR % = [ending value beginning
value] 1/n 1 x 100 (where n = the number of year-to-year
or period-to-period changes)
After analyzing the Chipotles financial statements and
performing various finical ratios, it is clear to see that over
the past recent years from 2007-2013 Chipotle Mexican grill
has experienced extreme and steady growth. Over a period of
five years the companys net income has nearly quadrupled.
Overall I think the company is in great finical standing and
will continue to grow at a rapid rate.

5. What action recommendations would you make to CMGs top

executives to strengthen the companys growth and profitability?

If I were given the opportunity to advise the top

executives of CMG, I would tell them that most importantly
they must focus on building back their reputation. After
recent scandal involving chipotle and an E-Coli outbreak,
the company really took a hard hit and I think that they
really need to focus on regaining the trust of their
customer and they need to push forward and build back
their customer base.