CHIPOTLE MEXICAN GRILL INC IN CONSUMER FOODSERVICE (USA)

Euromonitor International August 2011

CHIPOTLE MEXICAN GRILL INC IN CONSUMER FOODSERVICE (USA)

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LIST OF CONTENTS AND TABLES

Strategic Direction ........................................................................................................................ 1 Key Facts ..................................................................................................................................... 1 Summary 1 Chipotle Mexican Grill Inc: Key Facts ........................................................... 1 Summary 2 Chipotle Mexican Grill Inc: Operational Indicators ........................................ 1 Company Background .................................................................................................................. 1 Suppliers ...................................................................................................................................... 2 Competitive Positioning ................................................................................................................ 3 Summary 3 Chipotle Mexican Grill Inc: Competitive Position 2010 ................................. 3

Euromonitor International

CHIPOTLE MEXICAN GRILL INC IN CONSUMER FOODSERVICE (USA)

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CHIPOTLE MEXICAN GRILL INC

STRATEGIC DIRECTION
Chipotle Mexican Grill Inc is continuing to focus on its core competencies and outlet expansion in 2011 and the near future. While the company serves food in the Latin American fast food category, it strives to serve high-quality food quickly, while transforming the way Americans think of and consume fast food. Chipotle seeks to source its ingredients from producers that utilise more sustainable practices, for example preferring meat producers that offer antibiotic- and hormone-free products. In addition, the company prepares its food on site, using raw ingredients and preparing them in the store, rather than centralised facilities. Such sourcing and preparation standards allow the company to position itself as a high-quality, sustainable and premium restaurant. The menu remains simple but highly customisable, offering a few ingredients in a variety of arrangements. This emphasis on high quality and simplicity allows the company to deliver high restaurant margins and scale operations for fast outlet expansion. The company anticipates opening an additional 135-145 new restaurants in 2011.

KEY FACTS
Summary 1 Chipotle Mexican Grill Inc: Key Facts Full name of company: Chipotle Mexican Grill Inc Address: Tel: Fax: www: Activities:
Source:

1401 Wynkoop Street, Suite 500, Denver, CO 80202, US +1 (303) 595 4000 +1 (303) 595 4014 www.chipotle.com Latin American fast food, fast casual

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Summary 2 Net sales Net profit Number of employees

Source:

Chipotle Mexican Grill Inc: Operational Indicators 2008 2009 US$1,332.0 million US$78.2 million 20,400 US$1,518.4 million US$126.8 million 22,500

2010 US$1,835.9 million US$179.0 million 26,500

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COMPANY BACKGROUND
Chipotle Mexican Grill Inc is a publicly-traded company headquartered in Denver, Colorado, US. Founded in 1993, the company was acquired by McDonalds Corp in 2001. In 2006, McDonalds fully divested itself of Chipotle, when it became a publicly-traded company under

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CHIPOTLE MEXICAN GRILL INC IN CONSUMER FOODSERVICE (USA)

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the CME symbol on the New York Stock Exchange. The original founder, Steve Ells, remains the company Chairman and CEO. All of Chipotles restaurants are company-owned rather than franchised. The company operates 1,084 restaurants in 38 states as of December 2010. While the brand can be found throughout the country, the states with the highest penetration of Chipotle restaurants are California, Colorado, Ohio and Texas. The company has expanded rapidly since it went public, opening 503 locations between 2006 and 2010. In June 2010, Chipotle opened its 1,000th restaurant in the US. While this location was one of 129 new locations opened during the year, it marked a milestone of growth for the company in the US. In May, 2010, the company opened its first restaurant in London, UK, only the second international restaurant the company operates (the first was in Ontario, Canada). The company is considering further expansion, particularly in Western Europe. As the company expands, it has implemented what it calls the A Model initiative, which reduces the size of a typical store and broadens site selection criteria. The company has already opened restaurants in most major US metropolitan areas, and believes that future expansion will be dependent upon opening smaller, more efficient restaurants that can operate in areas with less customer traffic. Thus, Chipotle hopes that the A Model will allow it to move into markets that were previously not considered. In November 2010, Chipotle announced that it would be launching an Asian-inspired restaurant in 2011, following on Chipotles model for high-quality food served in a fast casual environment. The company believes that its model is not particular to Latin American food, but rather than an emphasis on Food with Integrity can be implemented in a variety of fast food categories. While this development is certainly a test case for the company, it may provide an avenue for future growth. The company announced a partnership with Facebook Deals in November 2010, offering discounts and other promotions to customers who check in at Chipotle using Facebook Places. This further develops Chipotles use of technology and social media applications. Previously, in 2009, the company launched an application on the iPhone that allows consumers to place orders from their mobile phones. Likewise, orders can be placed through the companys website.

SUPPLIERS
Chipotle Mexican Grill Inc places a high priority on offering high-quality natural ingredients to its customers. Therefore, it carefully screens potential suppliers to ensure that they meet the companys standards for animal care and sustainable farming practices. As a result, the company has strong relationships with its suppliers and distributors. The vast majority of meat (pork, chicken, and beef) sold by Chipotle is naturally raised. In 2010, some supply shortages meant that natural chicken and pork products were not available in some areas. The company is working to ensure an adequate supply of meats that meet its standards, but because of the strict criteria, this may not be possible in all locations. The company generally does not purchase raw materials directly from farmers or other suppliers, but rather selects and approves a list of suppliers of its ingredients. The company has strong relationships with its suppliers as it remains committed to offering naturally raised meats. Therefore, Chipotle maintains a list of approved suppliers meeting Chipotles specific criteria, from whom its distributors must purchase meats and other ingredients. Ingredients and other supplies are delivered to Chipotles restaurants from 22 independently owned and operated regional distribution centres. Most of the companys suppliers and distributors are

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CHIPOTLE MEXICAN GRILL INC IN CONSUMER FOODSERVICE (USA)

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small- to mid-sized companies, each with a regional scope, rather than large national supply chains.

COMPETITIVE POSITIONING
Chipotle Mexican Grill Inc ranks second in Latin American fast food, with a 13% value share in 2010. The leader in the category, Yum! Brands, has more than five times the number of outlets as Chipotle, through its Taco Bell brand. Although Taco Bells value share has not seen the growth that Chipotles has in recent years, Chipotle still remains a distant second and is unlikely to overtake Taco Bell in the foreseeable future. The fast casual segment of consumer foodservice is highly competitive and fragmented. In addition, fast casual restaurants often find themselves competing against both fast food restaurants and full-service restaurants in their attempts to carve a niche in between these categories. Among fast casual outlets, Chipotle is the market leader in value terms, controlling a 16% share. The companys nearest competitor in the fast casual category is Buffalo Wild Wings, which has also seen rapid growth in recent years. Chipotles share has increased steadily since 2006 when it became a public company. Thanks to rising interest in Latin American cuisine, an increased consumer focus on sustainable food, and the rise of fast casual dining options, the company has found itself well positioned to expand rapidly and take advantage of ongoing consumer trends. The company hopes to be an impetus to change American consumers eating habits and the way they view fast food. Partnering with celebrity chef Jamie Oliver in 2010, the company highlighted the low quality of many processed foods that are typically offered to consumers at fast food outlets. Eventually, Chipotle hopes to inspire other restaurant operators to evolve their offerings to incorporate healthier, natural ingredients and less processed food. Summary 3 Category Chipotle Mexican Grill Inc: Competitive Position 2010 Value share Rank 13.0% 15.6% 2 1

Latin American fast food Fast casual

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