Chipotle Case Study

Chipotle case study

1. Do you think CMG is a successful company?

Yes, CMG is a very successful company that has made a name for itself and is well known around the full of USA. They started of with one restaurant and took over the USA fast food restaurant industry with a storm. Mc Donalds, the fast food giant, were interested in them and in 1998 they invested 360 million dollars to help scale up the business. Chipotle went from 16 restaurants to thousands of them in no time. They stuck to providing the highest quality food although it was a little more expensive then its competition. They came out with an IPO in 2006 which was very well received by the investors due to its constant and sustainable growth.

1. How does it compete?

Chipotle has a competitive edge having naturally raised animals used as meat. They also give farmers an incentive to grow live stock without using antibiotics, chemicals etc. They are all natural and that’s one of the biggest competitive advantages Chipotle has over its competitors. Chipotle applied this strategy to differentiate from its competitors. They never believed in spending a lot of money on marketing campaigns and believed in the more traditional way of marketing that is word of mouth marketing. They believed that they had a superior product and let the product do the talking for itself. They applied this strategy to have a good market share. Their naturally grown meat plays a big role to differentiate them from their competitors.

1. How do CMG’s resources support the company’s competitive position?

Chipotle has a great relationship with the farmers and they encourage them to raise live stock in an all natural way which in turn allows them to commit to future expansion. They will have to increase the prices due to increase in food costs and also labour, but the customers will soon realize that they have to pay a price so as to enjoy food at the highest standards. Due to its high quality of food it allows the company to have minimal level of marketing and yet have a big market share in the fast food industry. It allows the company to concentrate on quality of the food rather than just marketing its product as most of the restaurants do in the fast food space.

1. What Challenges does CMG face in late 2012?  How should Steven Ells and Montgomery F. Moran position CMG to respond to these challenges?

As any other company even Chipotle faces challenges. Company had its maturity as they had the same menu and prices for quite some time. All the restaurant outlets were owned by the company and it was very difficult to apply all the rules and keep it standardized all throughout each and every chain of restaurnt. A threat for Chipotle was Taco Bell’s subsidy Cantina Bell menu that proved to be the replica of Chipotle. Cantiana Bell offer half of the price Chipotle ask to its customers. A survey concluded that a customer of Chipotle has also liked the Cantina Bell menu. They were planning to increase the prices due to high food costs but decided not to, so that they can retain their customer based that was interested in the Cantina Bell menu.