SWOT Analysis of Chipotle: Strengths & Weaknesses 2021

Written by SWOT Analysis Team in Swot Analysis


NameChipotle Mexican Grill, Inc. [2]
IndustryRestaurant/Fast-casual Food /Food & Beverage [2] [5] [6]
Founded1993 [1]
HeadquartersNewport Beach, California [1]
Chairman & CEOBrian Niccol [2]
Revenues$5.6 billion (2019) [2]
Net Income$350 million (2019) [2]
Leading CompetitorsTaco Bell, McDonald’s, Domino’s, KFC, Shake Shack, Chik-fil-A, Papa John’s International [3] [4] [5] [6]



Chipotle started as a restaurant in Denver, Colorado in 1993 and was founded by Steve Ells. The company mainly sells burritos, burrito bowls, tacos, tortilla chips, salads, sodas, fruit drinks, tea drinks, organic milk, beer, and margaritas. Chipotle takes pride in its fresh and responsibly sourced ingredients which are free from any artificial flavors, colors, added hormones, or preservatives. Chipotle was one of the first among national restaurant brands to source organic ingredients.  When it comes to the meat that Chipotle uses, it is the first national restaurant brand to use meat that is only responsibly-raised. The business follows its “Being Real” value in its operations. The company also strongly commits to recycling its wastes to help the environment. The company has grown over the last 25 years and there are 2, 710 Chipotle restaurants at the end of Sept. 30, 2020 [2] [10]. The majority of Chipotle’s restaurants in the U.S. are located in California (426 restaurants), Texas (234 restaurants), Ohio (197 restaurants), Florida (183 restaurants), and New York (163 restaurants) [8]. 




Chipotle Strengths 2021:

  • Strong commitment to social responsibility.

    Chipotle takes pride in its responsibly sourced ingredients which are all fresh and mostly organic [2]. This adds to the positive brand image of the company and it shows that the company cares for its community and environment.  

    Chipotle makes sure that the meat they serve were also sourced from animals that were raised with conformity to established standards. Chipotle is also very transparent to its customers because they disclose temporary changes in their food ingredients if they have constraints in their usual supplies [2].
  • Good management of suppliers and well-established food safety standards.

    Chipotle maintains good relationships with its suppliers and ensures that these are all suppliers who meet the company’s standards. With this, the company is able to provide safe and high-quality food for their customers. Aside from that, Chipotle has its own food safety programs and practices like having food safety certifications, conducting inspections of internal and third-party restaurants, ingredients handling protocols, and more [2]. 

  • Utilizing mobile and digital platforms to increase their reach and provide convenience for customers.

    In 2019, Chipotle launched its “mobile order pick-up shelves” and “digital make lines” in the majority of its restaurants. With this, Chipotle can better manage customer data and enable the business to target individual customers [2]. The Chipotle Digital Kitchen was also announced last Nov.11, 2020, and intended just for pick-up and delivery orders only. This allows Chipotle to set up stores in smaller and urban locations [9]. This is a good strategy as well which helps the business cope up during this pandemic.

  • Chipotle’s digital sales grew 202.5% (year over year) as reported in the company’s 2020 3rd Quarter Results.

    These digital sales composed 48.8% of the quarter’s sales [10]. Despite the stock price dip caused by the pandemic as can be seen below during March 2020, there has been a notable recovery subsequently [11]. 

Image Source:
https://finance.yahoo.com/quote/CMG/chart

  • Integrating innovation with marketing.


    Aside from its successful Chipotle Rewards program, the company also employs a “stage-gate innovation process” which allows the company to test new menu items in test markets first prior to launching them. Chipotle also takes advantage of the other available marketing channels like T.V., social media, events, and sponsorships. Their focus is also on customer research [2].


Chipotle Weaknesses 2021:

  • Closures of a few restaurants.

    It was reported in its 3rd Quarter 2020 Results (year over year) that about 10 of Chipotle restaurants temporarily closed due to the pandemic [10]. 

  • Menu constraints.

    Since the main offering of the company is the Mexican menu, menu items are only limited to Mexican food and flavors. Thus, limiting the potential customers to those who love Mexican food or those who would like to try Mexican food. 






Chipotle Opportunities 2021:


  • Expansion in other global regions.

    The majority of Chipotle’s stores are located in the U.S. The rest are in Europe and Canada, which are also very few.  Chipotle, with its Chipotle Digital Kitchen, can potentially tap more locations not only in Canada and Europe but also in Asia. 

  • Lower store set-up costs for potential new openings if Chipotle Digital Kitchen is widely implemented.

    Given that the Chipotle Digital Kitchen will require lesser on-site personnel and smaller spaces, the company can save more labor costs and lease costs.

Chipotle Threats 2021:

  • The current industry is highly competitive.

    Chipotle operates in an industry where competition is quite tight when it comes to pricing, taste, food selection, customer service, location, promotions, and the like [2].  Competitors who can come up with similar offerings or even provide better offerings at lower costs compared to what the company offers can also impact the company’s sales and market share.

  • Volatility in the prices of ingredients and materials sourced.

    Fluctuations in the prices of the ingredients, paper, fuel, and other supplies or materials can also affect business profitability. Prices of products are also dependent on seasonality, climate changes, and government regulations [2].

  • Third-party delivery partners can be a factor for the growth or failure of the business.

    Since the company relies on delivery partners to fulfill delivery orders, mistakes on the part of these partners can affect the brand image and customer satisfaction. Any potential closures by any of these partners or price increases in delivery can also affect the company’s sales [2].


SWOT Analysis of Chipotle Conclusion 2021:

Overall, it can be concluded that Chipotle’s brand positioning has been geared towards sustainability and mainly using “real” and “responsibly sourced” ingredients. The company is also strong when it comes to its creative and innovative marketing efforts to expand its reach. The Chipotle Digital Kitchen is also promising due to its suitability during this pandemic and the future opportunities it may offer. 



References:

  1. “Overview.” LinkedIn,
  2. “2019 ANNUAL REPORT AND PROXY STATEMENT.” CHIPOTLE MEXICAN GRILL,
  3. Trefis Team and Great Speculations. “Chipotle Top Line To Grow By 12% in 2019.” Forbes, 24 Sept. 2019,
  4. Reeth, Mark. “7 Top Chipotle Competitors to Watch.” yahoo!news, 12 Nov. 2020,
  5. “Chipotle Mexican Grill competitors.” Craft,
  6. “Top 10 Chipotle Competitors In 2020.” WHAT COMPETITORS,
  7. “OUR VALUES.” CHIPOTLE MEXICAN GRILL
  8. “ALL CHIPOTLE LOCATIONS IN THE US.” CHIPOTLE MEXICAN GRILL,
  9. NewsRoom. “Chipotle To Open Its First Digital-Only Restaurant.” CHIPOTLE MEXICAN GRILL, 11 Nov. 2020,
  10. NewsRoom. “Chipotle Announces Third Quarter 2020 Results Q3 Digital Sales Tripled Year-Over-Year And Accounted For Nearly Half Of Sales.” CHIPOTLE MEXICAN GRILL, 21 Oct. 2020,
  11. “Chipotle Mexican Grill, Inc. (CMG).” yahoo!finance,

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