SWOT

1. Strengths
1. Innovation
1. Chipotle is innovative. Chipotle founder and CEO, Steve Ells, focused on making his restaurants have “food with integrity”. He implemented low roller menus, which consist of smaller portion sizes, reasonable prices, and even a children’s menu. Ells also placed vegan-friendly and gluten-free items on the menu to satisfy customer’s different wants and needs. Chipotle also runs on energy-saving features such as onsite wind turbines. Ells made Chipotle an eco-friendly environment for all.
2. Strong management team
1. Chipotle also consists of a strong management team. Ells owns 909,850 shares, he is the largest inside owner of the company. Chipotle also reaps the benefits of starting with McDonald’s; several directors who previously worked with McDonald’s for 15-20 years are board members of Chipotle.
3. Opening new stores with smaller footprint and lower upfront costs
1. The new locations they have planned to open will feature “Type A” designs. The locations will have a “smaller footprint and lower upfront costs” which will allow the company to start up new locations and the return on investment will “not warrant expansion”. This will decline the cost for a new location $800,000.
4. High-profile locations
1. Chipotle has locations located at various location types such as end of row shops, shops within a row, free-standing units, and those in urban locations. This puts them in various locations making it easy for people to visit.
5. Strong Financial Position
1. The company has grown rapidly in the past few years. In 2009 it opened 121 new locations (a 14% growth rate) and plans on opening 120-130 in 2010 (a 13% growth rate). Chipotle also plans on expanding its business to Canada and London.  These new locations are planned to have a “Type A” design, which will lower upfront costs. another strength is that Chipotle has had no debt as of December 31, 2009.
6. Reputation management
1. Chipotle also pays their employees more than the average fast food industry restaurants. They also give managers incentives for hiring quality people. This encourages managers to find great employees which leads to good service, exceeding their competitors.
7. Community involvement
1. Chipotle has become an active part in the communities by sponsoring community events such as holding dinners for local school sporting events), purchasing organic ingredients from local farmers, as well holding fundraisers.
8. Food made in front of customers
1. At Chipotle your order is made right in front of you. We put the ingredients right in front of you so you can pick the perfect ingredients for you. This makes the process interactive and more enjoyable.
9. Online ordering
1. Online ordering allows us to be quick and efficient and also provide convenience to our customers.
10. Upscale environment with fast service/ quick service restaurant
1. Our restaurants are also known for being an upscale environment with fast service. We want to provide convience to our customers without sacrificing the overall environment of the restaurant. Our locations are known for being clean, making customers feel like they are in a good environment.
11. Phone app for ordering and information
1. The Chipotle iPhone App is just another way the company makes eating convenient for their customers. With this iPhone App a person can easily pull up the menu, place and order, enter their credit card for payment, and find the closest restaurant location for pick-up.
12. Quality of food
1. Chipotle, as explained earlier, uses “food with integrity”, the use all natural ingredients and take pride in the food they are giving to their customers. Ells sees each and every customer as “precious”.  He wanted to give each and everyone of them a special experience. He even taught his staff how to cook.
13. Higher price point than competitors
1. Because Chipotle’s meals are more expensive than competitors it is seen as being better quality. “32% of of price for Chipotle food is the food itself, the highest in the industry.”
14. No franchise option
1. An interesting, yet important quality about Chipotle, is that none of the restaurants are franchised, they are all company owned. This is seen as a smart move because experienced individuals run all of the restaurants.
2. Weaknesses
1. Availability of brand specific sourced food
1. Chipotle’s food is specified as organic and locally grown which is a positive to most people but where exactly is the food coming from.In 2010, Chipotle plans to serve at least 50% of at least one produce item from local farms when it is seasonally available (more than 50% and more than one item any time we can). Those vegetables include romaine lettuce, red onions, green bell peppers, jalapeño peppers, and oregano. This is also true in many other brand specific companies such as Panera, Qadoba, and now even Taco Bell has joined in the forces of sourced food.  Yet this information is only available on its website and with limited detail information, while other health conscious quick service restaurants give specific location or areas where they receive there food from.
2. Limited Menu
1. Chipotles menu is geared towards the quick tex-mex grill. There are a slim variety of food besides burritos, tacos and salads in their menu which is a negative downfall especially when other fast food restaurants have more variety including different hot meals, speciality designed gourmet meals and signature fresh cooked breads, soups, and or sandwiches that Chipotle does not offer.
3. Limited Locations
1. Compared to Chipotles prime competition and even other well known fast food restaurants such as Burger King and McDonalds, there is very limited locations in the U.S. There are less than 1,000 Chipotle’s in the U.S which is very minimal when it comes to fast food locations.As of March 2009, 830 restaurants have opened throughout the United States and Canada. All are company-owned, rather than franchised.
4. Word of mouth advertisements/ Limited advertisements
1. Chipotle doesn’t believe they need to be dependent on advertising, and they focus more on word of mouth. They utilize an in-house agency, rather than hiring an outside agency, which they have tried again and again.Chipotle executed an advertising campaign where they poked fun at advertising agencies saying that the ad agencies said to show a burrito in the ad, but they thought it was better to show where they came from or that the ingredients deserve the spotlight. They did this through print, radio, and online but did not use TV ads or billboards.
3. Opportunities
1. Entering new markets
1. With more than 900 restaurants in the US, Chipotle opened its first restaurant in London (UK) in 2010. The company is now looking at properties in different European cities such as Paris or Munich.
2. Expand in the US
1. “Chipotle Mexican Grill will be the leading restaurant growth stock of any meaningful market cap, based on firm's work only 40% saturated in the US, with the ability to at least double and perhaps triple its current store base. That growth potential, combined its current rate of growth should command a valuation commensurate with that superior growth; today it does not.”
2. http://notablecalls.blogspot.com/2010/01/chipotle-mexican-grill-nysecmg-upgraded.html
3. Attitudinal change: people are more health-conscious
1. Consumers are becoming health-conscious, they are increasingly aware of matters as obesity and food safety. Even if the major fast-food chains have responded by offering more healthy options on their menus, this trend has hurt the Fast Food Restaurants industry, affecting specially hamburger and meat products and fried foods. Chipotle is considered to be healthy, following this trend people would choose Chipotle over other “greasy” fast food chains.
4. Offer new services/new food
1. Chipotle offers more than 65,000 choices. Customers can build a 1-1/4 pound burrito combining chicken, steak, barbecue or free-range pork, with different beans, rice, guacamole, veggies and salsas. The chain also serves tacos, chips and salsa, beer, and margaritas. Even so, there is always room for innovation. New ingredients and new options would give the costumer even more choices. (from Hoover's Company Records - In-depth Records, February 8, 2011 Copyright 2011 Hoover's Inc.)
5. Quick-service industry’s growth will outplace full-service’s growth in 2011
1. The National Restaurant Association (NRA) predicts in its Restaurant Industry Forecast that the quick-service industry’s growth will outplace full-service’s growth this year. The fast-food industry will earn $168 billion in 2011, a 3.3% more than in 2010. The full-service industry will earn $195billion, a 3.1% more than last year. The restaurant industry is set to earn a total of $604 billion in 2011, growing a 3.6% over 2010.
2. http://www.qsrmagazine.com/news/qsrs-grow-fastest-industry
6. Long-term trend of specialty food chains
1. There is a long-term trend in fast-food industry in investing in ethnic food and specialty chains. These chains offer a different and more specialized menu, as does Chipotle offering Mexican food. This trend has grown over the past years and has affected the whole industry.
7. Industry forecasted to have increased revenue in the next 5 years
1. “Over the five years to 2015, IBISWorld forecasts that industry revenue will increase at an average annual rate of 2.5% to $208.16 billion. The industry will resume its long-term growth trend beginning in 2011, when industry revenue will jump by an anticipated 3.4% to $190.24 billion.” Thus, as the economy recovers consumers will spend money again on extras like eating out. Personal consumption expenditure is predicted to increase at an average annual rate of 2.5% until 2015.
2. http://athena.rider.edu:4381/industryus/industryoutlook.aspx?indid=1676
4. Threats

1. Competition
1. Competition is a threat to Chipotle, although it is a very specialized quick-service restaurant. Chipotle has both direct competitors that are similar themed chains in the market and indirect competitors that are other popular fast food restaurants. The restaurants that directly compete with Chipotle are Pandahouse Restaurant Group, Qdoba restaurants, and Taco Bell, according to Hoover’s Company records. Taco Bell is the leader in the Mexican fast food category, according to Standard and Poors’ report. Standard and Poors’ report also says that indirect competitors to Chipotle are McDonalds, Starbucks, Yum! Brands, and Sodexho.
2. economic slowdown
1. The economic slowdown and less disposable income are affecting everyone, but especially the restaurant industry. IbisWorld says that people are choosing to eat home-cooked meals instead of going out to eat. hen they do go out to eat, average consumers are choosing to purchase lower-priced items. Chipotle is no different, except for the fact that they have a higher price point than restaurants like McDonald’s that have value menus. This database also says, “The industry is affected by factors that influence the growth in real household disposable income, including changes to tax and interest rates and changes in labor market growth. During an economic recession, the spike in unemployment leads to more subdued growth in household incomes. High and increasing gas prices also adversely affect disposable income, decreasing consumer expenditure on take-out food. This driver is expected to increase over the next year.”
3. lower cost competitors
1. Chipotle’s food begins at around seven to eight dollars, whereas competitors such as McDonalds, Taco Bell, Pizza Hut, Long John Silver’s, and KFC have options such as value menus that start below a dollar. This is a threat to Chipotle because the average consumer that chooses to eat at a fast food restaurant is choosing to purchase lower-priced options, according to IbisWorld.
4. regulation
1. Recently, there has been a crackdown on illegal workers, and Chipotle has been a big name in this problem. The government is doing this through audits of I-9 forms. Although most fast-food chains will be targeted with this, Chipotle is being mentioned in the media, which could be a big threat. According to msnbc.com, Co-Chief Executive Monty Moran told Reuters on Friday that U.S. Immigration and Customs Enforcement (ICE) has also issued "notices of inspection" for restaurants in Washington D.C. and Virginia... Under Obama, immigration enforcement agents are cracking down on employers with so-called "I-9 audits" — I-9 being the employment eligibility verification form. ICE says that means companies' hiring practices could be subjected to the same degree of scrutiny as their bookkeeping is by the Internal Revenue Service.”

1. substitutes
1. Substitutes include places where people can get prepared food other than fast food restaurants, which is a big threat to Chiptole. This includes prepared foods from food stores, caterers, and full-service restaurants. According to IbisWorld, this “driver is expected to increase over the next year,” which is a threat to Chipotle. These substitutes could be considered more convenient or a more worth-while use of disposable income, even though Chipotle serves a specialized market that likes Mexican food.
2. other fast food restaurants will be continuing to offer healthy choices, including Mexican food and fresh salads
1. In the fast food industry, many restaurants are responding to the attitudinal change toward health consciousness. “Major operators will seek to expand revenue and profit by offering non-red meat products (such as chicken burgers, Mexican food and pasta) and providing a variety of other meal options, including fresh salads” (IbisWorld). This could be a threat to Chipotle since their big idea is “Food with Integrity,” which is food that appeals to those that are health-conscious. The fast food restaurants that are creating new healthy meal options could take some of the consumers with this attitude away from Chipotle. They only have a limited disposable income.