Chipotle analysis
1. Business Overview
Chipotle is an American restaurant chain that serves Mexican inspired foods. They sell foods like burritos, tacos, bowls, chips, salads, and more. You can choose your ingredients right at the counter, and customize your meal. Their main competitors include Taco Bell, McDonalds, Dominos, KFC, and other fast food chains. Chipotle is known for their flavorful food, and their high quality ingredients. They also offer beverages such as soft drinks, Izze, Teas, Lemonade, and seasonal drinks as well.
Chipotle makes all of their revenue from food and beverages. Chipotle has grown to more than 2000 locations, but are primarily based in the US. Chipotle offers tasty food with high quality ingredients, and cooked with classic cooking techniques. In 2011, the company launched Shop house which specializes in Asian Cuisine. The store sold foods like noodles and curry. Eventually, all locations got closed down.
2. Size
Chipotle is a well known chain, and is loved by many. They hold a 9.64% market share. As I said before, Chipotle has over 2000 locations, and over 45,000 employees. Revenues from 2022 come up to $2 billion and 16% increase. The average customer pays at Chipotle is about $11 dollars, and an average of 610 customers are served every day at each chipotle.
One disadvantage that Chipotle has is the number of customer visits. Only 43% of Chipotle customers visit the brand once a month or more. However, 71% of McDonald's customers say that they visit McDonalds one or more times a month. As well, about half of chipotle customers only come a couple times a year. This means that McDonalds has created a more loyal customer base, and has created incentive for customers to visit.
Chipotle is widely known for their hearty meals which are nutritious and delicious. The most popular item sold at chipotle is their high protein bowl. A bowl at chipotle can be customized for the customers choice, and can have meats, vegetables, sauces, rice, and more. The next most popular item is the chicken burrito bowl. This is another form of the bowl, and is a great alternative for people who are looking for a healthy meal. And the third most popular item is the chicken burrito. The chicken burrito is a tortilla warmed, and folded in a burrito format. The burrito is also customizable, and you can choose a variety of ingredients that will be stuffed in it.
Chipotle is a sit down store, but is considered fast food by many. However, if chipotle included a drive thru, many people would be able to save time when ordering food. Chipotle can have premade foods that would be available as soon as someone ordered it, and would save people time. Many people value the time it takes for fast food to serve food, and including a drive thru can be a great way to attract more customers to eat at Chipotle.
3. Growth
Revenues
Year 2017 2018 2019 2020 2021Revenues $4.5 B $4.9 B $5.586 B $6.00 B $7.5 B
As we can see, Chipotle revenues have been increasing at a consistent rate which is always a good sign. They are also growing at a fast and significant rate. More customers and stores are the reason for this increase.
Net Income
Year 2017 2018 2019 2020 2021Net Income$176.3 $177 $350 $ 356 million millon million million$ 653 million
Chipotle’s net income is increasing, however the profits are significantly low. Even though revenues may be growing, and at a high number, the profit margins needs to be at a high number as well for the business to be growing. Additionally, the costs of their operations are the reasons the profits are so low. Chipotle can increase the price of their
goods, or spend less money on certain areas to increase the profit margins, and their profits.
Low Probability Medium Large Probability Probability Large Payoff Start having more Start opening more Adjust menu to locations in stores at a rapid trendy foods and international scale rate drink items to bring to maximize in new customers revenues Medium Payoff Have a day in the Collaborate with Try to reduce week where different celebrities operating costs to everything in the and try to bring maximize profits menu is a certain hype to restaurants amount off Small Payoff Start expanding Host events and Have offers such as menu to american have more clever buy one get one, foods to target a advertisements to and different deals larger consumer bring in more to bring in demand customers customers
If Chipotle expands the menu to american food, many customers may find interest and Chipotle will attract more customers. However, people may not enjoy the expanded menu, and may not buy the new product. This will reduce sales and decrease revenues.
If Chipotle has a day where everything is a certain percentage off, they can increase the number of customers on that day, and start increasing revenues over time. It can also keep those customers and create them into repeat customers in the future. However, it can take a toll on their profits if the percentage is too high.
If Chipotle tries to reduce operating costs to maximize profits, they can lower the quality of their product. This can affect the opinion of the customer on the food, and can prevent them from coming. However, if done well, they can save money, and increase profit margins.
Chipotle can add drive-thrus to attract customers who do not want to spend much time in the store. This can get more customers which will generate more revenues. However, drive-thrus may not work as there would have to be more employees, and change their entire plan for serving customers. This could cause a lack of quality and destroy the image of chipotle. Customers may not appreciate that, and could stop going or possibly stop going less frequently. This will lose money for Chipotle.
4. Margins
Operating Margins
Year 2017 2018 2019 2020 2021% 6.05 5.32 7.95 4.85 10.67
Chipotle’s margins seem all over the place on the table. We can noticeably see that COVID had an effect on the 2020 margins, however, in 2021 they came back strong with an all time high percentage. As I said before, the profits are extremely low compared to the revenues that they are bringing in. Chipotle needs to find a way to increase these margins for them to effectively grow, and become more successful.
5. Cash Flow
Year 2017 2018 2019 2020 2021$ in Millions $468.216 $621.552 $721.632 $663.847 $1282.081
The Cash flow has been increasing in the last 5 years. With a small dip because of the virus, 2021 had a huge bounce back with almost double the cash since last year.
6. Business Risk
Low probability Med probability Large probabilityLarge Loss All Chipotle stores Articles come out Covid variant collapsed because and support comes and scares god wanted them backlash towards people from to. chipotle. purchasing food from chipotle.Medium Loss Every single Conspiracy theories New restaurants Chipotle customer circulate that attract customers gets immensely suggest negatives instead of chipotle. poor because of about Chipotle economic food. depression.
Small Loss Florida gets nuked by Russia, and
chipotle stores are
destroyed.
Some employees go on strike
because of low wages.
Chipotle changes its menu and
people dislike it.
7. Stock Performance
Chipotle’s stock graph was pretty flat at first, however, in the year 2011, they started to pick up the pace. It gradually increased to the year 2016 where they experienced a decrease. Then after 2018, it started to increase again. Ater a small dip in 2020 because of COVID, they have been increasing at a fast and decent rate. There has been a recent decrease because of the labor shortage, and because of the Russia and Ukraine war.
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