Chipotle Mexican Grill

Week 2 Assignment: Case 18

American Military University

Strategic Management

BUSN 620

February14, 2016

Abstract

Chipotle Mexican Grill was established in 1993 by an inspiring young entrepreneur and chef Steve Ells. Opening his first fast casual restaurant in Denver, Colorado, his philosophy was simple; provide good food with fresh ingredients at a reasonable price. That simple business model has evolved Chipotle’s into a 4.5 billion dollar a year business and redefined the definition of fast food. Steve Ells has led this company to success by sticking to his initial business model. His methods are seen as unorthodox in the restaurant industry, but the results show otherwise (Pearce & Robinson, 2015).    

Successful company?

According to industry standards Chipotle spends too much money on its ingredients, not enough money on advertising, restaurants are not located strategically, no breakfast menu or drive thru and has no franchises. The company is successful in spite of the mentioned flaws that the industry claims is not the way to run a restaurant.  Chipotles success is centered on a simple menu that offers fresh food made from scratch and produce and meats that are purchased from local farmers. The chicken, pork and beef that are used are coming from animals that are raised in humane conditions and without antibiotics or added hormones. Chipotles mission statement became "Food with Integrity" (Stock & Wong, 2015). This researcher feels that Chipotle’s is a successful fast casual restaurant chain. Since the company opened its first restaurant in 1993 the chain expanded to over 1500 restaurants and has increased its revenue from approximately 1 billion (U.S. dollars) in 2006 to 4.5 billion (U.S. dollars) in revenue in 2015 (Statista, 2016).

Sustainable Resourcing

Chipotle’s supply chain was in close alignment with the companies operating principle of “Food with Integrity”. Steve Ells had finished reading an article about an Iowa farmer who had raised pigs without the use of hormones or steroids and the meat tasted much better than that of mass-market meat.  He researched concentrated animal feeding operations or CAFO.  CAFO is a method of raising livestock in confined spaces for the use of commercial purposes. This method has environmental impacts associated with it and is considered in humane to the animals. After touring these operations Steve Ells formulated the sourcing plan and the slogan “Food with Integrity”.  His commitment was to source to farmers that supplied pasture raised livestock, fresh dairy products and fresh produce. An additional program was initiated to have these fames located within a 350 mile radius of a restaurant to help reduce transportation cost and to give the local economy a boost and improve the taste of food due to the freshness of the ingredients used at the peak of a growing season (Pearce & Robinson, 2015).