Chipotle M

Marketing Plan

Marketing 5341

Professor Besio

December 9th, 2014

The 5 Cs

Company

Chipotle is a Mexican food chain dedicated to serving high quality “fast” food. The company was founded by Steve Ells in Denver Colorado in 1993, and has grown to over 1,000 stores by 2011. The initial growth of Chipotle was mainly attributed to McDonald’s investment in the company in 1999 for a 90% stake. With the involvement of McDonald’s, Chipotle was able to gain access to not only capital, but to the parent companies’ suppliers through their large distribution system. By 2003, Chipotle had opened 300 stores throughout the country, and had established a loyal customer base. Today, Chipotle remains dedicated to its vision of “Food with Integrity.” This represents their “commitment to finding the very best ingredients with respect for the animals, the environment, and the farmers.” In addition to promoting its high quality, fresh ingredients, Chipotle offers consumers a customizable menu with an open kitchen atmosphere and assembly line food preparation. This allows customers to obtain high quality food quickly and efficiently. Customers

Chipotle has done an impeccable job of building customer loyalty. The company has gained this following mainly by word of mouth, considering the company has a small advertising budget of only $4.5 million, less than 1% of its revenue, as of 2011. Considering this small advertising expenditure, it is impressive that the company has fared so well. Chipotle’s customer loyalty can be seen in its increasing demand and through multiple Chipotle fan pages such as a Facebook fan page called The Church of Chipotle. Chipotle’s customers tend to be young, approximately ages 18-34, with at least a Bachelor’s degree. These young consumers, who are often in a hurry or choose not to cook at home, look for high quality, yet fast food. They also tend to be somewhat affluent, since Chipotle’s prices, although low given the quality of the product, are still higher than those of quick service restaurants such as McDonald’s. Chipotle customers also tend to be health conscious, and appreciate the high quality, fresh ingredients that the company offers.

Competitors

Chipotle competes generally in the restaurant industry. The company competes directly with other fast casual restaurants, such as Panera or Qdoba Mexican Grill, and quick service restaurants (QSRs), such as McDonald’s and Burger King. Chipotle and other fast casual restaurants have a growing advantage over QSRs. Although McDonald’s revenues are still much larger than that of Chipotle, Chipotle’s revenues have continued to grow over the past five years at a consistent rate of about 20%. Additionally the fast casual segment saw an 8% rise in guest count over the past year, while the guest count for QSRs remained flat.

Collaborators

Initially, as stated above, McDonald’s helped to get Chipotle off the ground. Chipotle was the first company McDonald’s invested in that it had not developed itself. The two companies collaborated together for eight years until McDonald’s sold its stake in the company.

Chipotle’s success can also be attributed to the long-term, sustainable relationships it has developed with its suppliers. The company selects suppliers based on quality of their food and their understanding of Chipotle’s mission. The company works closely with suppliers and uses a mix of forward, fixed, and formula pricing protocols to maintain reasonable supply costs.

In order to maintain customer loyalty, Chipotle focuses a great deal of attention on their employees. The company strives to hire top performance employees by offering attractive career opportunities to crew and management who work hard, provide great customer service, and have an ability to lead. The company promotes predominately from within, with about 85% of salaried management and about 96% of hourly management coming form internal promotions. The company’s best general managers are promoted to Restauranteur, who are then given the responsibility to mentor one or more nearby restaurants. Chipotle is committed to creating a performance-based culture that ensures the best restaurant experience possible for both employees and customers.

Context

Political – Chipotle strives to be an environmentally conscious brand, dedicated to providing sustainable food products. The company aims to promote progressive ideas and innovation within the food industry.

Economic – Chipotle targets the young and affluent, understanding that many consumers were negatively affected by the recent economic recession, and have changed their spending habits.

Social – Chipotle is dedicated to offering consumers fresh, high quality ingredients and to promoting a dialogue among consumers about the negative health effects of genetically modified foods.

Technological – Chipotle’s point of sale system has helped the company track consumer preferences, demand, and the effectiveness of salespeople.

Marketing Objectives & Strategies

Chipotle uses non-traditional marketing techniques to reach their target market. Chipotle relies heavily on customer interaction to build their brand. The company uses promotional programs, in-store communications, and focuses on design elements to create the best customer experience possible. Chipotle’s main objective is to get consumers to understand how Chipotle is different from other restaurants in the industry. Its slogan, “Food with Integrity,” has helped to create the company’s brand image in the minds of consumers.

Chipotle is an innovative company in the way it advertises so effectively while spending so little. The company’s new “Cultivating Thought” program has recently gained a substantial amount of media attention. It is a campaign developed by Chipotle whereby the company puts interesting quotes and thoughts by historical figures, celebrities, etc. on their cups and bags.

Although Chipotle does not spend a lot on advertising, the company finds ways to grab consumers’ attention. Recently, Chipotle released its Scarecrow video, an original YouTube comedy series created to highlight problems in the food industry.

Chipotle is also expanding into new cuisines, differentiating itself with brand extensions. These new brand extensions include an Asian restaurant, ShopHouse, and a pizzeria, Pizzeria Local. These new brands will help the company obtain an even larger market share in the fast casual segment, by acquiring customers with different tastes and preferences. Chipotle also has an opportunity to grow the company’s new brands with Chipotle’s “Cultivate Festival.” The Cultivate Festival is a series of outdoor festivals that draw between 25,000 and 40,000 people by hooking them up with local foods, flavors and beer makers, all under the big tent of the Chipotle brand.

Overall, Chipotle has found unconventional ways to reach its target market, predominately the millenials. The company promotes customers to explore their interest in “food with a conscience,” by having a dialogue, not by preaching to customers with expensive TV ads. Chipotle encourages customers to be active on social media and help build awareness of the brand.

STP

Segmentation & Targeting

Chipotle has and continues to open stores in urban areas of the U.S. and abroad. The company understands that these are areas where their target customers mainly reside. Chipotle targets young consumers, ages 18-34, with a Bachelor’s degree as stated above. These customers tend to be more affluent and can afford paying the slightly higher prices than those of QSRs. Chipotle’s customers tend to be focused on living a healthy lifestyle and to eliminating genetically modified foods from their diet.

Positioning

Chipotle positions itself as a health conscious brand, dedicated to providing customers with the highest quality ingredients at a reasonable price. The assembly line structure of the restaurant allows young, time conscious customers to acquire fresh meals quickly.

Products

Objective #1:
Chipotle aims to position itself as a premium brand, compared to quick-service restaurants, by offering higher quality products.

Strategy #1:
The company is able to position itself this way by offering all-natural ingredients. Chipotle has important, strategic relationships with its suppliers in order to ensure customers are able to choose from the highest quality ingredients.

Plan #1:
Chipotle plans to expand is supply network as the company expands to new areas and regions.

Objective #2:
Chipotle also aims to keep its menu clean and simple, while still offering its customers a wide variety of options.

Strategy #2:
The company is able to achieve both of these objectives by doing two things. First, Chipotle keeps their menu simple by only offering five meal styles: burritos, burrito bowls, tacos, and salads. Second, however, the company offers their customers unlimited variety by allowing them to customize their meal style and choose whichever ingredients they desire. Chipotle offers a variety of ingredients, including tortillas, meats, cheeses, rice, vegetables, salsas, sour cream, and guacamole. Because customization can be daunting to some consumers, Chipotle encourages employees to make suggestions to certain customers if those customers are unsure of what ingredients go well together.

Plan #2:
Chipotle plans does not plan on changing its menu offerings. The company has, however, implemented a “secret menu” which includes other meal styles, for example quesadillas. This allows loyal customers to feel extra special and like they are part of the Chipotle culture.

Objective #3:
Chipotle intends to assemble each individual product, for each individual customer quickly and efficiently.

Strategy #3:
The company accomplishes this objective by using an assembly line process, much like Subway’s sandwich assembly line process. Chipotle has a few ways in which it makes the assembly line as efficient as possible. First, the company ensures that there is a sufficient amount of ingredients in place for the rush hour crowd. Second, Chipotle has their “aces in places,” meaning that all employees in the assembly line are in their appropriate positions to ensure guests are being served at all times. One unique position that Chipotle has created is the expediter. This employee works between the final product wrapper and the cashier to bag the meal. This allows the cashier to spend their full time and energy getting customers through the payment process. Third, Chipotle employs a “line-backer,” a manager that oversees the assembly line workers and aids them with whatever they need so that they do not have to turn their backs on customers. This intricate assembly lines process allows employees to remain completely attentive to customers’ needs and allows customers to receive their food quickly.

Plan # 3:
Chipotle plans to continue with this assembly line process for food preparation. The company wants to continue hiring top performing employees who are friendly and efficient, hard workers. Chipotle plans to maintain these kinds of employees from promoting from within the company.

Pricing

Objective:
Chipotle targets young professionals, many of who seek healthy food in a hurry, and who are willing to pay for it. For this reason, Chipotle is aims to price its products higher and obtain higher margins than quick-service restaurants.

Strategies:
In order to create and maintain demand at higher price points, Chipotle must make customers feel like they are truly getting what they are paying for. The company achieves this though multiple activities.

#1: First, Chipotle promotes their all-natural ingredients, which can be seen in almost any of their marketing campaigns.

#2: Second, the company has created an open kitchen design, so that customers can see that the ingredients are delivered fresh, not frozen. Chipotle never wants customers to feel like the company is hiding anything from them.

#3: Third, Chipotle has designed all stores to be sleek, modern, and clean. This adds to the overall dining experience of each customer, which most young professionals appreciate.

Plan:
Chipotle plans to increase prices even more in the coming year. This is due to the increase in prices of supplies and the increase in minimum wage.

Distribution

Objective:
Chipotle aims to distribute the freshest ingredients to its restaurants.

Strategy:
The company independently owns and operates 23 distribution centers in key locations around the U.S. Chipotle acquires these ingredients from local suppliers to ensure they are of high quality and very fresh. The company itself delivers such ingredients to each restaurant as needed.

Plan:
Chipotle plans to keep distribution internal, to ensure quality to customers.

Marketing Communications

Objective:
Chipotle aims to communicate to consumers what makes the company different from other fast food restaurants:
1. High quality fresh food, on-the-go
2. A commitment to animals, people, and the environment

Strategies:

1. Chipotle uses non-traditional marketing techniques to reach their target market. Chipotle relies heavily on customer interaction to build their brand. The company uses promotional programs, in-store communications, and focuses on design elements to create the best customer experience possible.

2. Chipotle’s slogan, “Food with Integrity,” has helped to create the company’s brand image in the minds of consumers.

3. Chipotle is an innovative company in the way it advertises so effectively while spending so little. The company’s new “Cultivating Thought” program has recently gained a substantial amount of media attention. It is a campaign developed by Chipotle whereby the company puts interesting quotes and thoughts by historical figures, celebrities, etc. on their cups and bags.

Plan:

Chipotle recognizes the need for their marketing to evolve. To this end, the company has been developing more “owned media,” including new video and music programs, and a more visible event strategy that includes their “Cultivate” festivals of food, music and ideas, and participation in relevant events in markets around the country. Many of these newer programs allow Chipotle to tell their story with more nuance than is afforded by traditional advertising, and help forge stronger emotional connections with their customers.

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