Chipotle Mexican Grill, Inc. in Beijing, China

Goal
The goal of the well-known fast food restaurant chain, Chipotle Mexican Grill, Inc., is to introduce the franchise to a brand new market, Beijing, China. The market is totally different for many perspectives, such as Asian culture and different customer base. It will be very important and challenge to find effective ways to attract dinners. Hence, Chipotle Mexican Grill, Inc. has to build and promote a new definition for fast food, which is healthy. People in Beijing, China become more and more pay attention to the food they eat and whether it is safe and healthy. The developing process will definitely not be easy, so the corporation needs to seek ways to overcome all the possible barriers and problems it may happen in the future. The ultimate goal is to survive and to be successful in the new market, and slowly and stably expand franchises in Beijing, China, and growing 15 percent of the market share within one year.

Introduction
Chipotle Mexican Grill, Inc. is a fast food restaurant chain that was founded by Steve Ells in 1993. Ells used his father’s loan, $85,000, to open the first Chipotle restaurant in Denver, Colorado. It became a huge success by selling over 1,000 burritos a day. The second store opened two years later, also in Colorado. The father of Ells invested $1.5 million, and then Ells used the funds to expand Chipotle by creating a board of director and business plan. In 1998, McDonald’s made a small investment in the company. The investment helped Chipotle so much, and it allowed the company to develop more restaurants in different locations. The corporation has grown and developed successfully since then. Chipotle Mexican Grill restaurants are all over the world now. There are in the United States, Untied Kingdom, Canada, and France. They specialize in burritos, burrito bowls and tacos, with choice of cilantro-lime rice, pinto or black beans, meat (braised carnitas or barbacoa, adobo-marinated and grilled chicken or steak) or guacamole, salsa and cheese or sour cream. (chipotle.com)
Chipotle has opened its franchise in North America and Europe. It is time for it to explore new market, such as Asia. From the success of many western cuisine restaurants, such as McDonald’s and Pizza Hut, the capital of China, Beijing, would be a great potential market for Chipotle to open its first store in Asia. For instance, KFC has the top quick-service restaurant – in term of sales, in China, and it has more than a thousand outlets that serve more than 2 million Chinese each day. (Miller, 2004) Because of these successful cases, it can provide the resources and useful experiences and strategies for Chipotle to learn. Following the fast pace of young professionals, people prefer fast and quality service, and it is becoming a trend. Hence, Chipotle would be a great fit to its demand. Assumptions
In 2000, more than 20 percent of quick-service operators in China were foreign, and Western-style fast food accounted for roughly one third of China’s total quick-service business volume. (Miller, 2004) Following the influences of globalization, lots of the western cultures are flowing into Beijing. Food is one of them, and it is becoming more and more popular. China is still a developing country, so middle class occupied a big portion of the population. Chipotle is healthy, fast, and affordable. There will be a large demand for it. On the other side, there will definitely be challenges as well. Mexican food is new to people in China. It may be difficult to make people know and like it immediately. In resent years, with annual growth 13%, fast food restaurant industry grows rapidly. (ibisworld.com) Thus, the time for entering will be beneficial for Chipotle.

Competitive Analysis
Chipotle Mexican Grill will definitely bring a new flavor to Beijing. There are only a few Mexican restaurants, and they are not franchises. One of the Mexican restaurants gets a high rating. It is called Sand Peddle Beach. It got many good reviews by foreigners on tripadvisor.com. It is a small restaurant. Many people say they have authentic Mexico food. That restaurant will be a strong competitor for Chipotle. However, the idea of healthy fast food is new to the market, and it is very unique. It may attract many customers. Also, there are a few western fast food franchises in China, such as KFC, McDonald’s and Subway. They are doing while in China. In order to attract wider audience, they all adjust their menus and add new Chinese dishes. For example, the total sales revenue for Subway in Beijing grew more than 40 percent year-on-year in 2010 and we expect to see similar rates of growth continue over the next two years, according to Moody-Stuart, a Subway agent for Beijing. (Yuan 2011) However, sales for McDonald’s and KFC falls around 10 percent this year in Asian region, which is a big decline. (Rudarakanchana, 2013)

SWOT Analysis Chart

Strategy
Following the rapid change of globalization and economic on restaurants in China, marketing strategy needs to adapt the situation as well. China’s emerging middle class carves high-fashion items; luxury quick service restaurants are in high demand. (Miller, 2004) Hence, besides emphasizing quality and freshness food with great tastes, Chipotle also needs to change the restaurant’s style into well-decorated Mexican style dining place. So, middle class people can experience high quality service.
Some of the winning strategies seem easy and simple to do, but many companies failed to do market research or didn’t spend time to introduce their brands in China. Hence, it is important to pay attention to the details, such as choosing a meaningful Chinese name for the restaurant. Some companies’ names are just translated from the sound of foreign name, which is not meaningful and it may be mistranslated. Another thing to remember is to learn what customers want and deliver it through market research. Learning what customers want from a restaurant involves not only studying what customers want to eat, but also how they prefer to be served and what overall dining experience they expect. (Miller, 2004) Of course, marketing the restaurant and its products is very significant. When doing so, restaurant needs to aware who are the target customers.

Segmentations
The restaurant is open for everyone, however; businessman, young professionals and college students are the target segmentations. They don’t have much time to spend on lunch and dinner, however; they want something that is healthier than McDonald’s. In China, there are not many fast food restaurants. In that case, Chipotle would be a great place for those people to go. According to the National Bureau of Statistics of China, out of a total population in 2004 of 14.213 million in Beijing, 1.415 million (9.96%) were 0-14 years old; 11.217 million (78.92%) were 15-64 and 1.581 million (11.12%). (China Statistics 2005) People age from 15 to 40 should be the target customers. From a survey that is collected from one of my friends in China, Fan is a college student currently in Beijing, China. He claims that students are very busy nowadays, and they don’t want to spend lots of money on fancy western food. They, include him, are looking for food that is healthy, tasty and affordable. After telling him the Chipotle Mexican Grill, he said he would definitely try it out if there were one in Beijing, China.

Four Ps
Product:
The restaurant should be at a small to mid-size place with Mexican style decorations. The restaurant will serve authentic Mexican style fast food, just like other Chipotle franchisees. However, some of the ingredients may change slightly due to different taste preferences in China.
Place:
The restaurant should be in a busy financial distract, such as Zhong Guan Cun District, Beijing. That is where busy businessman and students are. Chipotle would be a great lunch choice for them to buy and go eat at their workplaces and schools.
Price:
The price should be affordable for middle class and upper class people. In the U.S., the average price of a burrito should be around $7 depends on what ingredients you want to add. That is equal to 42.63 Yuan adjust to the currency rate. However, we can’t sale it at the same price because the food supply and people’s life style and income are different in Beijing, China. Also, the price should be similar to other western fast food restaurants, such as KFC and Pizza Hut. For example, price for items on the menu has raised so much at Pizza Hut in Beijing, China. For medium size pizza, it costs around $14. (Information from a friend in Beijing, China) It is a lot more expensive than here. Thus, price for items on the menu for Chipotle should be slightly higher than U.S. as well. Any burrito or burrito bowl with BBQ pork and steak should be around 55 Yuan; with chicken should be 50 Yuan. If people order salad only, the price should be 45 Yuan.
Promotion:
TV commercials and Internet commercials would be the most efficient way to advertise the brand. Social media is also a way to do it. Posters on the public transportation are popular in China as well.

Structure

General manager should be responsible for all restaurant operations and making sure to communicate with the corporation in U.S. regularly. He or she needs to manage all restaurant employees, and to monitor food supply. Gathering resources from competitors and customers and developing marketing strategies that can increase revenues are also his or her duty. The responsibility of general manager assistant is to evaluate staffing levels, people development, accuracy of financial reporting, food cost, labor costs, other operating expenses, shift management, safety and sanitation, product quality, and administrative duties. Also, the assistant is responsible to other tasks that are assigned by general manager. Under general manager, there will be culinary manager and service manager. Culinary manager is responsible for selecting, hiring, training and supervising the culinary staff in the kitchen, and he or she needs to make sure food is always top-quality, well prepared and presented. Service manager is responsible for selecting, hiring, training, managing all servers, managing day-to-day shifts, guest services and sanitation. He or she also supervises the team that builds good relationships with customers. The restaurant will operate 7 days a week: serving food Monday – Friday from 9:30 AM to 9:30 PM, and Saturday –Sunday from 11:00 PM to 8:00 PM. It will be closed on New Year’s Eve and Spring Festival’s Eve. Distribution channels move products and services from business to consumers at a right time, at a right market with the lowest cost. Thus, it is significant for Chipotle Mexican Grill, Inc. to find a distribution channel for the restaurant in Beijing, China. It will be a single channel because the company will want customers to get the food from the restaurant directly. It is the most efficient way to do business. The channel members should include the meat supplier, tortilla supplier and produces supplier, and these members need to make sure to provide quality food without delay. Because the franchise will be a small to middle size restaurant that doesn’t need huge food supplies, there will be no need for a distribution partner. Culinary manager can be responsible for monitoring and controlling the quality and safeness of food supplies.

Actions * Change the style of restaurant decoration to well-decorated Mexican style sit-down restaurant with comfy seats * Market the idea of fast health food through social media, television and flyers. Create an account on Renren.com (a popular social networking website in China, similar to Facebook.com) and restaurant rating websites and so on, and post pictures of food and dining area on there. Make TV commercials and flyers by partnering up with celebrities. * Give out promotions (coupons and discount) and send out flyers to nearby schools and office buildings at the beginning of business. Reduce promotions if the sale goes up * Collect customer feedbacks. By doing survey that contents questions like what they think the tastiness of food at Chipotle, customers can gain a Chipotle coupon that is worth 20 Yuan. * Create a Chinese version Chipotle Mexican Grill, Inc. website. On the website, it can include the background information of the corporation, menu and ingredients and so on. * Add more transparency to the restaurant. On the website, the corporation can show people why it is healthy by posting videos and stories of how the vegetables are planted and how cow and pig are raised. * Expand restaurant chain if sales keep increasing * Add more vegetable choices and fish (as one of the meat choices). Chinese people like to eat vegetables. Fish is a healthy choice, and Chinese people like fish. Also, Chipotle can buy in different local soft drinks and beers. * Setting up training sessions for employees. So, customers can enjoy the dining experience. Servers need to know how to deal with difficult situations; such as there is a long waiting line. * Generate a lot of attention by publicity stunts in order to attract customers. Setting up public tasting test with local well-known competitors, and invite the press and community to join the events. * Create a customer loyalty program in order to increase sales and popularity. For example, if customers who purchase more than ten times, they can get one meal for free. For those people who tell their friends about the restaurants, they will get discount during next time visit. * Have a grand opening party, and invite local newspapers and the press and popular bloggers, so they can market for the restaurant.

Forecast

YEAR 1 | | Sales | $356,820 | Cost of Sales | $185,960 | Gross Profit | $170,860 | | | Salaries and Wages | $15,000 | Rent | $40,000 | Equipment Expense | $2,500 | Depreciation Expense | $1,200 | Marketing Expense | $10,000 | Insurance | $2,500 | Legal Expenses | $1,500 | Total Expense | $72,700 | | | Net Profit | $98,160 |

In the first year of business, the total estimated costs of salaries and wages, rent, equipment expense, depreciation expense, marketing expense (e.g. advertising and promotions), insurance and legal expense will be $72,700. In the first year, the prediction of our revenue is $356,820. Therefore, we will make a profit of $98,160 in the first year.

References
Age Composition and Dependency Ratio of Population by Region in China Statistics, year of 2005. http://www.chipotle.com/en-us/menu/menu.aspx Miller, Paula M. (2004) Quick Service Hits China. The China Business Review.
Fast-food Restaurants in China: Market Research Report. (August 2013) Retrieved from http://www.ibisworld.com/industry/china/fast-food-restaurants.html
Rudarakanchana, Nat. (September 2013) McDonalds and KFC See China Sales Fall: Why is one Beating the Other? Retrieved from http://www.ibtimes.com/mcdonalds-mcd-kfc-yum-see-china-sales-fall-why-one-beating-other-1404102
Yuan, Ben. (2011) Subway Eyes Further China Expansion. China Daily. Retrieved from http://usa.chinadaily.com.cn/business/2011-07/04/content_12826883.htm