imc 613: chipotle brand audit

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Chipotle Brand Inventory Denisse Leon West Virginia University April 20, 2016

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Page 1: IMC 613: Chipotle Brand Audit

Chipotle Brand Inventory

Denisse Leon

West Virginia University

April 20, 2016

Page 2: IMC 613: Chipotle Brand Audit

BRAND EXPLORATORY

Table of Contents

Executive Summary.............................................................................................................4

The Industry.........................................................................................................................5

The Inventory.......................................................................................................................7

Products & Services.............................................................................................................7Menu............................................................................................................................................7

Catering.......................................................................................................................................8

Fast-Service...............................................................................................................................10

The Experience...........................................................................................................................10

TV Series....................................................................................................................................11

Brand Elements..................................................................................................................12Brand Name...............................................................................................................................12

Tagline/Brand Positioning.........................................................................................................12

Logo...........................................................................................................................................13

Packaging..................................................................................................................................14

Restaurant Architecture Design.................................................................................................16

Competitive Environment..................................................................................................16Panera Bread.............................................................................................................................18

Shake Shack...............................................................................................................................19

Market Share......................................................................................................................21Points of Parity..........................................................................................................................21

Points of Difference...................................................................................................................21

Marketing Mix...................................................................................................................22Product Strategy........................................................................................................................22

Menu......................................................................................................................................22

Promotion Strategy....................................................................................................................22

Animated Short Film/TV Ad.................................................................................................22

Cultivate Festival...................................................................................................................23

Free Burrito a Day, For Life..................................................................................................24

Social Media Campaign: Haiku Contest................................................................................25

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BRAND EXPLORATORY

TV Series................................................................................................................................25

Pricing Strategy.........................................................................................................................26

Price.......................................................................................................................................26

Growth and Revenue..............................................................................................................28

Operating Costs......................................................................................................................29

Distribution................................................................................................................................30

Locations................................................................................................................................30

Mobile App............................................................................................................................31

Brand Hierarchy.................................................................................................................31

Brand Exploratory.............................................................................................................32

Attitudes and Perceptions..................................................................................................33

Research Methodology......................................................................................................33

Consumer Research...........................................................................................................33Survey Results Key Findings......................................................................................................34

Target Audience & Brand Personas..................................................................................37Generation Y..............................................................................................................................37

Generation X..............................................................................................................................37

Recommendations..............................................................................................................38Recommendation #1...................................................................................................................38

Recommendation #2...................................................................................................................40

Recommendation #3...................................................................................................................42

Recommendation #4...................................................................................................................43

References..........................................................................................................................45

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Executive SummaryOver the last couple of years, fast-casual restaurants have become a popular alternative to

those that prefer freshly prepared food with the convenience of counter service and the ability to

customize their meals, “all in an upscale and inviting ambiance.” Unlike most Quick Service

Restaurants (QSR), also known as fast-food restaurants, fast-casual restaurants’ price ranges

from $8 to $15, and often do not offer the ability for a drive-thru (Trefis Team Contributor,

2014).

Chipotle’s particular business model focuses on providing “Food with Integrity” and has

positioned itself as a challenger brand in the fast-casual industry. However, the recent E-coli

outbreaks have produced some negative PR news for the chain that has negatively impacted the

image of the brand.

This brand audit provides a comprehensive examination analysis and strategic evaluation

of the brand to assess the current health of the brand, while uncovering any additional sources of

brand equity to further leverage them in favor of the brand (Keller, 2013, pp 265).

A series of recommendations supported by primary and secondary research information

have been included to impact the overall creative, business and strategic plans of the

organization to position the company as the top in its industry.

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The Industry The $22 billion burrito empire humble beginnings trace back to 1993 when Steve Ells

opened the first store in Denver, Colorado (Stock & Wong, 2015).

Chipotle was founded under the idea that “food served fast did not have to be a typical

fast food experience” (Arnold, 2015). Instead of following common fast-food standards such as

finding a good location, offering low prices, making products out of frozen food to reduce cost,

etc., Chipotle did the complete opposite and began providing a higher value in its products by

offering quality food, clean dining environment and efficient service.

Part of the success of Chipotle is certainly not in the burritos they sell, but as Steve Ells

said in an interview with Fortune: “it works because of our system: fresh, local, sustainable

ingredients, cooked with classic methods in an open kitchen where the customer can see

everything, and served in a pleasing environment” (Kaplan, 2011). The company’s website states

that Chipotle is in “the business of good food” the perfect mix between fine dining and quick-

service restaurants (Our Company, n.d.).

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Currently, Chipotle has more than “2010 fast-casual restaurants, up from 1,783 the

previous year” (Truss, 2016). Chipotle’s location cover the majority of the United States for

exception of nine states.

The company “also operates 11 ShopHouse Southeast Asian Kitchen restaurants and two

Pizzeria Locale restaurants. It operates these two new concepts under the same fast-casual format

as Chipotle Mexican Grill (Jones, 2015).

In 2015, Chipotle’s total sales were “$1.2 billion, compared with $1.05 billion a year ago

in 2014. This was a 14.1% growth in sales” (Jones, 2015).

In addition, while most fast-food restaurants have a “reputation for low wages,” fast-

casual restaurants like Chipotle pays its employees well even though the work can be demanding

(Lutz, 2015). According to Dee Gill, “any investor who reaped the 738% gain in Chipotle

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Mexican Grill, holds proof that higher worker wages can be good for shareholders too. The

company says 98% of its managers, some of whom earn six-digits, start as crew.” (Gills, 2013).

The InventoryThe fast-casual restaurant Chipotle, created in 1993 by Steve Ells, has continued its rapid

growth despite of not following common restaurant tactics. The new trend in fast-casual

restaurants has become very popular in recent years, especially among millennials. However, as

more restaurants within this industry arise, differentiating from its competitors is becoming even

more important in order to keep the brand relevant for consumers.

The purpose of this brand inventory is to provide an analysis and insights on how the

overall brand is managed by the company, while providing a competitive landscape among its

competitors.

Products & Services

Menu

Chipotle is committed to offer healthy fresh food made with wholesome ingredients and

using classic cooking techniques. “The values behind our Food With Integrity philosophy

influence virtually every decision made at Chipotle,” said Steve Ells to the Huffington Post (Ells,

2014).

The fast-casual restaurant serves Mexican inspired food such as burritos and tacos made

with high quality natural, organic and non-GMOs ingredients in its food (Chipotle. (n.d.).

Chipotle’s menu offers four main entries: tacos, burritos, bowls and salads, from which

the customer can customize all the elements in their order resulting in more than “65,000

combinations” (Hickey, 2013).

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Chipotle’s menu is overall simple and focused, despite the recommendations of

McDonald’s, which was Chipotle’s largest investor in its early growth days. Chipotle refused to

sell “low-risk high-profit menu items such as cookies and coffee” (Yohn, 2014). Despite its

limited menu, Chipotle is a place where choices are limited only by the consumer’s imagination.

The restaurant’s menu has remained the same since the first restaurant opened in 1993,

with the exception of a few items that were added to the menu to offer a vegetarian option such

as sofritas which was introduced in 2014 (Hatic, 2016).

Catering

In addition to the in-store services, Chipotle also offers three catering options “options

that are perfect for any business meeting, event or party—serving as few as 6 or as many as 200”

(Chipotle Catering, n.d.). Just like the restaurant menu, the options are very simple and clear

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Fast-Service

Chipotle’s “throughput” offers a super fast-service, and they do so by 1) having

everything ready before rush hour, 2) placing staffers in strategic areas to serve guests at all

times, 3) expedite the process by placing a worker in between the final burrito wrapper and the

cashier, and last but not least 4) having a “line backer” making sure everything runs smoothly

(Bhasin, 2012).

The Experience

The restaurant has managed to make out of a meal an entire experience for its customers.

Ross Beard describes it as follow:

“Unlike traditional fast food restaurants that seem to be designed

specifically to get you in and out quickly, Chipotle has a soothing, relaxing

vibe – much like Starbucks. In fact, industry analyst David Tarantino says

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Chipotle is changing fast food the same way Starbucks changed coffee shops

and Home Depot changed home improvement” (Beard, 2014).

Chipotle is not just a restaurant where you can order food and leave, but rather has

become a place where people can share a meal together in “relaxed atmosphere and comfortable

seating” without paying the cost of a casual dining experience (Beard, 2014).

TV Series

In 2014, Chipotle introduced a TV series entitled “Farmed and Dangerous” available on

HULU. The show offers a satirical story where “The lead character, Buck Marshall, played by

Ray Wise, is head of the Industrial Food Image Bureau. Wise's character represents big-business

interests that attempt to put a positive spin on genetically engineered foods” (Young, 2014). And

while the show is produced by Chipotle, the content does not mix the story in trying to push

burritos.

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Brand Elements

Brand Name

Chipotle Mexican Grill, Inc., is a fast-casual restaurant inspired by the little taquerias in

La Mission Market in San Francisco. Steve Ells, founder of Chipotle, was fascinated by the giant

sized foiled-wrapped burritos, and took the idea he had seen at the Market and added his own

twist (Chipotle, 2011). Its name derives “from the Mexican Spanish name for a smoked, dried

jalapeño chili pepper” (Daszkowski, 2014).

Tagline/Brand Positioning

The fast-casual chain known for its philosophy “Food with Integrity” represents the

commitment that Chipotle has made to positively contribute to the environment by using local

small farms that share the same values. The company “makes an extra effort to partner with

farmers, ranchers, and other suppliers whose practices emphasize quality and responsibility”

(Chipotle, n.d.). The chain serves naturally raised chicken and beef free of antibiotics or

hormones, the animals must be fed a pure vegetarian diet. In addition, the cheese and sour cream

come also from cows that are not treated with the synthetic hormone rBGH like other restaurants.

(Martin, 2015). This helps to ensure that the food has the highest standards of value and quality

for its customers.

According to Casey Schoelen, “When a brand builds itself on a platform with specific

values, consumers expect the brand to mirror those values” and Chipotle certainly does that

(Schoelen, n.d.).

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Logo

Chipotle has stood out in the fast-casual market as a

comfortable and eccentric setting to enjoy fresh tacos and burritos.

Its original logo also stood out from the norm by using a Papyrus-

like font because according to Diana S. Khoury “Papyrus is way

OVERUSED. It is no longer novel or interesting. It is now so predictable it’s boring” (Khoury,

2015). But for the first decade of Chipotle’s history, this was certainly not the case. The

restaurant ongoing growth proof the design community wrong. In 2009, the company went

through an almost seamless re-design, moving away from its first design into a more icon based

and dual tone style (ChipotleTweets, 2016).

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Packaging

Chipotle sustainable endeavors has leveraged its packaging to align with its “Food with

Integrity” philosophy and contribute positively to the environment. The company uses “eco-

friendly, compostable fiber burrito bowl containers” that are biodegradable (Fiber Burrito Bowls,

n.d.). According to Wendy Gabriel, “Chipotle saves more than 22 million gallons of water per

year by using 100% recycled content in its napkins” (Gabriel, 2013).

In addition, Chipotle “has built a brand around the idea that “food served fast doesn’t

have to be a fast-food experience. Accordingly, they’ve designed multiple small reminders (i.e.

brand applications) that reinforce that story” (Busche, n.d.).

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In May of 2014, Chipotle introduced “Cultivating Thought Author Series” in which the

restaurant includes stories on Chipotle’s cups and take-out bags. The company uses its containers

to tell its story and offer “patrons a chance to feel engaged while eating Chipotle’s Mexican

food” (Serros, M. (2014).

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Restaurant Architecture Design

The restaurant architecture design “decor was spare and industrial: halogen lighting,

metal tabletops, wooden benches and seats, concrete floors, and arched metal ceilings”

(Advameg, Inc., n.d.). The style aims for a hip, and urban feel that fits with the company’s target

audience.

Competitive EnvironmentThe economic conditions of the last couple of years have impacted the dining habits in

the U.S., affecting negatively the majority of Quick Service Restaurants (QSRs). According to

Forbes, “the customer traffic growth in QSRs was considerably flat during the year ending June

2014, whereas the visits to fine dining restaurants rose 3% during the same period. Fine dining

restaurants have an average customer spend of $40 and QSRs report an average check of $5”

(2014). The extreme pricing range from one side of the spectrum to another has allowed for the

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fast-casual industry to fill the void among the middle-class groups, with an “average check of $8-

$20” (Forbes, 2014).

Unlike fast-food restaurants, the fast-casual industry prides itself “on serving up meals

just as quickly as traditional fast-food chains while using healthy, fresh and sometimes local

ingredients to create wholesome meals” (Ingram, n.d.).

But in the battle for customers, Chipotle is changing the face of fast-casual restaurants by

“driving double the sales volume per location” and “moving into a more competitive

environment as more fast-casual restaurants come onto the scene” such as Shake Shack, Habit

and Panera Bread, all which have similar food policies to Chipotle’s” (Jones, 2015).

Competitive Snapshot

Competing Factors Chipotle Panera Shake Shack

Number of U.S. Stores 2,010 1,972 60

Pay & Order Via Mobile

App

Yes Yes No

Average sale per restaurant 2.17 million 2.47 million 2.7 million

Offers catering Yes Yes No

Franchises Opportunities No Yes No

GMO Free Products Yes Yes Only its buns

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Panera Bread

The sandwich shop that calls itself an “advocate for clean food” and founded in 1981 is

one of the largest competitors in the fast-casual industry. With over 1,972 locations in 46 states,

the company generated $4.5 billion in sales in 2014. Like Chipotle, Panera offers a “welcoming

environment” with its newest redesigned stores with a lounge-like atmosphere, free Wi-Fi, and

of course, fresh food” (Duprey, 2015).

However, in the last couple of years, Panera has gone through a reinvention period by

introducing “Panera 2.0,” as the company calls the makeover. Ashely Lutz from Business Insider

outlines the changes as follow:

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1) Offering rapid pick-up – through the use of technology customers can now order food

from their mobile devices ahead of time and pick it up without waiting in line.

2) Creating a new position – “Expos” as Panera calls them are the new hired associates

that are “on the customer’s side of the counter to check orders for accuracy.”

3) Delivering to your table – the fast-casual brand is trying to reinvent the industry ad

stepping up its service by delivering the food to the customer’s table. The company

believes that “this higher-quality experience differentiates Panera from fast food and

even much of fast casual.”

4) Building catering centers – the catering side of the business contributes to 8% of

Panera’s current income. Currently must of the catered orders are put together in

restaurants. The new model will move the assembly to the “special centers for

distributing catering orders”

The benefits the restaurant expects to start seeing is that it will allow the “managers to

spend more time interacting with customers and identifying problems” (Lutz, 2014).

Shake Shack

The restaurant began as “simple hot dog cart in New York’s Madison Square Park in

2004,” and until recently it has had an accelerated growth (Bowman, 2015). By 2015, the

company had expanded to over 60 locations worldwide.

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According to Marie Cole, “Shake Shack burgers are catering to Americans who not only

want to eat better tasting food, but also want to know what their food is made of and where it

comes from” (Cole, 2015).

Like Chipotle, Shake Shack prides itself by offering “100% all-natural Angus beef,

vegetarian fed, humanely raised and source verified. No hormones or antibiotics – EVER. We

pride ourselves on sourcing incredible ingredients from like-minded artisanal producers” (Shake

Shack, n.d.). According to Trevir Nath, “many believe the success of the burger joint is set to

mimic that of Chipotle” (Nath, 2015).

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Shake Shack’s menu is very similar to Chipotle in regards to

the limited amount of options items there are available in its menus.

One big difference though is that Shake Shack does offer Beer and

Wine at all location. In addition, Shake Shack offers food for dogs.

The furry-four-legged guest can enjoy a “ShackBurger Dog Biscuits

or a Bag O’ Bones. (Shake Shack Menu, n.d.).

Market ShareThe buzzword among restaurant chains lately has been fast-casual, a combination of

between fast service and sit-down convenience for a “healthy meal without any extra hassles”

(Suarez, 2015). Below is a comparative analysis of parities and difference from Chipotle’s main

competitor Panera and its second rival Shake Shack:

Points of Parity

Fresh food, Fast-casual dinning experience, Brand reputation.

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Points of Difference

Chipotle Panera Shake Shack

Operational efficiency.

Support and educate consumer on the future of farming and food.

Everything they use and produce is environmentally friendly.

Values long-term partnerships.

Most of its marketing is word-of-mouth.

Stands for community and do so through their “Cultivate Festival”

Serve Mexican food Customizable order

experience TV show Throughput

experience Naturally raised meat Use of story-telling

Operational efficiency using technology.

Serve food at the table New restaurants

design Offer sandwiches and

soups A lot of locations. Support “Feeding

America” through its foundation.

Offer a rewards program

Serve sandwiches, salads and soups

There is Wi-Fi available

Does not offer alcoholic beverages

Menu also includes breakfast items

No international locations

Limited amount of locations

Offer hamburgers, hot dogs, fries, and frozen custard

Semi-customizable orders

Fast expansion in the last couple of years

Raises awareness for No Kid Hungry, but has been doing so only for the last 4 years or so.

Serve Beer & Wine at all locations

Offer food items for dogs.

Marketing Mix

Product Strategy

Menu

Chipotle’s “Food with integrity” program aims to remove as many genetically modified

organism foods (GMOs) from their products. This provides Chipotle a competitive advantage

especially among fast-casual restaurants that also offer fast and fresh products, but do not put as

much emphasis on offering GMO-free products. Chipotle’s packaging is also another

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distinguishing element of the brand. By using environmentally friendly products, Chipotle is able

to remain aligned with its slogan “Food with Integrity”.

Promotion Strategy

Animated Short Film/TV Ad

Chipotle has one of the most untraditional marketing strategies; unlike its competitors

with big-budget marketing campaigns, Chipotle keeps everything in house. In 2012, during the

Grammys, “Chipotle aired its first national TV ad,” an animated two-minute spot that “told the

story of a farmer whose farm had grown into a massive industrial compound. He has a crisis of

conscience and moves back to a more humane, sustainable way of operating” (Morrison, 2012).

The video was viewed 6.3 million times on YouTube just a week after it was released.

According to Elizabeth Weiss, “The Scarecrow” has been praised as an innovative piece of

marketing and beautiful work of art, and applauded for its anti-factory-farming message” (2013).

The impact of the video was reflected in Chipotle’s “2011 performance (revenue was up

23.7%, comp sales up 11.1%, and net income up 23.7%)” (Lukovitz, 2013).

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Cultivate Festival

Chipotle introduced around the same time was its annual Cultivate Festival that “attracts

over 17,000 people” every year. The free event features “live music and chefs from around the

country, as well as educational elements that let attendees see how food is raised and grown”

(Morrison, 2012). The Cultivate Festival along with the Farm Team loyalty program – “both are

focused on humane food sourcing and organic farming” – allowing the company to work more at

a grassroots level (Bhasin, 2012).

The impact of the festival, according to Mark Crumpacker, chief creative and

development officer at Chipotle, is “changing the way people think about and eat fast food, and

that includes helping people understand how food is raised and prepared” (BusinessWire, 2016).

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Free Burrito a Day, For Life

Every time a celebrity shares their love for Chipotle “they’re sent a card that entitles them

to a free burrito a day, for life. Chipotle asks for nothing in return, but many recipients have

taken to social media to announce their joy” (Tan, 2015). The fast-casual restaurant strategy “is

a sort of reverse engineering of the typical endorsement process,” the unique marketing style

“relies on the power of personal recommendation” (Stem, 2013).

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Social Media Campaign: Haiku Contest

The restaurant’s clever social media campaign encourages customers to express their love

for burritos by “asking people to post a haiku on Twitter or the brand's Facebook page for the

chance to win prizes. The top 20 poems with the most Likes and retweets will win a dinner for

two” (Johnson, 2015). The consumer-generated campaign had a lot of buzz on Facebook and

Twitter.

TV Series

In 2014, Chipotle introduced a TV series entitled “Farmed and Dangerous” available on

HULU. The show offers a satirical story where “The lead character, Buck Marshall, played by

Ray Wise, is head of the Industrial Food Image Bureau. Wise's character represents big-business

interests that attempt to put a positive spin on genetically engineered foods” (Young, 2014). And

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while the show is produced by Chipotle, the content does not mix the story in trying to push

burritos.

The TV show certainly aligns with Chipotle’s philosophy of delivering “Food with

Integrity” or in this case, shows “with Integrity”.

Pricing Strategy

Price

The fast casual restaurant that prides itself in offering fresh high-quality food. Over the

last couple of years, “the company has managed to transcend fast food while keeping some of its

cost structure in place. It has also been able to take a very limited menu and give consumers the

feeling of variety” (Kline, 2015).

In 2014, Chipotle raised its prices by 6.5 percent, and despite the increase store sales

continued to soar that year. According to Business insider, “Chipotle hadn't raised menu prices

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for three years, but the higher cost of ingredients compelled it to roll out up to a 6.5 percent

average increase in the second quarter” (Dastin, 2014).

It is important to note that prices ranges depend on the item and by locations, as noted by

the tables below from Business Insider (Lutz, 2013):

But in 2015, after the wake of an E Coli outbreak that brought down sales, the company

announced that would drop prices as much as 22% to help increase sales (Wahba, 2015).

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Growth and Revenue

With over 2,010 locations and growing, Chipotle has become one of the fastest growing

fast-casual restaurants with “rising number of restaurants worldwide between 2007 and 2015”

and ranking one of the “U.S. consumer’s joint favorite in 2015” for best healthy food (Number of

Chipotle Mexican Grill restaurants 2015 | Statistic, n.d.).

In 2013, the company generated average unit sales of $2.1 million, increasing its revenue

by 17% (Shaw, 2010). In 2015, Chipotle’s total sales were “$1.2 billion, compared with $1.05

billion a year ago in 2014. This was a 14.1% growth in sales” a drastic dropped from prior years

(Jones, 2015).

However, in mid October of 2015, Chipotle suffered a major E-Coli outbreak “that

spanned 14 states and sickened 60 people” (Beach, 2016). A second outbreak of a different kind

was later identified by the FDA affecting five people (Clark, 2016).

Below is a visual map overview of the states where the stores were affected by the

outbreak.

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During the outbreak, “Chipotle closed 43 locations in Oregon and Washington out of an

abundance of caution,” but those locations have reopened (Carlson, 2015). On February 2016,

Chipotle temporarily closed for one day all of its locations “while it dedicated time to informing

its employees of several new food safety measures to prevent future outbreaks” (Barnett, 2016).

Operating Costs

According to Market Realist, in 2013, the company’s food cost represented “33.40%, or

$1.1 billion, of revenues, which increased by 78 basis points (or 0.78%) year-over-year,”

followed by its labor with “23% of the company’s total revenues, or $739 million, in 2013,” and

10% for other operating costs such as “advertising and marketing expenses, bank and credit card

charges, restaurant maintenance costs, and utilities” (Jones, 2014).

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Prior to the e-coli outbreak “The chain’s stock was trading at $754 in August 2015 and

hit a low of $404 in January” (Beach, 2016).

Distribution

Locations

The first Chipotle location had “800 square feet in size, the subsequent units covered

1,600 to 2,800 square feet” (Advameg, Inc., n.d.). Each location seat approximately 58 people

and feature outdoor patio space (Chipotle Company Profile | Reuters.com, n.d.). Currently,

Chipotle has more than 2,010 fast-casual restaurants, and more than 45,000 employees (Jones,

2015).

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Mobile App

The Chipotle App allows customers to order from their phone and skip the lines. Their

orders are saved in the system to process it faster next time the customer decides to order (Tan,

2015). In addition, customers are able to find locations

Brand HierarchyAccording to Keller, brand hierarchy helps to outline the strategy of the brand by

displaying common and distinctive elements (Keller, 2013).

In this case, the Mexican fast-casual restaurant has tried to diversify by extending into the

Asian and Pizza food market and running these two new concepts under the same format as

Chipotle. Currently, the burrito chain “operates 11 ShopHouse Southeast Asian Kitchen

restaurants and two Pizzeria Locale restaurants” (Jones, 2015).

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Both of Chipotle’s additional lines of extension also focus on providing gourmet food in

a fast-casual setting. The target market is mainly Millennials just like the main brand, and the

concepts of assembly line and customization are also present.

Brand Exploratory The recent E-coli outbreak that the Millennial-friendly Mexican food chain suffered in

2015 severely affected the brand’s reputation. “However, while the outbreak was not the sole

responsibility of Chipotle, they are the ones in the news” (Winters, 2015). And although Chipotle

may be making some steps from a corporate perspective to change consumer’s perceptions, the

chain has an uphill battle ahead to re-gain trust among current and prospective customers.

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Attitudes and PerceptionsChipotle competes with a few fast-casual restaurant types. On the forefront of the leaders

in the quick service restaurant business are Panera, Shake Shack, Qdoba, Baja Fresh, Five Guys,

and Panda Express. The fast-casual Mexican restaurant position itself as the “healthy alternative

to traditional fast-food chains” (Marafiote, 2015). “The bad publicity has taken a toll on the

bottom line at the company, which has warned that its sales fell in the last quarter of 2015”

(Zarroli, 2016).

The restaurant’s limited menu serves its target audience which consist of millennials,

health-conscious consumers. “No doubt much of their success comes from their emphasis the

story they have built around the freshness and integrity of their ingredients” (Millennial

Marketing, n.d.).

Research MethodologyIn order to understand consumers’ mindset, beliefs and attitudes towards the Chipotle

brand, a consumer research was conducted to measure five different areas of the brand:

awareness, association, image, response and relationship. Two main sources were used as

primary source, consisting of quantitative and qualitative research through a survey and the

secondary source was using Chipotle’s social media and industry articles.

Consumer Research Responders were asked six questions that covered brand perception, loyalty,

demographics, and psychographic information. The survey was answered by 13 online students,

and 29 other additional respondents, a total of 42 responders.

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Survey Results Key Findings

Chipotle’s Food with Integrity commitment did not influence 55% of the consumers’

decisions.

35.71% of responders eat at Chipotle at least once a month.

The largest age group of people that eats at Chipotle once a month are between 25-34 years

old.

The most common words used to describe the fast-casual restaurant were: Fresh, Healthy,

Delicious, Mexican, Flavorful, Tasty, Clean and Dangerous.

Despite the last year’s E-coli outbreak, respondents associated the following words with

the fast-casual restaurant: 16.09% Delicious; 45.17% Fresh, 21.35% Tasty; 21.05% Healthy and

5.56% Dangerous. Of the 42 responders, 30.95% were between ages 25-34, and 28.7% between

35 and 44 years old.

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Below are the survey questions asked:

Q1 – Does Chipotle’s Food with Integrity campaign influence your decision to eat and enjoy their products? Yes, No, Other

Q2 – What three adjectives would you use to describe the quality of Chipotle food?

Q3 – How often do you eat at Chipotle?NeverThis was my first time2-3 times per week1 time per weekEvery other weekOnce a monthOther

Q4 – What is your age group?18-2425-34

35-4445-5455-6465+

Q5 – Are you White, Black or African-American, American Indian or Alaskan Native, Asian, Native Hawaiian or other Pacific islander, or some other race?

Q6 – Which of the following categories best describes your employment status?

Employed, working full-timeEmployed, working part-timeNot employed, looking for workNot employed, NOT looking for workDisabled, not able to work

Despite the bad publicity from the E-coli outbreaks, Chipotle consumer’s perceptions are

for the most part positive. In part is because of the great listening response the company has on

social media.

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Another reason Chipotle has gotten a lot of publicity on social media is also in part

because of the steps the company has taken after the outbreak by giving away free burritos to

help ease dinners. However, despite all the discounts, appears that almost “40% of people have

changed their Chipotle habits”. “Of those respondents, however, 70% say they have not eaten at

Chipotle again since the illness broke out, an improvement from the 78% who said so in each of

the last two months” (Wiexzner, 2016).

The E-coli outbreak damaged the brand negatively for many of Chipotle’s consumers,

and its philosophy “Food with Integrity” might have worked against them creating a bigger

effect than it would have had with any other restaurant (Erbentraut, 2016). However, a report

done by Crimson Hexagon suggests that “Chipotle’s positioning strategy and its reputation for

food quality have been very successful in the past” and the actions the company took right after

the outbreak have began to generate “positive response from the public, which can put Chipotle

even farther ahead than the competition” (Semtei, n.d.).

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Target Audience & Brand PersonasBy using observational research, social media, and the survey data, the following profiles

have been identified as the main archetypes of Chipotle’s customer base.

Generation Y

Millennials or Generation Y value transparency and authenticity (Lutz, 2015).

16-34 years’ old

Tech Savvy

Family oriented

Communicators

83 million Yers population

Earns about 30-60K

Is college educated

Generation X

According Klara (2016), Chipotle is among the few brands that “have long viewed Gen X

as core customers.”

35-54 years’ old

Full time employees

Mixed political views

65 million Xers population

"Think Different" is a Gen X mantra

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RecommendationsBased on this research, the brand has taken a toll on the image and perceptions that

consumers have towards, especially after the recent outbreaks. However, the actions on behalf of

the company to address the E-coli issue and the concerns of the consumers have helped to

generate some positive buzz around it.

In addition, the consistency of the brand message across all of the chain’s channels have

played a big role in supporting the relationship the brand has with the consumer. And while most

people are familiar with the Chipotle brand, there seems to be opportunity in the midst of tragedy

to resurge the brand even stronger.

Recommendation #1

Increase “Food with Integrity” awareness by 10% within 12 months

Overview

Since it’s inception, Chipotle’s “Food with Integrity” model has guided most of what the

brand is today. But recently, the E-coli outbreaks have challenged the validity of the model,

creating some major distrust among consumers and investors. The strategy for this will be to

capitalize on Chipotle’s commitment to food quality and reinforce the message through the use

of compelling storytelling marketing campaign while engaging customers to take a part of the

movement.

Tactics

An online campaign will be launched entitle “Food with Integrity is ___________”.

Everyone has an opinion of what Food with Integrity is. That's why a website would be created

as a platform for people to express what Food with Integrity is to them.

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The website will feature a section for customers to create their own response, and the

responses will be featured through a rotation system that changes the images every 5 seconds to

allow for all the submissions to be highlighted, and the opportunity for people to vote on those

that they personally agree or disagree with.

Some posts will be selected and create some community projects around them and

featured in the site.

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Outcome

Allowing people to share their personal opinions will generate media attention, while

providing the customer the opportunity to directly connect with Chipotle’s philosophy. While

there will be some negative posts, the goal is to utilize them as a means to show transparency,

and get immediate feedback to hear directly from consumers what they think about the brand.

Stories and community projects resulted from this experiment will provide content for social

media and traditional media.

Recommendation #2

Address food transparency

Overview

While farmers’ markets have become very popular over the last decade or so, consumers

that live in big cities don’t always fully understand everything that goes into the good practices

of farming. Teaching consumers more about farming practices, while recognizing farms that

value sustainability can be a good way to begin addressing transparency. This campaign will

focus on how Chipotle manages “Food Transparency” by taking the users behind the scenes with

the suppliers and learn more about the process behind the production and distribution of the

produces.

Tactics

Develop a mobile app that will allow customers to track a Just-Bought-A-Burrito back to

the farmer’s geo-tagged field. Every time a consumer purchases a burrito, the wrapping will have

a QR code that can be scanned through a mobile app. The link will geo-tag the farm from which

the produce came from, and allow the user to learn more about its practices.

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Within the app, consumers will be able to read more about the farm, and understand why

it aligns with Chipotle’s “Food with Integrity” practices. The app will also feature Chipotle’s

Author series, along with a section to participate in the “Food with Integrity is ________”

campaign via mobile. The mobile responses will be tracked to see the impact that the farm

awareness have in consumers. The app will be promoted online, and social media.

Outcome

By showing the transparency of where the products come from, it will position the brand

as one to take a bold step and made a statement that “Food with Integrity” is not just a slogan but

a way of living. In addition, this will position Chipotle as a trailblazer to open communications

practices between the farmers and the consumers.

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Recommendation #3

Partner with a Music Record label to produce an original song for a new short film

Overview

The original Scarecrow campaign mission was to “change the way people think about

and eat fast food” (The Scarecrow, n.d.). Similar to the 2011 and 2013 sustainable farming series

themes, the new animated short film will address transparency and accountability, while

capitalizing on the legacy and impact of the prior films driving home its commitment to

sustainability. The film will be complemented with a brand new song written specifically for this

campaign.

Tactics

Storytelling has been a big part of the Chipotle brand, by partnering with a record music

company, the goal is to work with an up and coming band that fits the Chipotle values and

personality to write a song for the up and coming short film. The new song will be released on

the radio a month before the short film. According to Alex Pham, “65 Million Millennials Listen

to Radio Each Week” (2014). The new song will speak mainly to the Millennials, the prime

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market of the chain. In addition, the short film will re-introduce the scarecrow in a simple and

emotional story just like the prior films.

Outcome

By the end of the campaign, Millennials should be able to relate the song with the new

short film, and whether they have seen the short film or not, the video and the song would create

awareness on sustainability practices.

Recommendation #4

Increase customer lifetime value through a loyalty program

Overview

Loyalty programs have the potential to develop brand advocates because of the repeated

purchases the customer has to make to get a reward or incentive. Introducing a loyalty program

can help to retain existing customers, acquire new customers, win-back defected and churned

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customers, build relationships, create brand advocates and be able to respond to competitive

challenges (Clark, 2010).

Tactics

A new burrito loyalty program will be added to the mobile app. Similar to the Starbucks

rewards program, customers will be required to set up an online account, which will provide the

chain with customer information and permission to send quarterly newsletters with information

on sustainability and other food practices. Customers that are a part of the loyalty program will

receive a free burrito for every tenth one.

Outcome

The loyalty program should increase not only sales, but also in-store visits. The database

will also allow the brand to connect with the customers directly and begin to impact the

perception of the brand through its quarterly newsletter, offers, and overall improve customer

trust and satisfaction.

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