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Chipotle brand audit paper [final copy]

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Chipotle brand audit paper [final copy]

  1. 1. BRAND AUDIT Qijiao Fan Hai Nguyen Weizhi Feng Adrian Torres
  2. 2. Part I: Brand Inventory – Company View History and Corporate vision Inspired by authentic ingredients and the economic model of one local taqueria store in San-Francisco, Steve Ells began to open the first Chipotle store in 1993 at a former Dolly Madison ice cream location near University of Denver campus. The first Chipotle was a wide success. After two years since the first Chipotle opened, Steve added the second and third Chipotle locations. In 1996, Chipotle Denver area restaurant opened. Following the extraordinary successes, Chipotle was able to invite more outside investors to expand the scale of production to give way for the Chipotle’s openings outside of Colorado: Minneapolis, MN, Columbus and OH. After Steve visited some individual local farms, he found out pigs were raised in air-opening area as opposed to the way majority of pigs were raised. So he decided to dg pork and chicken naturally. Chipotle went public on New York Exchange in 2006. After that, Chipotle still kept focusing on providing the most authentic and healthy ingredients within each burrito. His vision is to serve 100% naturally raised beef in the near future. Moreover, Steve promoted to eliminate the antibiotics in ranching. From the year Chipotle opened until now, it has always been emphasizing on pursuing high-quality ingredients and cooking
  3. 3. techniques to provide best eating experience for customers and fulfilling corporate social responsibilities. Driven by its main vision “Food with Integrity” -which is to serve the food made with ingredients that serve the best for animals, environments and farmers, Chipotle is still following it and making progress year by year. By 2010, 75 million pounds of meat is naturally raised in a human way without given any antibiotics or added hormones. Besides naturally raised animals and providing fresh meat, we expect to increase the percentage of our cheese and sour cream made with milk from pasture-raised cows. We will continue following our vision and improve our business performances by strengthening our economic models and expanding restaurant margins. Menu and Food Preparation Chipotle serves only a five things: burritos, burrito bowls, tacos and salads. But because customers can choose from four different meats, two types of beans and a variety of extras such as salsas, guacamole, cheese and lettuce, there’s enough variety to extend its menu to provide countless choices. Chipotle said that it plans to keep a simple menu, but it will consider additions that it thinks make sense. Chipotle also encourages customers to let it know if they can’t find something on the menu that’s quite what they want; and if they can make it from the ingredients they have, they’ll do
  4. 4. it. In addition, Chipotle started to offer Kid’s Menu in 2009 to attract more families to their restaurants. Food With Integrity: Chipotle wants to keep a simple menu so that they can concentrate on where they obtain each ingredient, and this has become an integral part in their effort of providing high quality food. For example, as of December 31, 2010, all of Chipotle’s restaurants served carnitas made with naturally raised pork, as well as barbacoa made with naturally raised beef. Also as of December 31, 2010, about 80% of Chipotle restaurants served naturally raised steak and about 86% of our restaurants served naturally raised chicken. Naturally raised meat is defined by Chipotle as the meat coming from animals that are fed a pure vegetarian diet, never given antibiotics or hormones, and raised humanely. Chipotle said that its definition is stricter than the U.S. Department of Agriculture’s standard for naturally raised marketing claims. “In preparing our food, we use stoves and grills, pots and pans, cutting knives, wire whisks and other kitchen utensils, walk-in refrigerators stocked with a variety of fresh ingredients, herbs and spices and dry goods such as rice. Ingredients we use include chicken and steak that is marinated and grilled in our restaurants, carnitas (seasoned and braised pork), barbacoa (spicy shredded beef) and pinto and vegetarian black beans. We add our rice, which is tossed with lime juice and freshly chopped cilantro, as well as freshly shredded cheese, sour cream, lettuce, peppers and onions, depending on each customer’s request. We use various herbs, spices and seasonings
  5. 5. to prepare our meats and vegetables. We also provide a variety of extras such as guacamole, salsas and tortilla chips seasoned with fresh lime and kosher salt. In addition to sodas, fruit drinks and organic milk, most of our restaurants also offer a selection of beer and margaritas. Our food is prepared from scratch, with the majority prepared in our restaurants while some is prepared with the same fresh ingredients in commissaries. Marketing Mix Product Chipotle is best known for its large burritos, which are wrapped in foil paper and served hot. They are made by flour tortilla with rice, black beans, meat, salsa and cheese inside. Beside burritos, Chipotle also served other food including burrito bowl, crispy and soft tacos, and salads, with a choice of chicken, pork carnitas, barbacoa, steak, or vegetarian. Price Chipotle distinguishes itself from its premium pricing strategy. Comparing with their competitors in a broader sense, such as McDonald’s or Subway, Chipotle priced their food higher. The price starts around $5.95 for a Chicken Burrito and can reach as high as $8.15 for a Steak burrito with Guacamole. Prices of burritos depend only on the types of meat. Customers can add all kinds of beans, rice, and salsas with no extra
  6. 6. charge. The brand image is enhanced by a relatively higher price than other fast food restaurants. Promotion Chipotle has run many promotions giving out free food to potential customers, especially when opening a new store. Stores also give out free burritos on certain occasions; for example, Chipotle gave away free burritos to reporters during the 1997 trial of Timothy McVeigh, which took place in Chipotle's hometown of Denver, and so did they to those displaced by Hurricane Katrina in 2006. For Halloween 2010, Chipotle announced that customers who dressed as a processed food product would receive a burrito for $2. The event was part of a $1 million fundraiser for Jamie Oliver's Food Revolution called “Boorito 2010: The Horrors of Processed Food." The promotion is aimed to increase awareness of family farms. Also in support of family farms, Chipotle released music videos of Karen O of the Yeah Yeah Yeahs and Willie Nelson.
  7. 7. Locations Since its first restaurant opened in 1993 in Denver, Colorado, Chipotle has been putting effort in distribution throughout the years. Today, the company has more than 1200 locations, with restaurants in 41 states, Washington D.C., Toronto, and London, making it very convenient for customers to buy their food anywhere they go. Chipotle offers various ways to distribute their food. Even though most customers order food in store, they can also order it online or use the ordering application on an iPhone, or even just send the order to the Chipotle store that is closest to the customers through fax. There is also an ordering method available for events from which customers can order burritos by box. In Austin, TX, Chipotle recently started a new distribution channel by sending out a truck with all the cooking facilities inside. This distribution form is a copy from Mexico where such vendor trucks are common. Followed by an irregular schedule released on Twitter, the truck goes to sell Chipotle in
  8. 8. different places of the city. The Chipotle truck serves almost the entire in-restaurant menu except chips and crispy taco shells and the same ordering process. Communications and Marketing Activities The company has put a lot of efforts in communicating with customers through different platforms. For example, on the website page of Chipotle there is a section named Fan-Antics, where Chipotle’s fans can leave a message or submit their pictures that can be displaced on the website. Meanwhile, on their Facebook page there are people posting on the wall nearly every minute and most of them get replied from the Chipotle immediately. Meanwhile Chipotle has been actively engaging with the local communities. Chipotle thinks that “Each and every Chipotle restaurant is an active part of the neighborhood around it- because without a neighborhood, you couldn’t have a neighborhood burrito joint.” So far Chipotle has been hosting and participating in a great number of social events. These events, ranging from high school basketball team dinner to workshop of educating people about their core value “food with integrity”, have all been helping to increase the brand awareness of Chipotle. In the past, Chipotle mainly relied on billboards, radio ads, and word-of-mouth to advertise. However, in 2012, Chipotle aired its first nationally televised commercial during the 54th Grammy Awards ceremony. Chipotle received attention when Ozzy
  9. 9. Osbourne’s reality shows The Osbournes featured the company's burritos heavily. Chipotle was also mentioned throughout the "Dead Celebrities" episode of the television series South Park. Event Sponsorship & Community Building 3rd Annual Haley Pontiac- Chipotle Bryan Circuit Race Location: Richmond, VA Date: May 2009 ! Burritos on wheels? We got to sponsor a circuit race in Richmond with over 250 local cyclists participating. Burritos and chips and salsa were passed out to fuel the riders. Primes (pronounced "preem”-- which is your French lesson for the day) are awards given for riders who reach milestones during a sprint, and in this ride the primes were burrito bucks. It was exciting to see the riders put the pedal down when they knew a burrito was on the line! Catch 25 Foundation Fundraiser Location: New York City Date: December 2009 We were pretty excited to work with the Yankees World Series Champion Manager Joe
  10. 10. Girardi's Catch 25 Foundation (which is dedicated to supporting individuals and families around the country suffering from ALS, Alzheimer's, cancer and fertility issues.) The West 45th Street Chipotle held a fundraiser that raised over $5100! Brand Attributes Throughout the years, Chipotle has always focused on more than just providing fresh, organic burritos made with high quality raw ingredients. We focus more on the source of ingredients and keep finding the ingredients raised with the respect for the animals, the environment and farmers guided by our “Food with Integrity” vision. In order to provide the best eating experience rather than “fast-food experience, we are trying our best to provide the best eating experience at Chipotle by also emphasizing on sanity, interior design, service and atmosphere. As a result, Chipotle has the following brand attributes: Better ingredients Tasty food Fresh cooking used and grow in Clean restaurant Sustainable design sustainable ways Fun and energetic for each restaurant Naturally-raised Chipotle culture Fast and organized meat Wonderful dining Community Use sustainable experience building-support resources for food Implement the local farmers and production concept “Food with work with large Friendly service Integrity” (FWI) food distributors
  11. 11. Part II: Brand Exploratory – Customer View   Measuring Sources of Brand Equity of Chipotle—Capturing Customer Mindset   In order to access Chipotle’s brand exploratory, our group has constructed a series of qualitative and quantitative research to capture and measure sources of Chipotle’s brand equity In order to effectively build and manage brand equity, it is consequential to know what customers think of Chipotle in terms of brand image, their beliefs and attitude toward different brands, feelings, thoughts and perception. So we need to understand consumers’ mindset by systematically conducting researches to measure sources of customer-based brand equity. So we will measure that through both qualitative and quantitative research techniques. Chipotle Brand Tracking – Capturing consumer mindset Purpose: In order to effectively build and manage brand equity, it is consequential to know what customers think of Chipotle in terms of brand image, their beliefs and attitude toward different brands, feelings, thoughts and perception. So we need to understand consumers’ mindset by systematically conducting researches to measure sources of customer-based brand equity.
  12. 12. Research Techniques: Qualitative and Quantitative Aspects to Measure: Brand Awareness Brand Response Brand Association Brand Relationship Brand Image Brand Awareness (recognition of distance, angel, speed, perceived package size) We measure Chipotle brand awareness in terms of brand recognition and brand recall in order to determine the strength of Chipotle in consumer’s memory. Brand recognition also is crucial for packaging. So we are eager to know if packaging is distinctive enough to capture customers’ attention in the distance. Also we want to know if our customers are able to recall some core brand elements like the name, logo, and symbol and so on under some certain circumstances. What appears in your mind when you think of Chipotle? Finish this link C_I_O_L_ See if you can be aware and assess package designs of Chipotle. If you want to have a fresh and tasty burrito, which restaurant would you consider going? If you want to dine in a Mexican restaurant, which restaurant would you go? When do you think of your favorite fast food restaurant, what comes to your mind?
  13. 13. Brand Association We use free association task to determine what subjects come to consumer mind when they think of Chipotle. And in this way, we can identify the range of possible brand associations in consumers’ minds and indicate the relative strength, favorability, and uniqueness of brand associations. Tell me what’s on your mind when you think of Chipotle. What does Chipotle name mean to you? What do you like best about the Chipotle? What do you dislike the most? What do you find unique about the Chipotle? How is different from brands? Who eats at Chipotle? In what situations? When and where do they eat at Chipotle? What do you think the reason why others like Chipotle? Brand Image Brand image of Chipotle is reflected by the associations consumers hold. But unlike measuring brand associations, we will analyze the specific attributes of Chipotle consumers think and their level of consideration to dine in Chipotle at a regular basis.
  14. 14. What are the strongest associations you have to Chipotle? What comes to mind when you think of Chipotle? (Strength) What is so good about Chipotle? What do you like about Chipotle? What do you like or dislike about Chipotle? (Favorability) What is unique about brand? What features does Chipotle share with other brands? (Uniqueness) Brand Response We are curious about how consumers can combine all their considerations to make a final purchasing decision. We need to specifically measure purchase intention of our consumers. And we will focus on the likelihood for consumers to buy Chipotle or switch to another brand by giving consumers scenario to see if consumers would like to pick us. “Assume you are very exhausted and hungry and you want to eat a delicious burrito that will take less time to cook, and it is also fresh, healthy and filling. Also, you want to find a nice place to cheer your mood up. If you go to downtown and see lots of restaurants, which one will you go? ”
  15. 15. Brand Relationship We will emphasize on two out of four dimensions : behavior loyalty and brand substitutability to measure brand relationship. We can ask consumers some survey questions to evaluate brand relationship as following: How often do you eat at Chipotle? When was the last time you eat at Chipotle? Which brand of burritos did you consider buying? Which brand of burritos will you buy next time? If Chipotle is not available in your area and you want to have a fresh burrito, what would you have done? Or what other brands would you consider and why?  Customer Knowledge – What do customers think about Chipotle? The results from our marketing search and other sources such as comments on Chipotle Facebook and Yelp allow us to conclude that a typical consumer brand associations for Chipotle might be “love,” “big burritos,” “fresh,” “tasty,” “naturally-raised meat,” “organic ingredients,” “casual dining experience,” “the outside and inside look of the restaurant,” “Mexican,” “see you food being made in front of you” and so on. In addition, the Consumer Reports ranked Chipotle as the best Mexican fast-food chain in
  16. 16. 2011, proving that Chipotle has successfully advanced its mission to serve “Food With Integrity” and its commitment to building a unique and special people culture. Mantra “Food With Integrity” Mental Map
  17. 17. Sources of Brand Equity The following sources have helped create high brand awareness plus strong, favorable, and unique brand image for Chipotle: The Chipotle name, which means “smoked and dried chili pepper” in Nahuatl, the native Aztec dialect, is one of the sources of Chipotle’s brand equity. In addition to its authentic sound, Chipotle also chose the name because most of its food contains ground chipotle pepper. This brand name seems to receive high awareness from customers. The Chipotle Pepper Harvest logo is also a key source of equity. The new logo on the right seems to receive better perception from the customer. Chipotle’s brand equity is mainly contributed by the safe and great-tasting food that it provides the customer. Chipotle’s burritos are usually perceived as huge ones, which customers think worth their money. Chipotle’s commitment to using not only fresh but also high quality raw ingredients such as naturally raised meat, organic produce, and even dairy free of added hormones has created a differential effect in customers’
  18. 18. knowledge, especially to those who are health-conscious. Customers are exposed to the concept of “Food With Integrity,” “Naturally-raised meat” when they are in Chipotle’s restaurants or heard from friends. Customers will be curious to try Chipotle’s food to see the difference. Another important source of equity is the Chipotle website, which is fun, attractive, creative and informative. It allows customers to locate Chipotle restaurants and place orders easily. The website also provides a wide-range of details about sources of the ingredients, nutritional information, and the history about Chipotle. Customers have a relaxing and curious feel when they visit Chipotle website because there are interesting things that they can explore. For example, the website shows visitors how pigs should be raised, how their produce is grown, and recommended reading. The casual-dining experience in Chipotle’s restaurants is also an essential source of equity. Customers said they are attracted by both the outside and inside look of Chipotle restaurants. Also, having a chance to smell, see, and feel the sounds, the smells, and the sights of cooking can really help customers work up an appetite. This is a unique association which makes Chipotle different from other fast-food and fast- casual brands. Moreover, each Chipotle is designed with a kitchen that’s open to the entire restaurant. Each ingredient is laid out in front of you so customers can choose the
  19. 19. perfect combination to make their meal. They can watch the process as their burrito, bowl, tacos, or salad is prepared exactly the way you want it and handed to them almost instantly. Some customers even said “they feel safe about their food because they can see how their food cook and made in front of them, and it doesn’t seem they are hiding anything from us.” Finally, the interior design of Chipotle and the music would make it a fund and interesting place for customers to eat with families and friends. Not only does Chipotle aim for quality food, but also for environmentally friendly packaging. Their bowls are made from recycled newsprint. They use unbleached tray liners, napkins and cups that are made from post-consumer waste. These proprietary business practices separate Chipotle Mexican Grill from the rest of the sub-standard, unethical, animal abusing brands in the restaurant industry. An additional source of equity for Chipotle is its image as a community builder as it works with local farmers to buy their organic produce. Also, through local events sponsorships, Chipotle has established its unique image in the eyes of the customers in those regions. Another source of Chipotle brand equity is their creative packaging. Chipotle puts great stories sent by the customers or hand writing narratives about their “Food With Integrity” philosophy. Some customers said that they love reading the stories on their cups while having the meal, while others said they knew Chipotle is using naturally- raised meat through the stories on their cups.
  20. 20. Customer-Based Brand Equity Model Customers love Chipotle -Brand Loyalty -Customer Engagement. -Well-known for high Resonance quality burritos. -Fun experience -High credibility on -Fresh the sources of food. -Healthy Feelings Judgements - Fresh, Big burritos made of Organic -Distinguished Ingredients, smoked jalapaño Naturally raised logo meat -Interior design of - Quick & friendly service, a higher but Performance Imagery the store; wood and metal. reasonable price Salience High quality burritos, casual dining More depth than breath Known but not very Prominent Brand Awareness
  21. 21. Competitive Review Fast-casual restaurants market Chipotle positions itself as a fast-casual trendy restaurant which provides tasty, big burritos made from high-quality organic ingredients at an affordable price: higher than fast food but lower than the price of family restaurant, which satisfies the need for most American consumers: an growing demand to consume health food: fresh, natural and nutritious. Even though Chipotle was one of the earliest restaurants to promote this industry, Chipotle is still facing fierce competitions in this industry. Competitors in the fast-casual Mexican market include Qdoba Mexican Grill, Moe’s Southwest Grill and Baja Fresh. Figure 1: Figure 2: Favorite QSR/Fast Casual Favorite QSR/Fast Casual Restaurant Ranked by Number of Restaurant Indexed by Votes Location Count
  22. 22. Figure 3: Chipotle Restaurants State-by-state breakdown Fast-Food restaurants market Consumers who perceive the fast service of Chipotle will form a wrong impression that Chipotle belongs to fast-food market. But the fact is that Chipotle does share certain characteristics that correspond with fast-food market: reasonable price, fast- service. Unlike fast-food restaurants, Chipotle serves burritos fast without providing “fast-food experience”.
  23. 23. Strongest market competitors Points of shared parity Fresh, healthy ingredients Serve fresh, high-quality food Fast Service Health-consciousness Tasty burritos Serve food in a clean Cooking in open spaces, 100% environment transparency Reasonable pricing Serve food in a clean environment Reasonable pricing Points of shared difference A variety of food options in menu (queso, A variety of food options burrito, fajita, breakfast) Franchising Distinctive flavor: roasted, slightly sweet, fire- grilled Customer rewarding program: E- Catering Service club, gift card Q-cash Card reward program “Our Sound” (more music options, free music downloading) Innovative, inviting interaction encourage consumes try different things. Franchising
  24. 24. How Chipotle Is Different Points of Parity! ! ! Points of Difference Fresh Food With Integrity Healthy High quality food Fast casual dining Naturally raised meat Burrito Organic produce Mexican Grill The restaurant experience The unique story in founding the company Sustainable restaurant designs Strengths Weaknesses S Innovation Availability of brand specific W Strong management team sourced foods Strong brand equity Limited menu O Strong financial position High costs for ingredients T Community Involvement Slightly higher price than its Strong Focus on Quality competitors A Opportunities Threats N Product Branding High competition in burritos A Asset Leverage market L Emerging markets and overseas Economic slowdown Y expansion Lower cost competitors or Offer products in grocery stores imports S Expand secret menu Price wars I Emergence of other similar fast- S casual chains in the market Substitutes
  25. 25. Recommendations Expand domestically first and internationally later to enhance brand awareness while maintaining the core value of the brand: Currently, a lot of customers ask Chipotle to open new restaurants in their areas because they love Chipotle’s burritos. This is a good trend for Chipotle to expand its business and the breath of brand awareness. However, Chipotle needs to keep track with its “Food With Integrity” philosophy because this is the most unique image that it owns. Since it is difficult to look for supply in organic produce and naturally raised meat, Chipotle should be considerate in opening restaurants so that it could still maintain its uniqueness. Chipotle brand awareness is still not strong yet, so it should not risk its reputation by leaving its core values. Chipotle is having a few restaurants outside of the U.S, in Toronto and London, and people in these areas say that they love Chipotle, too. There are also requests from customers in Europe for more openings. Chipotle needs to do more research in Europe market for the potential openings of Chipotle. Again, if Chipotle ever decided to penetrate more extensively the international market, it would still need to consider not only the taste and reference of local markets but also keeping the best ingredients in their food. Finally, Chipotle could also explore the possibility of penetrating emerging
  26. 26. markets, where people prefer Western food. However, we don’t think this will be happening for any time soon. Do more marketing and Local Activities: Since its first opening in 1993, Chipotle has built their brand equity solely on word-of-mouth about their high quality food. This is a perfect way to do marketing in the restaurant business. Chipotle corporate brand has gained awareness from customers, but the product-attributes are still considered higher than brand attributes. However, Chipotle has evolved to another higher level, where marketing and branding become more important. Therefore, Chipotle should have advertising programs such as TV ads, radios, and prints more often to leverage Chipotle brand. Second, Chipotle gained awareness because of its high involvement in local activities. Based on the information provided on its website, Chipotle has held a lot of local activities in 2009 such as sponsoring circuit races, helping fund raiser, and so on. Recently, Chipotle seems to be less engaged in such activities. This is an important part of extending customer awareness, so Chipotle should consider being more involved in local community again. Find ways to gain more control in the naturally-raised meat and organic produce. The biggest obstacle that Chipotle is currently facing is the limited supply for the high quality ingredients that it needs. If it could solve this problem, it would be a highly success for Chipotle.
  27. 27. Brand Extension In September 2011, Chipotle opened an Asian fast-casual concept restaurant named ShopHouse Southeast Asian Grill in Washington, D.C. The company has said the new restaurant "would follow the Chipotle service format and its focus on 'food with integrity' in ingredients." Chipotle will start with only one store, and see how the restaurant works out. ShopHouse Southeast Asian Kitchen features "cuisine inspired by Thai, Malaysian and Vietnamese cuisines" served in bowls or as banh mi sandwiches. For this brand extension, the points-of-parity and points-of-difference are following: Points of Parity Points of Difference Same service form as Chipotle Different brand elements (e.g. different Organic ingredient (food with integrity) brand name, logo, color, etc.) Same ways to feed animals Different cultures, styles and tastes of food.

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