Mike Bolden » Posts for tag 'Chipotle'
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How Chipotle Can Find Bluer Oceans

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Posted in Blue Ocean Strategy
August 4, 2008
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Counter-Intuitive Locations Will Lead to Bluer Seas
An important way to target groups willing to trade up in price is to locate more stores in demographic areas that have high concentrations of these buyer groups.  While this sounds obvious, the tactics of this strategy for Chipotle’s value proposition are counter-intuitive.  Restaurant industry logic typically clusters competitor outlets in similar and close proximity. Running counter to this logic, Chipotle would be better suited near a mid-range restaurant, rather than near a fast food restaurant. Likewise, it should strategically positioned and pitched as THE “mid-range” option among fine and upscale dining establishments, not the “expensive” place passed by the fast-food strip.

How to Out-Maneuver Three Major Types of Restaurants
For all three of these types of restaurants, the Blue Ocean Value Canvas diverges favorably for Chipotle.  The fast food restaurant will be irrelevant because it won’t be in proximity, the mid-range restaurant will lose twice on price and quality, and the fine dining restaurant will be beat via a trificta of convenience/speed, price, and value.  The trick is that the buyer group who is willing to trade up price for quality will also act as an enabler to create a new restaurant categorization and value proposition. 

Winning Through Strategic Day Part Offerings
Within these demographically-favorable locations and near these up-scale restaurants, Chipotle must continue to target the lunch times and early evening/pre-dinner times. For lunch times, they should stick to their guns of high food quality/minimum service, and focus on value to retain repeat customers. This is particularly important for their restaurants located near corporate corridors and education centers. For evenings, pre-dinner should offer an indirect “flank” to direct head-to-head competition with the fine dining establishments.  During this day part, Chipotle can increase offerings – not necessarily service – by expanding the menu items for higher-end food and maybe even cocktails (they already offer beer).  Can you think of some other types of offering which you think Chipotle could do?  How else do you think Chipotle can expand it Blue Ocean?

I am willing to talk with blog participants live via phone for free consultations.  I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities.  For any of these request, E-mail me .  I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist – writing to inform, enlighten, and inspire.  Author of forth coming book, “Owning Marketspace”.  Available for consulting and speaking engagements.

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The Case of Chipotle’s Blue Ocean Burrito

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Posted in Blue Ocean Strategy
August 2, 2008
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Chipotle’s Current Situation
Chipotle Mexican Grill is a highly successful, midsize restaurant chain in the U.S. that serves large portions of burritos and tacos in minimally decorated shops and markets its ingredients as natural.  According to The Wall Street Journal’s July 25th edition, Chipotle’s sales growth softened through July, while its costs for cheese, avocados and tortillas ate into profits.  On the flip side of this news, Chipotle’s revenues rose 24% to $340.8 million in the second quarter.  Higher ingredient costs will probably be a restaurant industry norm as we move forward due to ever-increasing global demand for food and fuel.

Chipotle’s Blue Ocean – Similar to Curves
Chipotle’s success can be seen through its charting a Blue Ocean strategy of maximizing or raising the consumers’ desire for high quality food while minimizing the additional resources typically spent on service and ambience.  This strategy markedly diverges from the typical restaurant paradigm of reducing ingredient costs and spending resources on service and decorum.  Chipotle’s Blue Ocean also allows buyer groups to “trade up” to higher quality food without the expense of better service or atmosphere.  It is classic Blue Ocean nearly identical to the Curves women’s gym example cited in the book, Blue Ocean Strategy.  Curves avoided many of the big health club frills, opting instead to focus on a specific buyer group in a small facility: they focus on women in a women-only setting with core equipment offerings.  Both Chipotle and Curves have traded fancy resource-laden atmospheres to focus on their core offerings, and they have done so successfully.

Ocean Becoming Less Blue
Due to higher ingredient costs, Chipotle’s Blue Ocean is becoming less blue. While it is not yet red, it is vital that they recharge and head further out to sea. But they must choose the right direction. The wrong strategy could take them into a Red Ocean of fast food restaurants like Taco Bell, KFC, etc., or it could take them into the mid-range class of restaurants such as Chili’s, TGIF, Red Lobster, Olive Garden, etc.  Chipotle must continue to target “niche” customer groups who are willing to trade up food quality for a higher price. This can be achieved in two distinct ways: more strategic location selection and usage occasion strategies.

I am willing to talk with blog participants live via phone for free consultations.  I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities.  For any of these request, E-mail me .  I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist – writing to inform, enlighten, and inspire.  Author of forth coming book, “Owning Marketspace”.  Available for consulting and speaking engagements.

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