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Chipotle Brand Audit ReportChipotleBrand Audit Final ReportBeer & FlowersKenneth Tyas Aroon Duncanson Norrel Blair Brianna HauckVIC 4312Beer & Flowers1

Chipotle Brand Audit ReportTable of ContentsThe Brand InventoryProduct Market Overview 3Market Analysis . 3Brand Element Analysis . 6Marketing Programs Analysis . 8Target Segment Profiles . 9Brand Benefit/Differentiation Analysis 11The Brand ExploratoryConsumer Research Questions . 11Research Design . 12Major Findings . 12Proposed Brand Positioning/Identity . 14Branding Recommendation . 15References . 17Beer & Flowers2

Chipotle Brand Audit ReportThe Brand InventoryProduct Market OverviewChipotle Mexican Grill falls under the popular category of fast-casual Mexican dining.These types of restaurants are known for serving menu items such as tacos, quesadillas, andburritos in a very quick and efficient manner. The food is prepared behind a glass barrier,allowing consumers to see the food as it is being made. It also allows for a great deal ofcustomization because the consumer can point out the ingredients they want on their product, asit is being made. The types of consumers who usually frequent these restaurant are those whowant a tasty meal, at an affordable price, that they don’t have to wait a long time for. Millennials,including college students, are the perfect target consumer for Chipotle and other restaurantswithin this product market because they are on the go, whether to class or work, and they are alsotypically looking for a cheaper option. While they all have their points-of-difference, theserestaurants target the same consumer base more or less, which causes tougher competition.Chipotle, once the market leader, has fallen in the past year and been surpassed by itscompetitors.Market AnalysisMajor TrendsMany of the major fast-casual Mexican chains are trending towards creating healthieroptions. Recent developments have led to a decline in Chipotle’s popularity - mainly, the E. colioutbreak. Chipotle, which held the title of "Brand of the Year" in Harris' fast-casual Mexicanrestaurant category for three straight years, failed to make the top four this year (Garcia, 2016).Since the outbreak, Chipotle's stock has dropped over 40 percent (Garcia, 2016).Beer & Flowers3

Chipotle Brand Audit ReportLooking beyond financial trends, many of the same tactics are being utilized amongst allof the competing chains. One particular tactic that’s trending in the market is the concept of foodbeing prepared right in front of the customer. This allows the customer to see exactly how theirfood is being prepared it creates a sense of transparency. Additionally, many of these chains arelooking toward becoming healthier alternatives to fast-food chains, like Mcdonald's.Looking at McDonald's, many concerns are about the healthiness of their food, yet thecompany has made noticeable changes in response to these concerns. It’s not becauseMcDonald's doesn’t want to, it’s simply because they can’t, due to the large number (over14,000 worldwide) of their locations. Chipotle, which only has 1,800 locations across the U.S., isjust now running into these issues with organic food availability (Allen, 2015). This is directlyrelated to the food-borne illness issues that Chipotle experienced in the past year. As Chipotlecontinues to grow, the problem will continue to grow as well.Lastly, Chipotle finds itself in a growing pool of fast-casual dining options. Currently,the fast-casual chains represent only 30 billion of the U.S. 700 billion total restaurant revenue.However, it is projected that the market will grow more than an additional 100 billion withinthe next 10 years(Allen, 2015). With such massive growth in the market for fast-casual dining, itcreates both opportunities and challenges for Chipotle.Main Competitors & Competition Strategies in the Product MarketUntil recently, Chipotle was the most favorable Mexican chain. They’ve now beensurpassed by Moe’s Southwest Grill. In fact, Chipotle has dropped so far down in favorability,that they are below other competitors like Qdoba, Baja Fresh, and even Taco Bell.When a brand whose slogan is “Food With Integrity,” suffering an E. coli outbreakmakes the promise of fresh, healthy food a tough pill to swallow. Despite higher prices, theirstance of having foods without GMOs along with being ethically and naturally produced, was apoint-of-difference that resonated with consumers(Page, 2016).Consumers who wanted healthy food weren’t ordering salads at McDonald’s andWendy’s, instead [they were looking] for naturally-raised or organically-produced food Beer & Flowers4

Chipotle Brand Audit ReportDespite higher food costs, which prompted Chipotle to raise its prices in 2014, same-store salesgrew by 16.8 percent.As far as the competitor strategies go, it would seem as if Chipotle’s own strategy ofboasting fresh food isn’t all that unique. Moe’s promotes that their food is safe, or in their words,“Honestly Awesome Food [that is] fresh, flavorful and handcrafted for you.” (Overview) Freshfood is an aspect that Qdoba pushes as well. “The increase in market share (in terms ofpercentage of visitors) at Moe's Southwest Grill went up five percent around the time of thefood borne illness outbreaks at Chipotle.” (Chamlee, 2016)Despite their newfound popularity, Moe’s and Qdoba are still working hard on newstrategies. Moe’s, who only began launching national media campaigns a few years ago, seeks tohighlight the company's "personality" and differentiate it from its competitors. Qdoba is alsoseeking to create its own identity with new restaurant redesigns based on consumer research thatwill allow locations become a “gathering place,” and they also want to shake the perception ofpurely being a “lunch destination.”While Chipotle’s relatively small menu may have been a key to its success in the past,it’s now a drawback. Their competitors offer a wider selection in their menu, and make frequentadditions (Malcom, 2016). Moe’s is known for having a wide selection of ingredients, and offerslimited-time items, like their ancho chili lime rice bowl and ghost pepper salsa. Taco Bell, on topof already having a really extensive menu, recently added a breakfast menu, and some locationseven serve alcohol now.Chipotle is at a disadvantage: their menu is considerably smaller, and they have theweight of a food-related health scare on their shoulders, and it doesn’t seem like it’s going away.Taco Bell, who isn’t known at all for being healthy, is beating Chipotle in favorability - that’svery telling. When competitors who aren’t even seen as particularly healthy or clean are beatingthe brand in favorability, it’s a red flag that before Chipotle can focus on location redesigns,menu additions, or anything else, they have to get the focus off the notion that their food isn’tsafe to eat.Main Marketing & Branding StrategiesMost competitors in the fast casual dining market are using traditional media to markettheir brand. They use advertisements on platforms such as television and radio. Moe’s, forexample, bought a 30-second ad spot on national television to advertise their limited-time burritooffer. Qdoba also runs several television commercials each year. Chipotle has geared its marketstrategy to appeal to its target audience: millennials. Millennials tend to shy away fromtraditional media; they find it outdated and somewhat boring. Chipotle’s marketing strategyfocuses on having a large online and social media presence. Chipotle created one commercialwhich was in the format of a cartoon because they know this would capture the attention of theMillennials. Rather than buying a television spot, Chipotle posted the commercial on theirYoutube channel - it received over 8 million views. However, research shows that Chipotle isbeing overrun by their competitors, so maybe this isn’t the best strategy.Beer & Flowers5

Chipotle Brand Audit ReportTaco Bell, another main competitor of Chipotle, also focuses its advertising towardsMillennials. Although their approach is different, their target is the same. Taco Bell focuses lesson being health conscious and more on being fun and affordable. Taco Bell puts most of its timeinto its mobile advertising. They’ve worked with social media platforms such as Snapchat,Instagram, and Facebook. They use technology that tracks what apps consumers use most ontheir phone and gear their ads towards those behaviors and interests (Johnson, 2016).Millennials also care about the environment more than any other generation, so Chipotlefocuses their marketing on food sourcing and organic farming. Chipotle’s mainpoint-of-difference was virtually invalidated. It also damaged their consumer satisfaction rating.In June of 2016, Chipotle’s ACSI customer satisfaction rating dropped to 78 percent - six percentless than last year. (Chamlee, 2016) This is mainly due to a loss of reliability. Chipotle has madea big effort to win back consumers after this incident by doing several free giveaways.Giveaways are great and all because everyone loves free food. However, this is not enough toredeem Chipotle’s brand image and gain back consumer’s loyalty and trust. According toexperts, Chipotle’s recovery time is going to be a lot longer than expected.To get even more specific about the target audience, Chipotle is marketing towardscollege students. College students are the type of people who want to eat better, but are notextremely wealthy. Chipotle makes them feel like they’re eating something they can feel goodabout, without breaking the bank.Chipotle is also considered “trendy” among the consumer’s peers, which is anotherreason to want to eat there. Also, Chipotle has a very futuristic, modern interior. This makes for avery pleasant eating environment. Chipotle should play this element up a little bit more; make itmore of a focus.Brand Element AnalysisNameThe first step to creating a successful brand, is putting together brand elements that areeasy for consumers to recognize and understand. The most basic part of a brand is the name,“Chipotle Mexican Grill.” The name states exactly what service the company provides, it is aMexican Grill, this allows consumers to avoid confusion and simplifies the brand, to make iteasier to understand and differentiate it from other brands. (Chipotle, 2016)SloganChipotle also has their slogan, “Food with Integrity,” which allows consumers to build atrust with the brand and reinforces their brand positioning. Using the word “integrity” impliesthat that Chipotle is an honest company and therefore uses honest ingredients. Since the namegives no reference to the fact that they use fresh, natural ingredients, the slogan gives consumersthis idea of trust and value. (Chipotle, 2016)Beer & Flowers6