Ch. 11 - Developing and Managing Products

     Chapter 11 talks about developing and managing a new product. Chipotle hasn’t had any major changes on the menu in almost 20 years. The fast-casual chain announced the first-ever min the beginning of the year, a major addition to its menu: Sofritas, a meatless protein, that will be used to make vegan and veggie burritos and tacos. Chipotle describes the meal base as organic tofu that’s shredded and braised with chipotle chilis, roasted poblanos and spices. 

As we analyzed on the previous chapter, the add of Sofritas on the menu gives a prime example of a product idem added to the existing product line, which are the other types of protein available to complement the burritos and tacos. It can also be analyzed as a simultaneous product development, which is a different product with the same assets.

Many investors see Chipotle Mexican Grill as one of the more-successful growth stories in recent memory. The company's stock performance confirms as much; the shares have risen approximately 1,300% since Chipotle's IPO in 2006, over 1,000% in the last five years, and over 80% in the last year alone.

However, investors would make a huge mistake to write off Chipotle as merely a once-great investment. In reality and despite its formidable size, Chipotle remains in a high-growth phase. This becomes most evident when viewed in combination with the company's store expansion, which investors should best consider alongside the company's two new restaurant brands.

Ch. 12 - Services and Nonprofit Organization

       On chapter 12, Service is the most important topic. It shows the components that costumers seek for quality services along with other strategies to create better experience overall. Chipotle offers better-than-average pay for the employees in the fast food industry and offers managers lucrative financial incentives for hiring quality people - and firing those who aren't up to snuff. As a result, Chipotle has a reputation for good service that far exceeds its competitors. The fast food chain believes that the its business is only as strong as its staff.

In many ways, the Chipotle burrito is very similar to the iPhone. Founder Steve Ells invented a way to maintain the basic speed and experience of the standard fast-food experience and make the quality of the food a little better. The better food costs a bit more money, but consumers turn out to be happy to pay a premium for a superior product. Chipotle stands out for some unusual process innovations as well. Their “barbecued” meat products—carnitas and barbacoa—are vacuum-packed and cooked sous-vide in Chicago before being shipped out for on-site reheating.

     Each worker is responsible for one or two steps and then hands the package off to the next. The production inputs—rice, beans, meat, salsas—are assembled backstage and delivered at the command of the line workers. It’s not glamorous work or well paid, but it does offer a chance at advancement. The overwhelming majority of salaried managers were promoted from hourly wage jobs, and the best managers are further promoted to become “restaurateurs,” a kind of supermanager who oversees multiple stores. Wages for line cooks, meanwhile, would presumably rise if the unemployment rate fell. Under the circumstances, faster and better food is a great strategy for winning the future.

Ch. 10 - Product Concepts

        In this chapter we review different concepts of a product, as well as Branding. Chipotle has a firm grasp on one of our most important brand makers: Millennials. Millennials believe in what Chipotle stands for: Community. And based on that insight, the brand has consistently created a way for its customers to explore their interest in “food with a conscience,” making what could be tedious and preachy into an ongoing dialogue and movement that is both socially conscious and good for the palette. Leveraging the Chipotle brand in these new concepts will play very well with Millennials who drive a disproportionate share of margin for the franchise and vote not just with their visits, but with their likes, follows, tweets and Instagrams. Starting with Millennials and cascading from these new concepts will accelerate their growth potential, quickly.

        

     Chipotle has also been very creative as far as packing their products. They in the beginning of last summer a new line of oddly literary packaging—bags and cups printed with new writing both from authors you might find in the New Yorker as well as comedians like Sarah Silverman.Instead of limiting the topics to food or sustainability, both themes the company has focused on in the past, and ultimately decided to let authors write about whatever they wanted.

     The project was the brainchild of author Jonathan Safran Foer, who happened to eat lunch in a Chipotle restaurant one day by himself, and started wishing he had something to read. He knew people at the company—who'd reached out after Foer wrote Eating Animals, a book about factory farming—and decided to suggest his idea: What if Chipotle’s packaging was more like a book or a magazine? If customers like the new packaging, the company plans to roll out another lineup of writing soon. The soda cup may be the next literary form.

Ch. 17 - Personal Selling and Sales Management

One of Chipotle Mexican Grill’s founding principles is to serve “food with integrity.” So it comes as no surprise that quality customer service is an important part of the company’s mission. With 1,300+ locations, Chipotle is one of the fastest-growing restaurant companies in the United States. That type of rapid growth can make consistently great customer interactions a challenge. Chipotle’s secret recipe: becoming a customer company.

Chipotle’s service team receives inquiries as diverse as suggestions for locations of new restaurants, feedback about service at a specific location, or detailed questions about food ingredients and preparation. The company tapped Salesforce when it needed a scalable solution to provide business insights, keep pace with its growth, and expand to address social media over time.

                                      

Using customer profiles, Chipotle maintains a record of all customer service inquires—from a variety of channels—for 360-degree customer views. “Although we have more than a thousand restaurants, we want each to be a part of the community it serves and every customer to know they’re important,” says Shannon Kyllo, Customer Service Manager. “Salesforce gives us a close understanding of our customers so we can better meet their needs and personalize their experiences in our restaurants.”

Integration with back office systems for reporting is also important. “In addition to engaging with customers, it’s critical that we can identify trends as they develop,” explains Kyllo. “For example, if we get a lot of positive feedback in one area, it may be due to an exemplary district manager. Or if we get several complaints about an ingredient, there may be an issue with the supplier that we need to investigate.”

        Consumers are increasingly taking to social networks to share their opinions about their dining experiences—both positive and negative. Chipotle has a new team that is entirely devoted to listening to conversations about its brand and building even closer connections to customers. “As social media becomes the primary platform for customers to share their experiences and feedback, we are constantly evolving our communication model so we can connect with our customers in the ways that are most relevant for them,” explains Eric Wilson, Director of Initiatives. “Our service model is built on creating relationships with our customers—that’s always our top priority.”

Ch. 16 - Advertising, Public Relations and Sales Promotion

   Chipotle believes on the type of grand experiment that makes most brand managers tremble: It's giving up on advertising. Having cycled through four ad agencies in five years, the restaurant chain focus now mostly on word-of-mouth promotions.

       Chipotle has been adopting this plan since 2010, and according to numbers it has been working out very well.  In fact, not advertising on TV is key to Chipotle's business model. The company spends almost nothing on advertising—just $6 million nationwide last year. (By comparison, Arby's, the smallest of the large fast-food chains, spends about $100 million and McDonald's, the biggest, spends more than $650 million.)

Chipotle has been reducing its above-the-line advertising costs in the last few years.The company did advertise on TV for the first time ever in 2011, buying a single ad during the Grammy Awards that ran only once, for instance. But In its annual report, Chipotle describes why it believes advertising is bad for its business:  "Our marketing has always been based on the belief that the best and  most recognizable brands aren’t built through advertising or promotional campaigns alone, but rather through all of the ways people experience the brand."

Sales at Chipotle went up 20 percent last few years, so this is a company that already has momentum. The fact that its ad dollars are less effective than they should be suggests it's worth cutting them back -- they're a drag on earnings and they're not contributing efficiently to the company's overall growth.