Chipotle Balanced Scorecard
Chipotle The Chipotle Mexican Grille opened its first store in 1993 beginning a new category in the restaurant industry known as “fast casual” (About Us, 2014). This new category featured the “highest quality raw ingredients, classic cooking methods, and distinctive interior design-features that are more frequently found in the world of fine dining.” However, aside from the normally long wait in lines, an order could be taken and served in only a couple minutes. Currently Chipotle operates more than 1,500 restaurants internationally. The following pages will present a balanced approach to the effectiveness of Chipotle’s strategy analyzing financial performance, customer satisfaction, employee/learning and growth, and internal process.
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As of the 2012 annual report Chipotle has $472.9 million in cash and short term investments. This growth strategy worked to build 183 restaurants in 2012 while only closing three. Furthermore this low debt has managed to make their debt to equity ratio a .26 giving them very low leverage. Additionally they have an astounding current ratio of 4.12. This shows that Chipotle anticipates unforeseen problems and remains flexible with low debt. This has resulted in the minimization of the many risks Chipotle and other members of the industry face. However, with a beta of .79 Chipotle proves that their stock will remain very stable. With such aggressive growth Chipotle depends heavily on choosing sites that will provide an adequate return on investment. They have been successful at various types of locations. Their predictive modeling uses proprietary formulas determines projected sales taking into account competitors, area demographics, and the amount of information on competitors. The result has been a 21.7% return on investment (2012 Annual Report and Proxy Statment, 2012). This is above the industry average, however, profit margin is a different story. At 10.5% Chipotle is three percent below the industry average. Much of this is due to the to the rising costs of food. As Chipotle committed to such high food standards they were forced to limit their suppliers. With a low supply the cost will rise creating these below the industry average margins.