Chipotle plan book by Becca Lu

ADV 483 December 16, 2013

Mary Burd, Linnea Fox, Yoon Ji Hong, Becca Lu, Sandra Tichy, Shalyn Wismer

Table of Contents 01 SITUATIONAL ANALYSIS & MARKET BACKGROUND 02 Company Information 03 Industry Information: Category Trends 05 Competitors 07 External Information: Industry Trends 08 Current Users 09 Geographical Emphasis 10 Seasonality and Timing 11 Consumers and Consumer Decision Process 12 SWOT Analysis 13 AUDIENCE ANALYSIS & PRIMARY RESEARCH PLAN ! 14 Target Audience 16 Goals, Objectives & Methods 17 Focus Group Questions 18 Survey Questions 19 Focus Group Results 23 Survey Results 26 Primary Research Analysis 27 THE MEDIA PLAN 28 Broad Communication Objectives 29 Reach and Frequency Objectives 30 Time/Scheduling Strategy 31 Media Mix Statement 32 Media Categories & Media Vehicles 33 Non-Traditional Media 36 Sources

Executive Summary Analyzing Chipotle’s position in the casual, fast food Mexican restaurant industry, secondary research shows that Chipotle is a top competitor and has a strong place in the market. The company has continually grown since its establishment in 1993 in terms of both sales volume, number of locations and market share. Looking beyond profits and revenues, demographic information about Chipotle’s current consumers gathered through MRI data has made it clear that those ranging between the ages of 18-49 are Chipotle’s heaviest consumers. To maintain our current position as a top competitor in the Mexican, fast-food industry in consumers’ minds we conducted primary research to find areas we could focus upon improving. Analyzing over 100 participants’ responses to a survey regarding their fast-food purchase opinions and behaviors, we found that Chipotle was seen as a top choice when compared to its competitors and we found that these consumers valued time and efficiency when making decisions regarding fast-food restaurant selection. A focus group was also conducted to get more qualitative data and give us the opportunity to find unexpected insights. One of the most frequent complaints participants had about their experiences with Chipotle was having to endure a long wait before being able to get their food. Some even referenced leaving when they saw the line was too long. Other than this, there were very few complaints. People were pleased with the quality of their food and felt the quantity was well worth the price they paid for it. Seeing where current consumers’ felt satisfaction and dissatisfaction, we aim to improve Chipotle’s brand perception to not only maintain their large market share but to increase it. Our message will not seek to change Chipotle’s image, but to inform the public of solutions to their current frustrations. We will inform consumers that they can still enjoy Chipotle without having to endure the long wait by pre-ordering for ready pick-up via the mobile app. With focus on convenience and the time saving nature of this app, we seek to appeal to the busy lifestyle of our target market. This campaign will be aimed at eliminating problems built into current perceptions. The communication objectives of this campaign are to increase trail of the brand as a whole and increase awareness about the mobile app. Considering the lifestyles and demographic information about Chipotle’s current consumers, we created a media plan to most efficiently and effectively reach this market segment. Narrowing down the age range of 18-49 year olds to 18-29 year olds, we are focusing on reaching the millennial generation, an age cohort that is known for their tech-savvy ways and high involvement in the online world. To best reach this target audience, our media plan will involve the use of digital media vehicles and nontraditional advertising. Placing ads on a continuous basis, year round, on social media sites, online radio and on-demand streaming video sites, we will effectively reach and leave impression on this segment during their everyday internet use. In addition, to create buzz, we will use nontraditional media to give consumers a positive brand experience and provoke positive word of mouth. Reaching this market in ways that are an integral part of their everyday life will not only help to maintain but will serve to improve Chipotle’s current position in the mind of the public.

Situational Analysis & Market Background 1

Company Information Founded by Steve Ellis in 1993, Chipotle Mexican Grill is a chain of restaurants in fast-casual dining segment, specializing in Mexican cuisine. As of September 30, 2013, Chipotle has 1,539 restaurants in the United States, including Canada, London, England, Germany and Paris, France. In 2013, Chipotle has opened 165-180 new restaurants and expects to 180-195 more restaurants in 2014. To note, all the restaurants are company-owned without operating any franchises. In September 2011, Chipotle has opened an Asian fast-casual concept restaurant named ShopHouse Southeast Asian Grill in Washington D.C. which shares Chipotle’s mission ‘Food with Integrity.’ According to financial report on Yahoo Finance, for the third quarter of 2013 as compared to that of 2012, the revenue increased 18.0 % to $826.0 million due to opening of 37 new restaurants. Moreover, higher ingredient costs such as tomatoes, corn, and tomatillos in salsa, dairy and chicken, non-GMO sunflower and rice bran oils resulted in food costs taking up 33.6% of revenue. According to Trefis analysis, Chipotle has higher average spend per customer than most of its competitors. For example the average amount customers spend at McDonald’s was around $3.90 in 2012 while customers at Chipotle spent more than $11.50. At Chipotle, customers can make their own dishes by mixing and matching with sauces and ingredients such as meat, cheese, tomatoes, guacamole, salsa and etc. They can choose any one of Tacos (crispy or soft), Burritos, Salads and Burrito Bowls. In last February, Chipotle has introduced its new meat-free item, “Sofritas” which are the organic, non-GMO tofu burritos for their vegan and vegetarian customers and meat eaters who occasionally would like to try meat-free option throughout the San Francisco Bay Area. By the end of this year, the new menu will be served in 650 locations, or about 40 percent of all Chipotles. ı Under its mission “Food with Integrity,” Chipotle has emphasized organic, locally-produced ingredients and meat from animals naturally raised in open pastures with a pure vegetarian diet without any customer loyalty, launched a 3-minute animated viral video called “The Scarecrow”, which has gained more than 7.1 million views on YouTube. This film was more effective than traditional advertising because it created stronger emotional connections with the customers. Additionally, a Scarecrow game app for Apple devices launched by Chipotle has been downloaded 32,000 times. Chipotle is currently in partnership with the Huffington Post and came up with a brand-new section called “Food for Thought” in order to create awareness about how food is grown, raised, and prepared. It also covers everything from GMOs and food legislation to tips for finding local food sources and picking seasonal produce.

Industry Information: Category Trends INDUSTRY Chipotle belongs to the “fast-casual” restaurant industry. “Fast-casual” is the fastest growing segment in this industry. It is an upscale version of a fast food restaurant with higher quality food. TRENDS IN THE INDUSTRY Millennials are changing the definition of brand value for restaurant marketers. They don’t solely want food to satisfy their hunger. They want affordable adventures in tasting and sampling. Ethnic food is becoming mainstream in the United States. Approximately 77% Millennials enjoy eating a variety of different ethnic cuisines. Ethnic foods on the rise include ethnic fusion, Southeast Asian, Peruvian, Latino American/Nuevo Latino, Korean, and Argentinean. One of the leading cuisines is Mexican food. In addition to delicious ethnic cuisine, consumers want healthy food that is also sustainable. Chipotle is not only Mexican-inspired cuisine, but it promotes high-quality, natural ingredients that also promotes sustainability. TRENDS IN SALES The third quarter generated a revenue of $826.9 million—an 18% increase compared to third quarter of 2012. Additionally, the restaurant sales grew 6.2% in a quarter. Diluted earnings per share increased 17.2% to $2.66. This suggests that Chipotle is continuing to grow as each quarter progresses.

Industry Information: Category Trends Cont. PRODUCT DEVELOPMENT Since Chipotle values high-quality ingredients, Chipotle makes sure consumers are aware of this. Chipotle added an Ingredients Statement to the online menu, flagging which ingredients are local, organic, as well as those containing GMOs, hydrogenated oils, and preservatives. Chipotle released an iOS game and a video in September 2013, depicting industrial food production. The three-and-a-half-minute video called The Scarecrow. The Pixar-like is about an industrial giant Crow Foods, controlling all food production. Scarecrows have been displaced from their traditional role and are now servants to the crows and their evil plans to dominate the food system. The scarecrow hopes to create an alternative to the unsustainable processed food from factories. Chipotle has also added a kids menu, margaritas, and sofritas (organic tofu) to the menu. Chipotle also offers catering for as little as 20 people. Chipotle also offers an app where consumers can order their meals in advance and pick it up at the store. CONSUMER USE Chipotle offers burritos, burrito bowls, tacos, and quesadillas. Even though the menu is small and simple, there is over 65,000 possible menu combinations. Chipotle can be taken â&#x20AC;&#x153;to-goâ&#x20AC;? or can be eaten at the restaurant. As mentioned before, Chipotle offers an app for consumers to order their meals. ADVERTISING SPENDING Approximately 1.75 percent of Chipotle revenue is spent on advertising (half of what most fast-food companies spend). The revenue grew 16 percent in first half of 2014 compared with the same period last year.

Competitors As a fast-casual restaurant, Chipotle has a wide array of competitors in a competitive industry. First, there are competitors within the Mexican food category such as Qdoba, Moe’s Southwest Grill, Baja Fresh Mexican Grill and Taco Bell. Competitors within the fast casual category are Panera Bread, Noodles and Company, Panda Express and Potbelly Sandwich Works. In addition to these fast casual restaurants, there are fast food restaurants like McDonald’s, Jimmy John’s, Wendy’s, Burger King. Indirect competitors include cooking at home from food and products bought from a store, and pizza or sandwich delivery services.

Competitors Continued Financial Info Qdoba

• #2 in fast-casual Mexican behind Chipotle • closing 10% of stores (67 stores) due to underperformance • but in 2014, will open 60-70 more stores in different locations • owned by Jack in the Box • half restaurants are company owned, half are franchised • $583 million in sales

Moe’s Southwest Grill

•owned by Focus Brands Inc. •#3 in Mexican chains •20% growth every year

Brand Positioning

Brand Promotion

Product/Pricing/Place

Current Users

•Taste Off (Ours vs. theirs) •unique flavors •modern (nouveau) Mexican •made-to-order •“We live food” •enjoying food

•Taste Offs (web, print, video) •billboards •OOH (bus stop ads)

•average customer check is $7 •Rewards Program--email offers, birthday gift, free food after reaching a certain number of points •647 locations--college campuses, suburbs, cities, high-end shopping centers •order online

•similar to Chipotle’s users (18-49?)

•made to order •unique / original •high quality ingredients •fresh •differentiated brand experience: •tongue-in-cheek sayings on walls in restaurants •restaurants decorated colorfully, quirky •welcoming (“Welcome to Moe’s” greeting)

•radio •web •TV •outdoor

•$7-8 for meal, not including sides or drink •500 locations--suburbs, cities, shopping centers, colleges, airports •now opening locations in Central America

•similar to Chipotle’s users (18-49?)

Media Spending

External Information: Industry Trends ECONOMIC TRENDS The Millennials want affordable adventures, tasting, and sampling. Having a delicious meal that is filling doesn’t suffice. SOCIAL TRENDS Millennials have repositioned palate. They want more bold flavors and higher quality food. Approximately 9/10 people think fresh food is healthier. Healthy food is linked to home-made, house-made from scratch, artisan, authentic, seasonal, never frozen, farm-raised, grass-fed, free-range, and cagefree. Millennials are also cutting back on restaurant visits and having limiting cooking skills. They most likely consume pre-cooked fresh retail meals. Even, 44% say preparing food with fresh food is important, Millennials are inclined to use meal helps (e.g. ready made sauces). Other trends include an increase in eating alone and wanting snacks on the go. Moms are more likely consumers- they believe that organic products and GMO affect buying experiences. Gluten free is also a term that is found appealing. POLITICAL TRENDS The main political trend associated with the “fast-casual” industry is sustainability. Additionally, consumers seek true transparency. They want to know the calorie count, and the humane treatment of their products. Hyper-local sourcing (farmstead formulation) is CULTURAL TRENDS Sustainability is becoming a trend and a value of Millennials. Additionally global look a lies- ethnic food integrated into American food is becoming popular. Growing ethnic flavors on non-ethnic menus include: sriracha, chimichurri, aioli, tuzu, queso fresco, and thai chili. Even though Mexican food is on the rise, Mediterranean cuisine is being more popular. Approximately 40% of chefs say sushi is a hot cultural trend.

Current Users

The current users of Chipotle Mexican Grill are mostly educated White adults, aged 18-49, belonging to an upper middle class and enjoy hearty and quick meals. From the MRI data we can see that people who have graduated college plus are 59% more likely to purchase Chipotle than the average population. The age group 18-44 makes up almost 80% of the population consuming Chipotle. 90% of HHI of $150,000+ are likely to eat chipotle compared to the general population. Out of all people who bought Chipotle in the last 6 month, 77.5% of them are adults 18-49. Out of all people who bought Chipotle in the last 6 months, 40.5% have a household income of $75,000-$149,999. Since the HHI of this market is high, with a high percentage of upper education as well, we can assume that our users have honorable jobs and treasure being unique individuals since they can order their meal to their exact liking. This market appreciates the health and sustainability aspect of Chipotleâ&#x20AC;&#x2122;s food. 8

Geographical Emphasis Chipotle Mexican Grill currently has more than 1500 restaurants located in 41 states and the District of Columbia. It also has five locations in Canada and London, England and one in Paris, France. Chipotle is considered a national brand. The company manages based on six regions under casual fast food and service. California has 234 Chipotle restaurants, making it the state with the largest population of consumers. Runner-ups include Ohio with 143 restaurants, and Texas with 111 restaurants. Regionally speaking, Chipotle consumers are located in the Midwest, West, South and East Coast. Consumers in these regions also tend to be in higher populated areas. For example, college towns, large cities, and suburban towns. Media dollars should be spent in both urban and suburban areas. Rural areas such as smaller towns in the South and North (near Canada) appear to be lacking in Chipotle restaurants. This could be due to the fact that there is a lower demand in these locations for Mexican cuisine. Media dollars should be allocated geographically rather than distributed evenly throughout the entire country. Targeting large cities such as Los Angeles, New York City, Chicago would be ideal to reach avid consumers of Chipotle. However, certain large suburban areas and college towns should also not be neglected due to the fact that there is a large market of Chipotle consumers. In the past, Chipotle has been successful in locations in regional malls, downtown business districts, free-standing buildings and airport locations.

Seasonality & Timing SEASONALITY As an upper-end, fast-food style restaurant, Chipotle offers a service that is demanded year round; eliminating major business drop offs or booms due to seasonality. However, based on patterns found in Chipotle’s quarterly financial reports there are predictable trends of fluctuation in sales from quarter to quarter. There has been a historic trend showing Chipotle’s sales and net incomes have been lower in the first and fourth quarter. This is a pattern that holds true across the restaurant industry and has been attributed to the poor weather conditions found across the states during these seasons, preventing people from leaving their homes to go out to eat. Other seasonal factors are tied to the geographic location of the restaurants. Franchises on/near college campuses do much heavier business during the academic year than they do during the months of summer break. Aside from these factors, seasonality doesn’t have much of an impact on Chipotle’s sales. This Mexican food chain serves a genre of food that is appreciated throughout the year and being quick, filling, and affordable, it also is seen as an option for the “everyday occasion;” not a service saved for special events or occasions. TIMING In terms of timing, most locations are open from 11am to 10pm and Chipotle’s business peaks during the “typical” lunch and dinner hours- between 11am and 1pm and then again from 4:30pm to 7pm. Its sales show little fluctuation between week-days and weekends. Knowing this pattern of demand, and being such a popular, fast growing chain, Chipotle has done a great job to maximize their efficiency and numbers served. Knowing lines are unappealing and have the potential to turn off customers from using Chipotle’s services, the restaurant has designed its buffet-style layout to ensure the wait is short and a customer will receive their order both hot and with a minimal wait. To eliminate the potential negative impact of losing sales due to customers being unwilling to wait in line during these peak hours of sales, Chipotle offers a mobile ordering application. This allows customers to order online and track the progress of their order, so a customer’s food will be ready for pick-up at their time of arrival. Because “rush” hours can actually be seen as a problem for Chipotle, the restaurant has worked hard to make sure their kitchens are prepared for fast-paced, heavy production.

Consumers and Consumer Decision Process Over the past twenty years, the success of Mexican style restaurants in the United States has seen a major boom. Being a leader in the service category, this food trend has aided Chipotle’s incredible growth and success. Chipotle is now the second-largest Mexican food chain in the United States and has served in constructing America’s prototype of the burrito. Having opened for business in 1993, Chipotle has quickly become a well known and well liked brand in the consumer mind. Part of this strong reputation and exponential success comes from Chipotle’s position as a naturally sustainable chain. As Gustavo, author of Taco USA, commented, Chipotle serves more naturally raised meats than any other food chain in the states. Chipotle has made sure that this is known to their customers and consequently has positioned itself in the minds of consumers as an ethically conscious restaurant with high quality food. A position very few fast-food restaurants currently hold and a position that gives Chipotle a great advantage over its competitors. The purchase cycle when deciding to purchase Chipotle is driven by the regularly occurring need to satisfy hunger. After becoming aware of this need, whether it is from physical hunger pains or acknowledging the appropriate time of day for the consumption of food, a preference will next be established for how to best satisfy this need. This preference could stem from needing a large, filling meal to off-set hunger for the rest of the day, fitting within a certain budget or time frame, or to simply appease a craving for Mexican style food. Search may be affected by time, budget or location and if fitting will at this point allow Chipotle be selected. From there, the purchase will be made and the food can then be consumed. Satisfaction will hopefully be achieved by consuming desired flavors and no longer experiencing the discomfort of hunger. This cycle occurs very frequently seeing as people typically need to eat a substantial meal three times a day. Chipotle is a moderately affordable option giving it the potential to be a frequented purchase. This brand is known and chosen for their reliable quality and flavorful tastes which have earned a strong position in the consumer mind, making the need for search limited and potential for selection in Chipotle’s favor.

SWOT Analysis

Audience Analysis & Primary Research 13

Target Audience DESCRIPTION Chipotle’s Millennials are between the ages of 18-29. The target market leads an active lifestyle- whether it’s going to class, working on a project, going out with friends, surfing the web. They live on college campuses close to the heart of campus. Chipotle Millennials want to experience a culturally inspired meal that has a contemporary twist. They value technology and convenience- especially since they are always on the go. Chipotle Millennials love their Macbook Pros, iPhones, iPads, and any apps that make their lives easier. The target market also enjoys both quality and quantity- relatively low priced food that is delicious, healthy, and fills the stomach. Chipotle’s target audience appreciates a variety of bold, ethnic flavors. Chipotle Millennials prefer to get food fast and have a quality meal at the same time. They are also more likely to be concerned with environmental responsibility, as they are an informed generation. Studies have indicated that millennials tend to take more notice of company reputations, environmentally friendly options and reading product labels. RATIONALE Chipotle has been a consistently successful and respected brand that continues to grow. The company’s revenue has grown 16% compared to last year’s third quarter in 2012. Thus, targeting Chipotle’s current consumers is the most optimal option. Chipotle’s current users are mostly educated white adults between the ages of 18-49 and belong to an upper middle class. They most likely have a college degree. Millennials are changing the definition of brand value. They want affordable adventures in addition to delicious meals. Approximately 60% of Millennials find food quality the most important factor when it came to choosing a meal. We chose to segment our target market specifically between the ages of 18-29 because these Millennials are most comfortable with digital technology. They utilize technology to keep themselves informed on social issues. They are most likely recent graduates or are still in college. SCOPE According to the U.S. Census Bureau there are approximately 29,217,200 white Millennials between the ages of 18-29.

A Day in the Life of a Chipotle Consumer The Chipotle Millennial wakes up to his/her iPhone alarm. He checks his email, texts, and Facebook notification in bed. After brushing his teeth, putting on a pair of jeans, slipping on his Sperry’s, and a throwing on a black t-shirt, the Chipotle Millennial grabs his backpack and walks to class with a couple of his friends. He slides in a seat in the back of the class with a couple minutes to spare and opens his Macbook Pro. He visits his Facebook page, and surfs BuzzFeed while the teacher lectures. Class is a place where he can get his work done- not to learn new material. Halfway through class, he realizes that he forgot to eat breakfast again and decides that he wants to get Chipotle during his free hour between classes. He doesn’t want to wait in the long line because he has other better things to do. He has a group project, a paper, and a job interview he is preparing for. He checks his phone, and goes onto the Chipotle App to order his food in advance. He orders the same meal every time: chicken burrito with white rice, black beans, tomatillo salsa, cheese, sour cream, and lettuce. He’s always tempted to switch it up, but loves his order so much. The Chipotle Millennial submits his order for 11:00 and can only think about how excited he is to sink his teeth into his burrito. Even though he is always one of the last to arrive in class, the Chipotle Millennial is the first to leave. He walks fast across campus, skips the line at Chipotle, and picks up his prepaid, pre ordered meal. He sits down and Instagrams his half-eaten burrito while including the caption “starting the day right”. After lunch, the Chipotle Millennials continues to surf on the web in his classes. Before dinner, the Chipotle Millennial slips on some shorts, his fraternity philanthropy t-shirt, and his Nike running shoes and exercises at the gym. He listens to Spotify on his iPhone as he lifts weights. After a quick shower, he opens the fridge and makes an instant pasta meal. Feeling full, the Chipotle Millennial grabs his Mac, iPhone, iPad, and chargers, heads to the library with his friends to get some of his projects done. After a productive night at the library, the Chipotle Millennial texts his roommates to pick him up. Once he’s home, he slips on a pair of sweatpants, surfs the web on his phone, and calls it a night.

Goals, Objectives & Methods GOAL #1: CHIPOTLE FOCUS GROUP Objectives: • Understand brand perception • Understand competitor perception • Understand the motivations for eating at Chipotle • Understand the motivations for not eating at Chipotle Method: • This research was conducted using one focus group with six respondents who eat Chipotle at least once per month. They are students at University of Illinois in Champaign, IL. The research was conducted November 20, 2013. GOAL #2: CHIPOTLE ONLINE SURVEY Objectives: • Understand brand awareness of Chipotle and its competitors • Understand brand perception • Understand motivations for eating at Chipotle • Understand motivations for not eating at Chipotle • Understand the practices of eating at restaurants in general Method: • This research was conducted using an online survey with 112 respondents who opted to take the survey by seeing the link on social media. The respondents we made up of our target market from across the United States.

Focus Group Questions FIRST ACTIVITY: WORD ASSOCIATION • I’m going to list six different occasions in turn, and I would like you to write down the first place that comes to mind for each. 1. Going out to eat with friends 2. Going out on a date 3. Somewhere you would go to get food post-workout 4. Hungover food 5. Somewhere you would go if in a hurry ı ı 6. Somewhere you would go if you’re really hungry SECOND ACTIVITY • What do you think of people who eat at these restaurants. Please describe in a few words: ı ı 1. McDonald’s 2. Panera 3. Chipotle ı ı 4. Mia Za’s 5. Qdoba Disclose the name of the client with focus group participants THIRD ACTIVITY: DRAWING • Please draw the person you think would normally eat at Chipotle. Draw what they look like and what they are wearing. • Post-drawing: Now I want you to describe why you drew what you did. FOURTH ACTIVITY: GROUP DISCUSSION • Tell me about a time you had a positive experience at Chipotle. • Tell me about a time you had a negative experience at Chipotle. • What is one thing that you would change about Chipotle? • What is one thing that would upset you if Chipotle changed it?

Survey Questions 1. How often do you go out to eat? once per month or less 2-3 times per month 1-2 times per week 3-5 times per week 6 or more times per week 2. Rank how likely you are to eat at the following restaurants (1 being Very Likely, 4 being Not Likely). Please drag the choices in order. Chipotle ı Moe’s Southwestern Grill Qdoba ı Panchero’s 3. How often do you eat at Chipotle? (If “never” is selected, skip to question #8) never less than once per month 1-2 times per month 3-5 times per month more than 6 times per month 4. Please rate how you feel about this statement: When I go out to eat Mexican food, I go to Chipotle. never sometimes always 5. What factors draw you to eat at Chipotle? Please order each factor from most to least important, 1 being most important and 5 being the least. price food genre time/efficiency service taste

6. When you consider Chipotle’s food, how do you rate the quality? very poor poor fair good very good 7. Please rate how much you agree or disagree with this statement: It is important to me that Chipotle uses naturally raised meat. strongly disagree disagree neither agree nor disagree agree strongly agree 8. Which best describes why you do not eat at Chipotle? (only answered by respondents that selected “never” for question #3) cost dislike Mexican food location ı don’t eat out I eat at other Mexican restaurants (please specify) 9.How old are you? under 18 18-24 25-34 35-44 45-54 55-64 over 65 10. What is your gender? 11. What is your ethnicity? 18

Focus Group Results: Word Association I’m going to list six different occasions in turn, and I would like you to write down the first place that comes to mind for each.

Going out to eat with friends

Going out on a date

Post-Workout

Hungover Food

In a hurry

Really Hungry

Participant 1

Maize, Bombay, Woori Jib

Sakanaya, Star Karaoke

Home, Bombay, Maize

Papa John’s Merry Ann’s

Panera

Bombay

Participant 2

Buffalo Wild Wings

Ko Fusion, Seven Saints

Maize, Chipotle

McDonald’s, Wendy’s

Jimmy John’s, Potbelly’s

Noodles and Company

Participant 3

Steak and Shake, Hooters, Black Dog

Ko Fusion, Destihl, Olive Garden

Bobo China, Buffets, Panda Express

IHOP, McDonald’s, Jimmy John’s, Merry Ann’s McDonald’s

Texas Roadhouse, Jimmy John’s

Participant 4

Chipotle, Ko Fusion

Ko Fusion, Guido’s

Panera, Subway

McDonald’s, Chipotle

Panera, Jimmy John’s

McDonald’s, Chipotle, Panda Express

Participant 5

Pizza Hut, Noodles Old Chicago, Papa Del’s

Maize, Panera

Merry Ann’s, McDonald’s

Jimmy John’s, Subway

Olive Garden

Participant 6

Ko Fusion, Panera

Eat at home

Merry Ann’s, IHOP, McDonald’s

Jimmy John’s, McDonald’s

Ko Fusion, Radio Maria

Focus Group Results: Descriptions Describe people who eat at these restaurants. McDonaldâ&#x20AC;&#x2122;s

Panera

Chipotle

Mia Zaâ&#x20AC;&#x2122;s

Qdoba

Participant 1

in a hurry, low income, unhealthy

women, chatty, middle-class

young, trendy

young, bland

Participant 2

rushed, on a budget

girl, cold

hungry

college-aged

Participant 3

unhealthy, stingy, cheap

productive, intelligent

student

healthy

Participant 4

unhealthy, hungry, in a rush

older, health-conscious college-aged

younger

boring

Participant 5

poor

moms

frat bros

students

like lots of flavor

Participant 6

on-the-go

in a hurry, but want something healthy

not super healthy

like options

older generation

hungry

Focus Group Results: Drawing Please draw the person you think would normally eat at Chipotle. Draw what they look like and what they are wearing.

6 5

4 2

Participant 1: Drew student, Greek system, book bag one, sports attire, tennis shoes. Longer hair, grease-ball. Participant 2: Drew a boy and a girl. Students, messy hair, t-shirt came back from studying. Participant 3: Girl in athletic clothes, younger college age wearing gym shoes. Participant 4: Athletic guy, maybe frat guy coming after working out or class. Kind of grungy. Participant 5: Hipster. After class, laid back, chill. Flannel, a beanie and Dock Martins. Participant 6: Frat star. In between class, on the phone with friends. Backwards hat. Cool kid.

Focus Group Results: Group Discussion • Positive Chipotle Experience: • always fast, get in and out • a lot of food • quick and a guy gave me a free burrito once • very fresh ingredients • tried the fajitas instead of a burrito one time, it was great • online ordering is great, not promoted well, but I like this because it means not many people take advantage of it so I don’t have to wait long • comes out to be like three meals in one; so much food Participant turned the conversation toward negative: • • when I walk past Chipotle there are always long lines • not enough seats • the deterrent is the long line; I usually get it do go • normally try to swing by in between classes, but the line is so long I don’t have time; must be willing to wait • they took the bacon out of the beans! One thing you would change about Chipotle: • • if they added queso, “Qdoba would shut down permanently.” • the one on Green Street in Champaign, IL needs more seating • sometimes the food is a bit rushed One thing that would upset you if changed about Chipotle • • the napkins; we have a whole stack of them in my apartment • if they got rid of the guacamole • any of the options! More group discussion: • • price is a little expensive for a meal, but fair; it’s enough for two meals anyway • guacamole is expensive but it’s worth it • they have really increased prices • I like that there is a vegetarian option

Survey Results 1. How often do you go out to eat?

3. How often do you eat at Chipotle? (If â&#x20AC;&#x153;neverâ&#x20AC;? is selected, skip to question #8)

2. Rank how likely you are to eat at the following restaurants (1 being Very Likely, 4 being Not Likely). Please drag the choices in order. 4. Please rate how you feel about this statement: When I go out to eat Mexican food, I go to Chipotle.

Survey Results Continued 5. What factors draw you to eat at Chipotle? Please order each factor from most to least important, 1 being most important and 5 being the least.

7. Please rate how much you agree or disagree with this statement: It is important to me that Chipotle uses naturally raised meat.

8. Which best describes why you do not eat at Chipotle? (only answered by respondents that selected “never” for question #3) 6. When you consider Chipotle’s food, how do you rate the quality?

Other Mexican Restaurants specified: El Toro, Maize, Moe’s, Qdoba, dislike Chipotle in general 24

Survey Results Continued 9. How old are you?

11. What is your ethnicity?

10. What is your gender?

Primary Research Analysis • • • • • • • • • • •

Target Audience typically goes out to eat 1-2 times per week Among Mexican restaurants, Chipotle is most popular followed by Qdoba Of the Target Audience that likes Chipotle, they eat at Chipotle 1-2 times per month Target Audience typically perceives Chipotle as a place at which to eat when they are very hungry or hungover and a place at which to eat with friends The most important factor that draws people to eat at Chipotle is taste Target Audience notes that there are often long lines at Chipotle restaurants, but it typically does not deter them from eating there Target Audience could be better aware of the online ordering and app Target Audience perceives the price to be expensive, but it still does not deter them from eating there Target Audience perceives that Chipotle users are young, trendy, typically college students, members of the Greek system, athletic millennials. “The Cool Kid.” The quality of Chipotle’s food is perceived to be good • Target Audience likes that it uses fresh ingredients • It is important to target that Chipotle uses naturally raised meat Those who do not eat at Chipotle do not because they dislike Mexican food or prefer other Mexican restaurants such as Qdoba, Moe’s or other local establishments

The Media Plan

Broad Communication Objectives Our broad communication objectives will emphasize maintaining our good standing with our target market. Since our target market is already composed of consumers that have high usage of Chipotle, we have to make sure we continue to broadcast to those consumers that will continue to be the future generation of Chipotle consumers. Therefore, our media plan will focus on establishing frequency rather than reach. Looking at our secondary and primary research, we know our market is made up of tech-savvy millennials. They are constantly connected and like to stay informed on current news. They are interested in bold flavors, ethnic cuisine and have a busy lifestyle. When we asked our respondents what they liked about Chipotle, many responded:

“

“Fast and generous portions” “It’s super filling” “Delicious!” “Awesome food and awesome service”

”

Looking at our current responses, we know that our brand has a positive brand image. Despite this, we must continue to advertise to our consumers to address issues that keep some of our target market from purchasing Chipotle. Our media choices will reflect our objectives of making sure Chipotle remains a leader in the fast casual dining concept. We want to do this by establishing that we are committed to our current consumers and we understand their needs. Our objectives are: 1. To increase trial by 10% through our selected media markets in three years. 2. Raise awareness of our mobile application by 40% for our target audience in three years.

We will measure the effectiveness of our media choices by measuring what percentage of the target market was actually reached with our message, how many times they were exposed to the message and measure the usage of our mobile and web applications to order Chipotle.

Reach and Frequency Objectives Our current media objectives seek to expand upon frequency. Since our reach among our target market is currently broad in scope, we wanted to focus mostly on expanding frequency of our messages to our consumers in order to raise brand awareness and trial. To maintain our reach and increase frequency, we will focus on the use of digital media and some non-traditional outlets. We chose not to focus on print, national radio and OOH advertising because we want to continue maintaining our image as a brand that relies more on connecting directly with the consumer.

Timing/Scheduling Strategy The timing of ad placement is a very important part of our strategy. We want to focus ad delivery on day parts near/during typical meal times- 11am to 1pm and 4pm to 6pm. In doing so, we hope to increase the impact of the impressions made on our consumers through relevance to their needs at the time of exposure. Relevancy increases the chance that a consumer will retain the message delivered in an ad, and by releasing ads at or near times that people typically eat will resonate with their already growing hunger. Although time of day is very important to our strategy implementation, seasonality plays little to no role in our planning. The message we are looking to reach our target market with is applicable year round, everyday of the week. We will use continuity for our ad placements to steadily increase awareness regarding our mobile/online ordering options.

Media Mix Statement Our media mix is designed to reach our target market in the most efficient way possible. Research shows that today’s 18-29 year olds are very tech savvy and involved in the interactive online world. To reach people with these media habits, we intend to place ads in social media, on internet radio spots such as Pandora, and on internet TV sites such as Hulu. Since our main objective is to increase awareness and inform consumers about Chipotle’s online ordering app, using digital media is a perfect means to do so. These media vehicles are used throughout the day by almost all of our target market which will ensure that our money is being used efficiently. DIGITAL ELECTRONIC: Social Media • Targeted message to current users • Ability to utilize different sites for different targeting (ex. Facebook, Twitter, Instagram) • Current target market are heavy users of social media • Ability to achieve high frequency, use of sharing to reach more consumers • Ability to get statistics of message put out (Facebook) Online Radio • High frequency and reach • High penetration to target market • Lower cost of advertising • Increases online ad recalls and responses On-Demand Streaming Video • Visually pleasing • Little ad-free options for consumers (Hulu.com) • High reach • Highly used amongst our target market

Media Categories & Media Vehicles • From our MRI data, we can see that our target market is very perceptive to the online world. Since we currently have a strong brand presence with minimal advertising spending, we want to focus on enticing our current users to become more frequent customers. • In order to keep our budget relatively low, we will focus directly on digital media. We will be able to reach a high percent of our target market since they are devoted to technology and spend much of their time online. • The media categories we will use are online Radio Outlets and On-Demand Streaming Video sites. More specifically, we will place :30 commercial spots on Spotify and Pandora for our radio outlets, and place banner ads on Hulu for our OnDemand streaming site. • MRI data shows that our target consumers are 103 times more likely to use Hulu.com than the general population. Our target is also 73 times more likely to use Pandora.com than the general population. • Since Chipotle already has a high awareness, these commercials and banner ads will highlight the new rewards program and app rather than the brand itself. • Along with these sites, we will take advantage of the social media scene and use Twitter and Instagram to promote special campaigns. • The use of hash-tags such as #ChipotleChampaign can be used by customers and will be a method to spread awareness and get peers of the same demographic thinking about our brand. • We will inform our followers on Instagram that a promotional campaign is happening. With the use of a picture and location-specific hash-tag, our customers will be entered to win a free meal and/or free chips and guac. • We know these methods will resonate well with our target market since they are heavy users of social media with 18K followers on Instagram and 286K followers on Twitter.

Above is a chart displaying how the budget is allocated.

Non-Traditional Media: Sponsorship CHIPOTLE TO SPONSOR LOLLAPALOOZA Lollapalooza is an annual three day festival in Chicago that occurs in the beginning of August. Â The festival features bands of all genres: from alternative, to house, to rock, to rap, dubstep, pop, and indie. More than 160,000 people attend in a three day period. The diverse range of artists makes the festival appealing to everyone- especially Millennials. In 2013, single Lollapalooza tickets were sold out in 90 minutes- suggesting that the festival is a popular go-to. Having a Chipotle booth at Lollapalooza at a three day festival is beneficial since the festival lasts from 11 a.m. to 10 p.m. Even though Chipotle is well established within Millennials, it is a great opportunity for Chipotle to remind Millennials that Chipotle is a convenient option. Chipotle consumers can even order in advance through the app so they donâ&#x20AC;&#x2122;t have to miss their favorite artists perform. Additionally, Lollapalooza is a perfect place for Chipotle to have a booth since we are targeting Millennials between the ages of 18-29. Prior to the event, Chipotle can promote their booth on Facebook and Twitter. Chipotle can share its excitement for Lollapalooza and remind users that they can order their meal through the app so they can enjoy the festival more and wait in line less. Having Chipotle as a sponsor will also remind users and Lollapalooza ticket holders that Chipotle is up-to-date with the Millennials when it comes to their music selection. As a result, Chipotleâ&#x20AC;&#x2122;s sponsorship will reinforce their trendy vibe.

Non-Traditional Media: Promotion CINCO DE MAYO PROMOTION: “CINCO DE BURRITO” Cinco de Mayo (5th of May) is a popular day, especially among college students, because it is another reason for students to go out and celebrate. Since Cinco de Mayo is associated with Mexican pride, Chipotle can take advantage of the day and create a sales promotion through social media. Cinco de Mayo is also a great “drinking holiday” for college students; it’s towards the end of the year and the weather is starting to get warm. One promotional tactic that can be marketed through Facebook and Twitter is a “Cinco de Burrito”. A burrito at Chipotle costs around $6.85 (including tax). Chipotle can price their burrito at $5 (including tax) in honor of Cinco de Mayo. Since Millennials are money conscious- they will find this promotion a great deal, and will be more inclined to eat at Chipotle. Chipotle can post Facebook and Twitter statuses to promote this festive day. If a user shares a post on Facebook or re-tweets on Twitter, the user will get the $5 deal. The user will have to show the cashier the re-tweet or the share. Chipotle can also inform Twitter followers and Facebook users that they can get the “Cinco de Burrito” promotion if they order Chipotle through the app. Using both Twitter and Facebook is an efficient way for the message to spread-especially since Millennials are digitally savvy.

Non-Traditional Media: Rewards Program Chipotle currently has a rewards program, Farm Team, that is distributed at random by restaurant managers to customers. Instead, Chipotle should make this option available to all customers. There can be a reward system for the amount of return rates whether itâ&#x20AC;&#x2122;s in person or through the mobile app. For example, for every ten visits, a user can get a free burrito. This rewards program can also be promoted through social media. Chipotle can provide links on Twitter statuses and Facebook posts for more information on how users can be a part of the rewards program. Users can apply for the rewards program online and later obtain their card at a Chipotle restaurant nearest them.

Sources "Age and Sex." United States Census Bureau. N.p., 1 Apr. 2010. Web. 14 Dec. 2013. <http://www.census.gov/population/age/>. Arellano, Gustavo. Taco USA. New York, NY: Scribner, 2013. 142-157. Print. Avant, Mary. "Moe's: The Face of Growth." Restaurant News. N.p., 18 Jan. 2013. Web. 14 Dec. 2013. <http://www.qsrmagazine.com/news/moesface-growth>. Business Wire. "Chipotle Mexican Grill, Inc. Announces Third Quarter 2013 Results." Yahoo Finance. N.p., 17 Oct. 2013. Web. 14 Dec. 2013. <http:// finance.yahoo.com/news/chipotle-mexican-grill-inc-announces-200200888.html>. Chipotle. "Form 10-K." Form 10-K. N.p., 2008. Web. 14 Dec. 2013. "Chipotle Mobil Ordering." Google Play. N.p., 23 Sep 2013. Web. 20 Oct 2013. <https://play.google.com/store/apps/details? id=com.chipotle.ordering&hl=en>. "Chipotle Releases Game, Film Depicting Industrial Food Production | FastCasual.com." FastCasual.com. N.p., 12 Sept. 2013. Web. 14 Dec. 2013. <http://www.fastcasual.com/article/219389/Chipotle-releases-game-film-depicting-industrial-food-production>. Clare D'Souza, Mehdi Taghian & Gillian Sullivan-Mort, (2013) Environmentally motivated actions influencing perceptions of environmental corporate reputation. Journal of Strategic Marketing 21:6, pages 541-555. "Datamonitor | the Home of Business Information." Datamonitor | the Home of Business Information. N.p., n.d. Web. 14 Dec. 2013. <http:// www.datamonitor.com/>. Dostal, Erin. "Moe's Southwest Grill Readies First National Ad Campaign." Nation's Restaurant News Home Page. N.p., 6 Mar. 2013. Web. 14 Dec. 2013. <http://nrn.com/latest-headlines/moe-s-southwest-grill-readies-first-national-ad-campaign>. Evich, Helena Bottemiller. "Why the Agriculture Industry Hates Chipotle." POLITICO. N.p., 2 Oct. 2013. Web. 13 Dec. 2013. <http://www.politico.com/ story/2013/10/chipotle-scarecrow-ad-integrity-agriculture-97763.html>. "Franchise Directory." All Business. Dun & Bradstreet, n.d. Web. <http://www.allbusiness.com/franchises/moes-southwest-grill/13414114-1.html>. Hartung, John. "Chipotle Mexican Grill Form 10-Q." (2009): n. page. Web. 20 Oct. 2013. <http://www.wikinvest.com/stock/ ChipotleM _ exicanG _ rill_(CMG)/Filing/10Q/2009/F2283664>. Hoovers. "Qdoba Restaurant CorporationCompany Information." Qdoba Restaurant Corporation. N.p., n.d. Web. <http://www.hoovers.com/ company-information/cs/company-profile.QdobaR_estaurantC _ orporation.526158a358b70564.html>. Horovitz, Bruce. "USA TODAY." USATODAY.COM. N.p., 30 Sept. 2011. Web. <http://usatoday30.usatoday.com/money/industries/food/story/ 2011-09-29/chipotle-shophouse-southeast-asian-kitchen/50609904/1>. "IFT.org." IFT.org. N.p., n.d. Web. 14 Dec. 2013. <http://www.ift.org/>. "Internet Radio Increases Online, Broadcast Ad Effectiveness." MarketingCharts. N.p., n.d. Web. 14 Dec. 2013. Kaplan, David A. "Chipotle's Growth Machine." FORTUNE Features RSS. N.p., 12 Sept. 2011. Web. <http://features.blogs.fortune.cnn.com/ 2011/09/12/chipotles-growth-machine/>. Lariviere, Marty. "Making Fast Food Faster." The Operations Room. Kellogg School of Managment, 30 Aug 2012. Web. 20 Oct. 2013. <http:// operationsroom.wordpress.com/2012/08/30/making-fast-food-faster/>. "Lollapalooza Sells Out." City of Chicago. N.p., 3 Apr. 2013. Web. 14 Dec. 2013. <http://www.cityofchicago.org/city/en/depts/mayor/press_room/ press_releases/2013/april2_ 013/lollapalooza_sellsout.html>.

Sources Continued "Lollapalooza Sponsorship Profile | SponsorPitch." SponsorPitch. N.p., n.d. Web. 14 Dec. 2013. <http://sponsorpitch.com/properties/825>. Lutz, Ashley. "Chipotle's Food Is About To Get More Expensive." Business Insider. N.p., 18 Oct. 2013. Web. 13 Dec. 2013. <http://www.businessinsider.com/ chipotle-is-about-to-get-more-expensive-2013-10>. "Millennials Are Changing the Definition of Brand Value for Restaurant Marketers." National Restaurant Association. N.p., n.d. Web. 14 Dec. 2013. <http:// www.restaurant.org/Manage-My-Restaurant/Marketing-Sales/Promotion/Millennials-are-changing-the-definition-of-brand-v>. "Moeâ&#x20AC;&#x2122;s Southwest Grill | Evok." Evok RSS. N.p., n.d. Web. 14 Dec. 2013. <http://www.evokad.com/work/moes-southwest-grill/>. "Moe's Southwest Grill Menu." GrubHub.com. N.p., n.d. Web. <https://www.grubhub.com/nyc/moes-southwest-grill-pickup-kings/>. Morrison, Maureen. "Ad Age CMO Strategy." Advertising Age CMO Interviews RSS. N.p., 12 Mar. 2012. Web. <http://adage.com/article/cmo-interviews/ cmo-crumpacker-chipotle-bucking-fast-food-model/233210/>. "MRI Reporter." MRI Reporter. N.p., n.d. Web. 14 Dec. 2013. <http://ureporter.mriplusonline.com/selectdemofromsearch.asp>. Olmsted, Larry. "Food Trends For 2013, Straight From The Source." Forbes. N.p., 3 July 2013. Web. <http://www.forbes.com/sites/larryolmsted/2013/07/03/ food-trends-for-2013-straighthttp://www.forbes.com/sites/larryolmsted/2013/07/03/food-trends-for-2013-straight-from-the-source/-from-the-source/>. Onesource.com The Opinion Leaders. "Chipotle Mexican Grill's CEO Discusses Q3 2013 Results - Earnings Call Transcript." Chipotle Mexican Grill, Inc. (CMG):. N.p., 17 Oct. 2013. Web. 13 Dec. 2013. <http://seekingalpha.com/article/1752592-chipotle-mexican-grills-ceo-discusses-q3-2013-results-earnings-call-transcript>. "Qdoba - We Live Food." Fear Not Agency. N.p., n.d. Web. <http://www.fearnotagency.com/work/qdoba/qdoba-we-live-food>. "Qdoba Mexican Grill." Nation's Restaurant News Home Page. N.p., n.d. Web. <http://nrn.com/top-100/qdoba-mexican-grill>. "The Story Behind Qdoba Mexican Grill Restaurants." Qdoba. N.p., n.d. Web. <http://www.qdoba.com/qdoba-mexican-grill-story>. "Study: Consumers Want Healthful Foods." National Restaurant Association. N.p., 6 Nov. 2012. Web. 14 Dec. 2013. <http://www.restaurant.org/NewsResearch/News/Study-Consumers-want-healthful-foods>. Tishgart, Sierra. "Chipotleâ&#x20AC;&#x2122;s Crushing the Competition." Grub Street. N.p., 25 July 2013. Web. <http://www.grubstreet.com/2013/07/qdoba-closings.html>. "Top Ten Food Trends for 2013." Newswise. N.p., 17 Apr. 2013. Web. 14 Dec. 2013. <http://www.newswise.com/articles/top-ten-food-trends-for-2013>. Trefis Team. "Investment Overview for Chipotle (NYSE:CMG)." Trefis. N.p., 3 Nov. 2013. Web. <http://www.trefis.com/company?hm=CMG.trefis>. Wong, Venessa. "Chipotle Sells Itself With a Sad Cartoon About Agribusiness." BloombergBusinessweek. N.p., 13 Sept. 2013. Web. <http:// www.businessweek.com/articles/2013-09-13/chipotle-sells-itself-with-sad-cartoon-about-agribusiness>. Zacks.com. "Jack in the Box to Shut 67 Qdoba Outlets - Analyst Blog." NASDAQ.com. N.p., 19 June 2013. Web. <http://www.nasdaq.com/article/jack-in-thebox-to-shut-67-qdoba-outlets-analyst-blog-cm254497>.