Chipotle in India

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Bangalore Burrito
STRT 571 – Final Project
(Coming to a New Delhi Near You)
TJ Lowden
Kathy Wang
Onkar Kapoor
Bryan Jolly
Chipotle: Moving to India
 Company Overview




22,000 Employees
$1.3B Revenue / $140M Profits
25% Average YoY Revenue Growth over last 5 Years
First International Expansion: April 2010 in London
 Analysis of Expansion into India
Strategy
Profitability
 “Few Things Well”
 $10M Initial FDI
 Use 49/51 Joint Venture
 40% Contribution Margin
 Two Locations
 8-Year Breakeven Point
 New Delhi
 Bangalore
 12.5% Return on Investment
Risks
 JV for Social and Legal
Risk Mitigation
 Controlled Political and
Technological Risks
 Volatile Rupee: 39 to 51
Decision: Go (with the Right Partner)
Strategic Fit
USA
India
Consistent Key Strengths: 2) Financial Stability; 5) Available Capital; 7)Restaurant Efficiency
ID
Key Resource
Improvement Strategy
1
Marketable Cuisine
Adapt menu to address demographic
3
Brand
Improve brand awareness in India with similar US promotions
Business Acumen
Improve via strong JV partner for expansion into right markets
and conduct business operations
8
FDI Assessment
Revenue
Stores
Revenue per Store
Expenses
Food, Beverage, & Packaging Costs
Labor Costs
Occupancy Costs
Total Expenses
Stores
Expenses per Store
Contribution Margin per Store
1,331,968,000
837
1,591,360
Recent Recession reduced FDI in India
431,947,000
351,005,000
98,071,000
881,023,000
837
1,052,596
538,763
Contribution Margin in US Stores
33.86%
Expected Contribution Margin in India
40.00%
Increasingly Open
Capital Flows
Managed
Floating XR
RBI Controlled
Monetary Policy
Risk Analysis and Mitigation
Risk type
Implications
Mitigation Plan
Political
(low)
Local Government Corruption
leading to unfair treatment of
foreign entities
Diversify to different states
Enter with JV partner familiar
with India politics.
Legal
(med)
Bureaucracy and lack of FDI
policy transparency leads to
failed entry
Utilize JV partner familiar with
Indian policies and methods to
handle bureaucratic layers.
NR/USD XR Fluctuations lead to
higher investment than
anticipated
Establish local supply chain.
Limit currency risk exposure to
initial investment.
General social and cultural
acceptance of the type of cuisine
Adapt menu to cultural tastes
and preferences
Leverage relationship with
experienced JV partner.
Currency
(low)
Social
(med)
Expansion poses risks but they can be managed with the “Right” JV Partner
5
Questions?
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