Essay About Food Delivery Costs And Financial Measures

Chipotle Case
FinancialChipotle has many opportunities to increase its revenue margin and improve its operating margin as well. Financial aspects of any company as large as Chipotle are complex and that is why Chipotle will be working on increasing certain aspects while cutting back in others. Decreasing food delivery costs will help Chipotle improve its operating margin. Food Genius will be able to help Chipotle do this by providing Chipotle with a large amount of data and translating that data to help Chipotle understand where there are inefficiencies in their food delivery (and supply chain). Understanding what customers want will also help Chipotle simultaneously focus on increasing its revenue margin by providing customers more of what they want. Additionally, this will help increase earnings per square foot (EPSF) from the current price of $1.72 to $1.74. This is a conservative estimate based on previous 5 years’ EPSF numbers. Food Genius could help increase the EPSF significantly. Additionally, some of the financial measures for this 12 week engagement with Food Genius and Chipotle were unconventional. The unconventional measures are unknowns because Chipotle and Food Genius haven’t established metrics for the new implementations yet. Establishing those metrics during the process will be important for analysis and future forecasting. However, Chipotle and Food Genius are confident that they could establish these metrics throughout the process given Food Genius’ past experience with that process. CustomerCustomer-focused metrics were chosen in order to contribute to the overall bottom line for Chipotle while keeping the customer-centric ethos that Chipotle has so strongly maintained throughout the years. These metrics were grounded in Chipotle’s current and future commitment to investing in technological advantages. Chipotle would like to increase the use of Apple Pay. Chipotle believes that the technological piece of their business will give them a competitive advantage in the fast-casual marketplace and that their customer retention and satisfaction will rise. Chipotle implemented new in-store stations that allow for Apple Pay to be used by any customer at any time. Chipotle has just reported that Apple Pay is now responsible for 80% of its mobile payments since it was implemented.[1] That shows significant promise and is part of the reason why Chipotle has invested so heavily in technology with their customers in mind. Chipotle would also like to grow their customer retention rate. If customers are retained, they increase in lifetime value for the company, which contributes to higher profits and possibly even converting non-customers to customers via word of mouth. Internal Business ProcessWith a very vocal and visible CEO, Chipotle has to make sure that its internal business process aligns with the company’s stated values and vision. Chipotle would like to work with Food Genius to gain a significant amount of data intel on what the company could be doing differently in order to gain customers, but also how to keep internal processes streamlined to assist in some of the company’s larger long-term goals. Chipotle would measure the incentivizing of test stores to implement new procedures. Chipotle would need to measure percentage of sales growth, percentage of revenue growth, and percentage of increased customer satisfaction in order to decide if the new implementation plans are working and if the test stores are actually performing to standards. Chipotle would be working to decrease delivery time (based on customer feedback that this is an area in which they could improve). In order to do that, Chipotle would need to continue to keep track of delivery times and reward those who exceed standards/averages.  Learning and GrowthLearning & Growth measures can be difficult to measure because they are often “softer” metrics that can have unpredictable outcomes. However, Chipotle focuses on its staff and invests in the staff financially in order to improve their learning and growth. The numbers behind staff contributions (verbally or otherwise) are going to be measured and greater participation will be encouraged. One metric that Chipotle will measure is allowing employees to fix any customer complaint that costs less than $5 to fix. This would be a new policy/action for Chipotle, so they would need to decide on metrics during the process in order to analyze success or failure. They may choose to have the customer give feedback only when an employee “made it right” in that less than $5 incident. Allowing frontline employees to be able to solve customer issues is going to take a financial investment from Chipotle, but it is going to benefit the company in the long-term because they should retain more employees and gain higher customer loyalty.[2] Training is also another vital piece of the “Learning and Growth” phase for Chipotle. Training employees empowers them to take charge of situations and boosts their sense of self-worth.