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 Use 49/51 Joint Venture $10M Initial FDI 40% Contribution Margin

Risks
JV for Social and Legal Risk Mitigation Controlled Political and Technological Risks Volatile Rupee: 39 to 51

Two Locations
New Delhi Bangalore

8-Year Breakeven Point

12.5% Return on Investment

Decision: Go (with the Right Partner)

Strategic Fit
USA India

Consistent Key Strengths: 2) Financial Stability; 5) Available Capital; 7)Restaurant Efficiency

ID
1 3 8

Key Resource
Marketable Cuisine Brand Business Acumen

Improvement Strategy
Adapt menu to address demographic Improve brand awareness in India with similar US promotions Improve via strong JV partner for expansion into right markets and conduct business operations

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 Contribution Margin in US Stores Expected Contribution Margin in India 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 33.86% 40.00%

Increasingly Open Capital Flows

Managed Floating XR

RBI Controlled Monetary Policy

Risk Analysis and Mitigation

Risk type
Political (low)

Implications
Local Government Corruption leading to unfair treatment of foreign entities

Mitigation Plan
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.

Currenc y (low)

NR/USD XR Fluctuations lead to higher investment than anticipated

Establish local supply chain. Limit currency risk exposure to initial investment.

Social (med)

General social and cultural acceptance of the type of cuisine

Adapt menu to cultural tastes and preferences Leverage relationship with experienced JV partner.

Expansion poses risks but they can be managed with the Right JV Partner
5

Questions?