Porter's Five Forces Of Chipotle

Chipotle ventured into a new territory when it was created, as it had an innovative vision for fast-casual restaurants. By using fresh and quality ingredients, Chipotle raised the bar in their segment. The service line where customers could see their order being prepared enhanced the experience of Chipotle. Consumers who were used to eating at fast-casual restaurants where the food was frozen and made out of sight were able to savor the uniqueness of Chipotle. These differences helped Chipotle become successful. However, as competitors copy the traits that make Chipotle unique, Chipotle must adapt and overcome in order to remain a profitable company.

In 2012, the restaurant industry was a $435 billion dollar industry (Tristano, 2013).This amounts to a very large market that Chipotle has the opportunity to capture. In that same year the casual Mexican restaurant market totaled a whopping $31 billion in sales (Tristano, 2013). This was a 13% increase for the casual Mexican restaurant market and only amounted to 7% of the entire restaurant market. According to Tristano’s (2013) research, Chipotle Mexican Grill was the second fastest growing fast casual restaurant of all the fast casual restaurant markets in 2012.

Additionally, support for local and organic farming has shown a decrease in fast food sales. Recently fast food giant, Mcdonalds, has had to close nearly 700 restaurants due to lack of sales (Wahba). The general public is speaking out more and is stating they want fewer additives and more “real” food to be convenient. According to the WORLD HEALTH ORGANIZATION “GMO’s or “Genetically Modifies Organisms” are organisms in which the genetic material has been altered in a way that does not naturally occur”. The actual effects of GMO’s in food have had extensive research done to confirm suspicions that they are hazardous to the human body and are not suitable for consumption. Chipotle was the first fast food chain to disclose any artificial ingredients

Where and when did you observe the behaviors? Who made the observations? On 1/28/16, En-Lei observed inside of Chipotle. On 1/29/16 and 1/30/16, Matt observed across the street from Chipotle. On 2/1/16, Dana observed from a window across from Chipotle in the lobby of the Huntington Hall. On 2/2/16, John observed across the street from Chipotle. What behavior categories did you observe? How did you define each behavior category? We observed the outwardly happiness or unhappiness of individuals leaving Chipotle during lunch hours. We defined outwardly happiness as the smiling of each individual leaving Chipotle and unhappiness as the lack of a smile. When and how did you make observations? We used the frequency method of observation during lunchtime

One benefit for Chipotle is that demographically the fast-food industry is less saturated than what most people tend to think.

The main competitors of Chipotle include Panera Bread, Qdoba and Pei Wei as well as regional competitors, which are providing similar services and products and in some cases cheaper than Chipotle.

Chipotles norovirus scared many however, who is to say that every Chipotle in America, is going to have contaminated meat. Shutting down Chipotles everywhere. People bring things too far. Chipotles sales went down dramatically, 30 percent. With that being said they lost a lot of their customers and regulars. People see things like this and run from it, saying things like “oh i’m never going to eat there.”, “their

Chipotle has opened their stores in few countries such as the UK, the US, Canada, Germany and France. It is now time for the corporation to follow the lead from other companies like Yum. Brands such as KFC and Taco Bell as well as McDonalds expand their footprint in the Asian market like Japan. For example, Chipotle operates less than 2,000 restaurants in only 5 countries, while McDonalds operates more than 35,000 restaurants in 119 countries, and Taco Bell, another Mexican restaurant, operates 6,500 restaurants in 20 countries which shows that the Chipotle could do better if it expands its business.

Chipotle Mexican Grill, Inc. is a “fast-food service restaurant” under limited service category. It was formed in 1993 and went public in 2006. It has the largest market share in the Mexican-type food segment with a net income of more than

The fast food, or quick service restaurant industry (QSR), represents approximately 200,000 restaurants and $155 billion in sales in the U.S. alone, they are one of the largest segments of the food industry (Hoovers, 2011). This segment of the restaurant industry is “highly competitive and fragmented… number, size and strength of competitors vary by region, market and even restaurant. All of these restaurants compete based on a number of factors, including taste, quality, speed of service, price and value, name recognition, restaurant location, customer service and the ambience and condition of each restaurant” (Chipotle, 2010).

Chipotle is the leader in the fast casual market, with over 1,900 locations, $3.21 billion in annual revenue, and the ability to serve up to 300 customers an hour. It has innovated the restaurant market by providing reasonably priced scratch-made meals, containing local ingredients, all within the confines of a pleasing aesthetic environment (Chipotle Mexican Grill, Inc., 2014; Kaplan, 2011). To reach its success, the firm utilized architectural innovation by stealing components of various types of restaurants already in existence. The company appropriated its rapid meal preparation methods from fast food chains such Subway and Quiznos, adopted its provision of quality food from more upscale casual Mexican restaurants, and implemented a locally based supply chain similar to that seen at many local farm-to-table establishments. This convergence of different properties came together right as the millennial generation was coming of age and demand higher quality, natural, and locally sourced ingredients in meals that could receive quickly. The company has also attempted to utilize an incremental innovation approach by removing all CMO ingredients and testing new foods such as breakfast items, soup, and chorizo sausage (The Associated Press, 2015; Peterson,

It is also more widely spread geographically. Subway also offers the “choose your own” style of service, but it does not serve organic foods ("Chipotle Mexican Grill, Inc. SWOT Analysis."). Hot Head Burrito is another Mexican style restaurant that would be considered a competitor. These restaurants offer cheaper menu prices, lower-carb options and “diet menus” ("Chipotle Mexican Grill, Inc. SWOT Analysis."). While Chipotle offers none of these things, they have quite a large target market and have grown tremendously just in the last five years ("Chipotle Mexican Grill, Inc. SWOT Analysis.").

Chipotle is a fast casual dining establishment that serves Mexican cuisine, specializing in burritos and tacos. Like other fast casual restaurants, it does not offer full table service, but promises a higher quality of food with fewer frozen or processed ingredients than fast food restaurants. In fact, Chipotle is widely known for its mission to only use organic ingredients and

2. What does a SWOT analysis reveal about the attractiveness of Chipotle Mexican Grill’s situation and future prospects?

Over the last decade, Chipotle is one of the fastest-growing restaurant chains. The company’s commitment to serve fresh food using only natural and organic ingredients, supports local family farms and sources sustainable ingredients from local growers. Chipotle competes against the big fast-food chains, such as McDonald’s and Denny’s. Chipotle found its “Enthusiast” customers by focusing on social media to tell its story. Today, it has over 1.7 million social media fans, yet spends next to nothing on traditional paid media. Because Chipotle is a fast food and less expensive, it also appeals to the “Savvy Shopper” who wants to enjoy fresh food at a bargain price.