Industry Analysis Chipotle Essay

The devalued nourishment, or prompt value eating place pains (QSR), represents approximately 200,000 restaurants and $ clv billion in sales in the U.S. al mavin, they be one of the largest segments of the intellectual nourishment perseverance (Hoovers, 2011). This segment of the restaurant fabrication is grittyly competitive and fragmentize number, size and strength of competitors vary by region, market and even restaurant. wholly of these restaurants compete metrical footd on a number of accompanimentors, including taste, quality, speed of service, charge and value, name recognition, restaurant positioning, customer service and the ambience and condition of from each one restaurant (Chipotle, 2010).The QSR effort is seeing waxth due to the fact that nowadayss society is more strapped for season than ever. According to the American sociological Review, more than 50% of American families are dual earner mobmultitasking al outsets parents to accomplish more withi n a limited amount of date (Offer & Schneider, 2011). However, with both heads of the house working part-time or in full time jobs people hurt less time to prepare meals and QSRs offer another(prenominal) way for these families to multitask and save time. In 2011 the QRS indus find out saw stock determine beat the over either restaurant market. Bloomberg U.S. Quick-Service Restaurant Index, gained 13.5 percent while the full service restaurant index dropped by 1 percent (Wolf, 2012). agonistical AnalysisNew Entrant Threat bandage entry into the flying service industry has low barriers (Cambrian Group, 2011) it is highly competitive and has high saturation. however 40-50% of new entrants will survive their first of all social class and see loot (Paiz et. al., 2011 p.4). small-arm many of players in the QSR industry are franchises, approximately 300,000 (Franchise Direct), Chipotle operates differently. all(a) of their locations are high society owned and nonplus relative ly low pop out up costs (Chipotle Mexican Grill, 2007). Due to this Chipotle is able to grow their bottom line much quicker than new entrants into the same markets. While others may see low victor rate in the first year due to start up costs, Chipotle is able to effectively come back profit and growth quickly. RivalryIn the sub-category for quick service Mexican restaurants, Chipotle competes with Qdoba, Moes Southwest Grill, Baja Fresh, Taco Bell and El Pollo Loco. Mexican quick service accounts for $5 billion of the $20 billion market (Cambrian Group, 2011). At the end of 2010 Taco Bell held the largest market share among Mexican QSRs with 52% of the market and 5,635 locations in the U.S. and 262 locations in 21 foreign countries (Yum Brands, 2011). Qdoba in compare holds locations in 42 states for a total of 583 locations (Jack in the Box, 2011). Threat of SubstitutionsChipotle faces 6 major substitutes, McDonalds, Yum Brands, Wendys/Arbys Group, Burger King, Jack in the Box (owner of Qdoba), and recreates Associates Inc. (owner of Subway) which occupy 35.5% of the market (Paiz et. al., 2011, p.6). These QSRs offer dine-in, carry-out and delivery services and shit been in the market longer than Chipotle (Chipotle, 2010). In humanitarian to this they use a much broader marketing plan which includes, print, radio, and television advertisements which Chipotle does not relying mainly on radio and billboards (Burrito Buzz, 2007).Chipotle actually spends less in a year on advertising than McDonalds Corp. spends in 48 hours relying mainly on word of mouth (Burrito Buzz, 2007). Many of these substitutes have diversified their add-ins. While Chipotles menu is standard in all of their locations others in the industry now offer menu items that heighten on consumer preferences. Low carbohydrates, low calorie, and low fat options are showing up more very much on menus. Many withal emphasize lower-cost, value meal menu options, which Chipotle has not yet type faceed at pursing (Chipotle, 2010). Power of BuyersThe quick service restaurant industry has relatively high price elasticity due to the fact that fast food is not essential to customers and therefore relies heavily on the customers choice preferences and disposable income. Changes in customer preferences, full general scotch conditions, discretionary spending priorities, demographic trends, traffic patterns and the type, number and location of competing restaurants have a moderate effect on the restaurant industry (Chipotle, 2010). One example of customer preferences being a driver in the industry is the Whole Food-ism Movement which has put a large focus on organic, antibiotic-free, and non-processed foods (Mansolillo, 2007). Consumers now look for better options when eating and an overall healthier lifestyle.Chipotle has been able to benefit from this movement by carrying on their Food with justice mission (Chipotle, 2010). Due to economic downturn the strength of the buyers power has increase as the industry looks to gain consumers with pricing strategies much like those of McDonalds Value Menu and combination meals even though the cost of commodities have gone up (James, 2010). Customers of QSRs are looking for quality food without high costs. While Chipotle does not have a value menu or offer any type of combination meal much of their achiever is due to the fact that the customers are willing to pay a high cost for higher-quality (Chipotle, 2010). Power of SuppliersWhile the Chipotles mission is to use naturally raised, sustainable, local and organic products sets the company unconnected from others in the industry it in addition creates a larger supplier power when compared with other restaurants in the industry (Cambrian Group, 2011). The pool of suppliers that Chipotle can purchase from is much smaller and thus does not allow for Chipotle to control the prices paid for products. Due to the fact that Chipotles purchases are regionalized and in most instances purchased ingredient by ingredient they may fuck higher costs in nigh areas then others. In addition the purchase salute creates the potential for food shortages from suppliers resulting from weather related issues, such(prenominal) as freezes in Mexico and Florida or could lead to temporary spikes in the prices of some ingredients such as tomatoes and avocados (Jennings, 2011). Power of other StakeholdersThere are a number of stakeholders that can affect a companys profitability. puff up-nigh companies define who their stakeholders are they typically include customers, employees and shareholder (Enz, 2010). First and frontmost government entities, communities, and finical interest groups have an impact on the industry as a whole (Wheelen & Hunger, 2010). The restaurant industry can be affected by changes in food safety guidelines, building codes and crowd laws just to name a few. Chipotle CEO Steve Ells has as well as been one of the bring up individuals t hat testified to Congress in 2009 to eliminate the use of antibiotics in ranching to try to change current government ranching regulations which in turn could have large affect on the profits of Chipotle and others in the industry (Chipotle Story, n.d.).Chipotle also understands that their employees are an integral part in creating the milieu and culture that the company portrays and a significant stakeholder. The image of Chipotle starts with the people. Due to the high turnover in the fast food industry Chipotle looks for ways to keep quality employees by empowering, educating, and training to increase internal promotions, cultural sensitivity, and communication skills as well as by providing continuing English language education to all employees who request it (People Are People Too, n.d). Chipotle has taken steps to appeal to special interest groups that focus on the humane treatment of animals, and eco-friendly processes.By doing so they have identified a niche market focused on a healthier and more organic approach to quick service food. Being one of the first to focus on such an approach has allowed them to attract a loyal following before their competition. Being one of the first companies of its kind in the fast food industry also means that in order to maintain their current customer base Chipotle must continue to find new ways to set themselves apart from copy cat companies. One of those ways is to ensure that they continue to look for ways to make a positive impact on the environment like the creation of the nations first Platinum LEED certify restaurant in Gurnee, IL (Sustainable Design, n.d.). SummaryChipotle has experienced early success and loyalty because of their unique approach to quick service Mexican food focused on their Food with Integrity mission. They have experienced quick growth and profit even in a period of economic downfall, increases in food costs, and a competitive industry. Moreover Chipotle appeals to societys desire for a more economically friendly business and a healthier way of living.