Chipotle Case Analysis

Chipotle Case Analysis-By Team PYSHEN Strategic Issue Chipotle intent to find out a correct and effective strategy to continue its sustainable growth and to represent its profitability by penetrating high market divvy up while competing with its powerful rivals in the fast-casual feed industry. External Environment analysis GENERAL 1. Demographic Population size (O) potential increase in US Age structure mainly servicing adult between 18-49 years old geographical distribution (O) 39 states in the US, 1 in British and 2 in Canada Ethnic compound N/A Income Distribution medium or high income (Customers willing to pay the premium). . Economic (T) stagnate, change magnitude food be price (demotic 3. 9%, global 37%) and customers dwindling budgets. 3. Political (T) ICE shifts its way PETA asked to use CAK definition of healthy food. 4. Sociocultural (T) Higher wage for CIW. 5. Technological Prevailing Social media (O) Tortilla lattice machine (T). 6. Global Cultural differences for new stores (T) in international markets. 7. Physical Environment N/A. patience 1. New entrants (H) Low Barrier, small economies scale, product taste better, and small capital requirements. 2. Suppliers (L) customized food, many topical anesthetic farms. . Buyers (H) let loose switch appeals, sales represent all revenue. 4. Substitute (H), low switch cost, many choices. 5 challenger (H), many equally balanced competitors low storage cost. Internal Environment Analysis Tangible Resources financial (S) High ROI (approx. 10%) and operation cash flow. (V) Capacity to borrow N/a. Organizational autonomy in operation, strong incentive. (V). Physical 22 independent distributers with high qualities. (R), hard to get A location, and higher cost of construct, new stores sales are cannibalized by existing ones. W), local supplier and regional distributer, which reduce cost of transportation (V, R, I) Tech No tortilla grill (W). Intangible resources Human (S) Restaurateur program to train and rejoin managers to stay (V, I, R) Internal staff promotions and development (V). Innovation (S) Simple approach to scorecards with lots of combinations (V, I, R), Menu & prove (V, R, I, N), Open kitchen design (V, I, R). Reputation (S) Brand shout out (V, I, R, N) organic, fresh and sustainable ingredients (V, I, R, N) LEED certified restaurants (V, R).Capabilities relies on rigorously chosen suppliers (I). HR hygienic motivated and empowered (V, I). Marketing (S) effective promotion of brand name (offer free burritos to neighboring participation in charity fundraiser setting up event) (V, I, R, N) valuable word-of-mouth from Facebook (V, I). precaution information system N/A. Management (W) simple structure with single office control whitethorn reduce the oversight. Manufacturing (S) food productions are reliable with high quality (V, R, I, N). R&D (N/A).Core competencies unique menu design, great taste with its sustainable ingredients and quick service visible for customers differentiate Chipotle from another(prenominal)s. Strictly chosen suppliers armed service Chipotle meeting its food in integrity goals. Competitor Analysis Chipotle has bunch of competitors, and Panera is the most powerful one. twain Panera and Chipotle strive to provide quality food with fast service, focus on building their brand mountain chain and establish loyal customer relationship to drive repeat sales, and are unwilling to finance themselves by credit (no long-term debt).However, Panera heavily relies on franchise to expand its market, and develops catering business to promote its sales in future, which parts Chipotle doesnt involve. In fast-casual food market, Panera is a very strong competitor. Business take aim strategy differentiation by offering sustainable ingredient and better taste as sanitary as satisfied fast service. Alternatives 1. Globalization by franchise Chipotle only has three foreign stores, which situated only in Anglo-Saxon countries.Howe ver, enlarging its foreign market is a long-term task, and is required to a greater extent financial support. In current status, Chipotle has faced supplier shortage problem. Therefore building local suppliers is becoming more than critical issue and need great efforts, and whether this activity can guarantee enough supplies, which meet Chipotles strict standards, is still in doubt. A better way is to franchise in international markets because local managers will more familiar with the needs of local customers. Another reason is that Chipotle is reluctant to finance by debt.Through franchising in foreign markets, Chipotle whitethorn gather positive cash flows to fund connection owned restaurants in U. S. , and avoid large uncertain expense, cultural shock as well as political risks that may be incurred in foreign markets. 2. Exploiting its suppliers A possible way to penetrate more market share is to exploit and streamline its suppliers. The case shows that the company developed i ts suppliers by restrict quality, price and protocol standards. just about supplies shortages have been happened and some restaurants cannot operate smoothly without key ingredients.Chipotle did a good job in its downriver business, which is to provide a qualified food and services however, it upstream still needs to be well exploited efficiently to meet the huge needs of customers. Two feasible ways may not only lower the food cost but also overcome the shortage. One is developing more qualified suppliers in foreign markets. Although, the requirement of suppliers is hard to meet, Chipotle could corporate with local governments to acquire standardized supplies (successful poser is KFC in China). The tariff and freight may be offset by lower labor cost.The other way is to tap into more potential suppliers, with an enlarged supply chains, the company may enjoy a lower cost by economic scale effect. Recommendation Comparing with the above alternatives, we recommend Chipotle to dram atize the second one. The relationship with suppliers is considered as one of its capabilities, and thus, adopting the second method may involve less risky. If the company implements it appropriately, an efficient and effect supply chain could also become its core competency, reduce its cost of goods change and achieve expected SSS growth.