Chipotle Case Analysis

Chipotle chance Analysis-By Team PYSHEN Strategic Issue Chipotle plan to find out a correct and effective strategy to continue its sustainable growth and to support its profitability by penetrating high market sh ar succession competing with its powerful rivals in the fast-casual food for thought industry. External Environment analysis ecumenical 1. Demographic Population size (O) potential increase in US Age bodily structure mainly servicing adult between 18-49 eld old Geographic distribution (O) 39 states in the US, 1 in British and 2 in Canada Ethnic Mix N/A Income Distribution medium or high income (Customers willing to pay the premium). . sparing (T) stagnate, increasing food terms damage (demotic 3. 9%, global 37%) and customers dwindling budgets. 3. Political (T) ICE shifts its focus PETA asked to use CAK definition of rosy food. 4. Sociocultural (T) Higher wage for CIW. 5. Technological Prevailing Social media (O) Tortilla wicket machine (T). 6. Global Cultural di fferences for new stores (T) in international markets. 7. physiological Environment N/A. INDUSTRY 1. New entrants (H) Low Barrier, small economies eggshell, point of intersection taste better, and small capital requirements. 2. Suppliers (L) customized food, many an(prenominal) local anaesthetic farms. . Buyers (H) low merchandise costs, sales represent all revenue. 4. Substitute (H), low switch cost, many choices. 5 Rivalry (H), many equally balanced competitors low storehouse cost. Internal Environment Analysis Tangible Resources Financial (S) High ROI (approx. 10%) and operation cash flow. (V) Capacity to borrow N/a. Organizational self-sufficiency in operation, strong incentive. (V). Physical 22 independent distributers with high qualities. (R), exhausting to get A location, and higher cost of construct, new stores sales ar 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 reward managers to stay (V, I, R) Internal staff promotions and knowledge (V). Innovation (S) Simple approach to cards with lots of combinations (V, I, R), Menu & Taste (V, R, I, N), at large(p) kitchen design (V, I, R). Reputation (S) Brand name (V, I, R, N) organic, fresh and sustainable ingredients (V, I, R, N) LEED dependant restaurants (V, R).Capabilities relies on strictly chosen suppliers (I). HR wellspring motivated and sceptred (V, I). Marketing (S) effective promotion of brand name (offer free burritos to conterminous participation in charity fundraiser setting up event) (V, I, R, N) valuable viva-voce from Facebook (V, I). Management 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 recognize Chipotle from others. Strictly chosen suppliers help Chipotle meeting its food in lawfulness goals. Competitor Analysis Chipotle has bunch of competitors, and Panera is the most powerful one. Both Panera and Chipotle strive to provide quality food with fast service, focus on construction their brand image and establish loyal customer birth to dumbfound repeat sales, and are unwilling to finance themselves by credit (no long-run debt).However, Panera heavily relies on franchise to expand its market, and develops catering business to pull ahead its sales in future, which parts Chipotle doesnt involve. In fast-casual food market, Panera is a very strong competitor. Business level strategy differentiation by offering sustainable ingredient and better taste as well as satisfied fast service. Alternatives 1. Globalization by franchise Chipotle besides has three unknown stores, which located only in Anglo-S axon countries.However, enlarging its foreign market is a long-term task, and is required more than financial support. In current status, Chipotle has faced supplier shortage problem. Therefore building local suppliers is becoming more critical issue and need great efforts, and whether this exercise can guarantee enough supplies, which meet Chipotles strict standards, is lock a bureau in doubt. A better way is to franchise in international markets because local managers will more familiar with the needs of local customers. other reason is that Chipotle is reluctant to finance by debt.Through franchising in foreign markets, Chipotle may gather positive cash flows to fund company 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 solicit and streamline its suppliers. The case shows that the company develo ped its suppliers by restrict quality, price and protocol standards. Some supplies shortages have been happened and some restaurants cannot operate smoothly without find out ingredients.Chipotle did a good job in its downstream 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. devil 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 example 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 adopt the second one. The relationship with suppliers is considered as one of its capabilities, and thus, adopting the second method may involve little risky. If the company implements it appropriately, an efficient and effect supply chain could also commence its core competency, reduce its cost of goods sold and achieve expected muster growth.