Business Analysis: Chipotle Mexican Grill

Part A. INTRODUCTION.

Chipotle Mexican Grill is a popular restaurant chain that serves customers in the fast casual segment of their industry. The company prides itself on providing high quality food and utilizes ingredients that come from sustainable farms with respectable practices. It was founded by Steven Ells, a graduate of the Culinary Institute of America, who wanted to open a taco shop that puts a twist on traditional Mexican food. The vision he had for his restaurant wasn’t what many expected because numerous friends and family thought Mexican food was cheap, so he wouldn’t be able to get away with charging high prices. Ells contradicted those perceptions for the reason that his food goes beyond what other’s provides when it comes

To reduce their carbon footprints, Chipotle invested in solar panel to harness solar energy to power their company. They partnered with a company help implement the panels and got Chipotle an LEED (Leadership in Energy and Environmental Design) certificate designating they designed and operate in an environmentally friendly building.

Political/Legal:

The political and legal matter that are applicable for the restaurant industry is the government polices of the U.S. Department of Agriculture (USDA). Chipotle has 22 different distribution centers in various geographic areas, which serves the Chipotle restaurants in those vicinities. The suppliers for these distribution centers were evaluated based on quality and ingredients need to meet the company’s mission. The USDA help restaurants like Chipotle by inspecting the food to ensure its quality and makes certain it is safe for the general public.

Overall Assessment

The company networks with 25 organic farms that supply the fresh ingredients and naturally raise livestock to coincide with their mission to provide “Food with Integrity.” Organic agriculture is still in the beginning stages is the U.S. because the shift from traditional to organic farms fell due to the downturn of the economy. For that reason Chipotle supplier can drive prices because of the demand need for their products. However, Chipotle balances that power by not going full organic and natural in all of their ingredients. They source only 35 percent of their ingredients in order to not drive product price too high. They plan to slowly convert to full organic and natural ingredient by going in increments to slow adjust their business and customer to change.

Bargaining Power of Buyers: High

In the restaurant industry the customer has high power because of how saturated the market is. Although they have very little control over the price of products, they have low switching cost that allows them to seek the best price. With the numerous restaurants available to customer, it gives them the power to choose other places to eat besides Chipotle. Also, Mexican restaurants like Taco Bell and Qdoba gives customers a substitute for Chipotle’s food. Products in this industry are not ordered in large