Chipotle is extremely vulnerable to supply shortages. Considering the fact that their brand is built on the quality of its ingredients this is a problem. Their brand, cost premiums and a large component of their value proposition is built on and contingent on providing a product requiring inputs that the do not control ( Chipotle Mexican Grill, Inc. SWOT Analysis) . Irregularities in the work
Chick-Fil-A vs Chipotle: Which one is better? Many people lately have been raving over Chipotle, and Chick Fil-a lately. I have always thought to myself what is so great about these two food chains. Many people like Chipotle, and then there a a lot of people that love Chick-Fil-A.
CRegardless of Chipotles strengths, the company has encountered some weaknesses as well. In respect to future growth, Chipotle has seen some growth and are profitable, but there are some crucial factors that could be a warning sign of possible challenges. Chipotles principal weakness is its limited menu choices; there are basically customizable items on the menu that customers can order. Chipotle will have to offer more options to customers or increase marketing strategies; the main goal is to gain and retain customer confidence. Additionally, highly priced food items are another concern for Chipotle.
Chipotle is one of the most successful restaurant in the U.S. but every organization got some weakness and problems, today I would like to share with you what is the biggest chipotle’s problem ever that cost this restaurant a lot of money and lose trust from costumers and bad image in the media which is POISONING !! :- The fifth-biggest multistate sustenance harming flare-up of 2015 was the E. coli episode connected to nourishment served at Chipotle eateries in nine states. No less than 52 people were sickened, 20 of them were hospitalized. The episode was one of a few nourishment harming flare-ups connected to Chipotle this year including a Salmonella flare-up that sickened more than 60 individuals in Minnesota.
As the locations increased, Steve made the decision to fine tune the menu and decor of his restaurants, one of the changes that he made was to switch to free-range pork for its carnitas (2012). Free range pork means that the pigs have been allowed to roam freely and was not feed antibiotics (2012). Success continued for the Chipotle industry, by 2003 restaurant locations grew to 300 with revenue totaling $321 million (2012). Chipotle greatly increased McDonald’s growth avenue; however, in 2006, McDonalds divested from Chipotle at the price of $1.5 billion (Wikipedia, 2011). Hoover (2014) asserts that Chipotle’s top competitors are Panda Inn, Inc., Taco Bell Corporation.
Since news about the Chipotle food poisoning broke, a lot of people became more concerned about the food they eat. The public began to realize that even renowned brands and giant food chains can also be the breeding ground for the next food related fiasco in town. Because of the two outbreaks of Norovirus (a virus that causes diarrhea, vomiting, body pains and fever among others) in Simi Valley and Boston, two E. coli outbreaks, and one Salmonella outbreak in Minnesota, Chipotle is now facing rapid drops in their food revenue, a decline in their stock value, a criminal investigation and a lawsuit.
Chipotle is in the fast casual industry where competition is extremely intense since there are so many different dining options. An industry like fast casual restaurants has a very high growth rate therefore there is not just one company that has the market cornered. What sets the restaurants apart is not cost but product differentiation; they position themselves in the market with their slogan of Food with Integrity. Since restaurants in the fast casual industry are priced fairly in the same range Chipotle uses different product features to set themselves apart from the others (parature.com). The first value driver in Chipotle’s differentiation strategy is the product quality; they utilize local farmers who are conscience of the environment.
The following paper will examine the organizational structure of the Chipotle organization, diagnose problems,
The company has also reduced their costs and increased productivity. The company has also increased franchise handled business in the last three years. Company owned stores have increased 2.8% and franchisee owned stores have increased 2.7% compared to 2013. However, total revenue decreased by 4.9%. The current ratio in the balance sheet is .87 while the total cash is 17.75 million.
-Low threat of new entrant ( High input costs ) Threats -Input costs are increasing and fluctuating (beef price is rising and some ingredients such as wheat price is fluctuating) -All the restaurant’s segments are competitors and are not only competing at their own segment but also with other segments (e.g. Chipotle Competes with meals prepared at home as well as frozen or packaged food items available in supermarkets) -People reduce eating out spending economics recession and this might affect Chipotle -Competitor’s pricing strategy – competitors such as Taco Bell are offering similar products with reduced prices to compete for Chipotle’s market share -High threat of substitute fast food ( variety of choices for consumers) Situational Analysis for Chipotle Alternative Actions and Evaluation of Alternatives Alternatives Pros Cons 1. Differentiation Strategy by “ Food with Integrity” ( current Strategy) -Differentiate from competitors -Get more attraction because of unique style of serving -Rising food prices -Need for more produce as raw material inputs -Low awareness than other brand due to their marketing style of loyalty and word of mouth
And considering Chipotle’s past financial results, Chipotle’s 2016 financial performance, affected by the illness outbreak, was clearly an outlier. Hence, as 2016, some valuation multiples may not be suitable for the valuation of Chipotle. A clear example of inadequate valuation multiples could be the P/E ratio. Taking into account that Chipotle closed at $377.32 as 2016, it seems to be that even the most bearish investor would not believe that Chipotle would only be worth $20.68 per share, as suggested by the average of the P/E
The Sodastream video failed because it was predictable, it overtly endorsed the brand, and was ineffective in its critique of the way most videos go viral. It was also ineffective in advertising the brand as an underdog when calling out the big names (Coke and Pepsi). The easiest way to analyse the pitfalls of this ad is to compare it against a similar product competing in the same channel with a comparable ad but an entirely different level of success: Smartwater. First of all, Smartwater was sly in endorsing their brand and creative in the way they critiqued what is popular and trending in the realm of viral marketing.
Chipotle is a very successful fast food restaurant business within the domestic boards of the United States; therefore it would seem like the next step would be to expand the business internationally. There are many opportunities to be enjoyed by expanding Chipotle into the international market, however there are also many challenges that need to be considered before this decision is made. Some of the great opportunities Chipotle has the ability to achieve when expanding internationally are things such as increased profits, well recognized brand name, and growth. The strongest motivator for a business to expand is the idea that more Chipotle restaurants equal more profits. This idea can be found valid if the expansion into foreign markets
What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage? The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation.
Many ingredients, such as jalapeños, tomatillos, chiles de arbol and chipotle peppers are raised in America. This fact forced the company to charge higher prices in Europe compared to the prices of USA and Canada, to compensate the cost of exports from America. European locations charge 9 euros per entree (burrito, tacos, salad, bowl) with your choice of one meat (chicken, steak, barbacoa, etc). On the other hand, we have low prices in USA. For instance, a location in Fullerton, California charges $6.70 for chicken, $7,40 for steak and barbacoa, $6,70 for sofritas and vegetarian and 7,15 for carnitas.
