Essay On Chipotle's Bargaining Power Of Suppliers

Threat of New Entrants The threat of new entrants for Chipotle is low-to-moderate. Ambitious entrepreneurs open new restaurants regularly; however, it takes a significant amount of time and resources to develop the type of brand loyalty that Chipotle has successfully acquired over the years. Their name is well-known and customers remain loyal so others may find it difficult to compete in this industry.

Bargaining Power of Suppliers Not like many other names in the fast food industry, Chipotle's bargaining power of suppliers is higher than most. If you take for instance Mcdonald’s or Taco Bell, their main focus is not how the cow was raised that supplies them with one dollar hamburgers or where the tomatoes were grown that they are larger

The first reason that gives the buyers more bargaining power are that Chipotle’s customers can switch to a lower costing product or choose not to go to a restaurant at all. Additionally, they must keep their prices reasonable even with the higher quality ingredients they offer in their products. It was seen in Chipotle’s past year performance that demand for their products has stunted since the E. coli outbreak in October. The second reason that gives the buyers more bargaining power are that Chipotle’s sales of their product accounts for a significant portion of their annual revenues. The first reason that gives the buyers less bargaining power are that many customers purchase Chipotle’s products, not necessarily a few large buyer groups. This means that Chipotle does not have to be dependent on a few large groups for their revenues. The second reason that gives the buyers less bargaining power are that Chipotle’s products are differentiated by offering higher quality ingredients than it’s competitors in its industry. Some buyers may be willing to pay a little more for higher quality food, than say going to Taco Bell. For these combined reasons, the bargaining power of buyers in Chipotle’s industry is