Chipotle Presentation

Tori Esser, Cole Monroe, Rachel Peck, Stephanie Steuck, and

Joann Wolfenberg

Strategic Review

Our Recommendation

C2C: “Commit 2 Consume” Strategy

https://en.wikipedia.org/wiki/File:Chipotle_Mexican_Grill_logo.svg

Presentation Agenda1. Company Snapshot2. Trends3. Porter’s Five Forces Model4. Resources and Capabilities5. Diagnosis 6. Strategies

Company Snapshot• Locations in large, populated cities especially along the coasts

• Fast-Casual environment

• Quality ingredients from local suppliers• Loyal customers

• Jason Mraz supplies avocados to Chipotle http://www.huffingtonpost.com/2015/01/13/jason-mraz-avocado-farmer_n_6430822.html

In the News• E. coli: July, 2015• Norovirus: August, 2015• Salmonella: August and September, 2015• E. coli: October, 2015• Norovirus: December, 2015• E. coli: December, 2015

http://a57.foxnews.com/images.foxnews.com/content/fox-news/health/2015/12/08/30-boston-college-students-sickened-after-eating-at-chipotle/_jcr_content/par/featured-media/media-0.img.jpg/876/493/1449546512064.jpg?ve=1&tl=1

Trend: Minimum Wage

Planning and Preparation - Customer retention - Offset costs

Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

Trend: Healthy Food Options


Trend: Aging Population

Millennials are the Future - Higher quality food- Affordability

http://yourmarketingdepartmentct.com/millennials-what-makes-tick/


Porter’s Five Forces

Analysis

Power of Suppliers

Power of Buyers

Threat of Competitive

Rivalry

Threat of New

Entrants

Threat of Substitute Products

Porter’s Five Forces


Power of Suppliers: High

• Concentration• Product differentiation


https://www.chipotle.com/food-with-integrity

Power of Buyers: High• Switching costs• Threat of backward

integration


http://www.gettyimages.com/detail/news-photo/bags-of-chips-are-seen-ready-for-customers-in-a-chipotle-news-photo/471371484

Threat of Competitive Rivalry:High

• Number of competitors

• Switching costs


http://hackthemenu.com/taco-bell/secret-menu/

http://cincinnatizoo.org/events/wild-about-wine/qdoba-logo/

Grant Model

Resource: Reputation • Encourage new and maintain loyal customers• Satisfy customers’ expectations• Maintain reputation over competition• Control products/ingredients• Strong brand appearance


Resource: Physical Resources• No physical location =

unsuccessful • Favorable location to

attract customers• More restaurants =

more income/accesshttp://abc7ny.com/food/all-chipotles-open-late-for-employee-presentation-offer-customers-free-burrito/1191719/


Capabilities: Food Prep

• Sets fast-casual apart from fast-food

• Prevents the spread of diseases

https://www.chipotle.com/foodsafety


Capabilities: Supply Chain Management

• Cost management• Inventory control• Menu planning variability

http://www.biz-development.com/SupplyChain/6.20.1.supply-chain-management-overview.htm


Concern Levels• INSERT GRID HEREPrimary Secondary Not a Concern

● Reputation● Buyer Power

● Supplier Power● Competitive Rivalry● Substitute Products● Physical Resources● Food Preparation● Cost Management● Supply Chain

Management

● Minimum Wage● Healthy Food Trend● Aging Population● New Entrants● Finance● Trade Secrets● Customer Service● Human Capital

Management


DiagnosisOur feasible strategy must:

– Improve Chipotle’s current reputation– Decrease buyer power

http://www.health24.com/Homepage/Tests/Whats-your-diagnosis-Case-16-numbness-in-forearm-20150618


Three Feasible Strategies

1.ENE: Encourage and Educate Customers2.Backward Vertical Integration3.C2C: Commit to Consume Subscription Model


Breakdown of StrategiesImprove

ReputationDecrease

Buyer Power

Decrease Supplier Power

Decrease Competitive

Rivalry

Cost to Implement

Time to Implement

ENE Yes Yes - - Low ShortBackward Vertical Integration

Yes Yes Yes Yes High Long

*C2C* Yes Yes - Yes Low Short

* Recommended Strategy


Encourage & Educate Customers• Incorporate membership

program• Publicize new changes• Hire new management

http://careers.chipotle.com/


Encourage & Educate Customers: Pros• Decreased buyer power• Informed customers• Relatively low cost• Easy implementation

http://www.prweb.com/releases/2013/2/prweb10388212.htm


Encourage & Educate Customers: Cons• Competitive parity• Limited impact• New food preparation - must be effective• Too little, too late?

https://lh3.googleusercontent.com/-SJlYRlsdfOOLU8l6D5SfvBdE5yfA6f7rCAYHIIRJyjkVJBGgzA8JlZv8_mvJvmSTnk=w300


Backward Vertical Integration• Become our own supplier

– Complete control over ingredients/products• Encourage safety to customers


Backward Vertical Integration: Pros• Establishes control over ingredients

– Decreases the risk of disease• Reduces cost in the long run• Decreases buyer power


Backward Vertical Integration: Cons• Expensive• Difficult to implement

–Lengthy process

http://www.chenxicartridge.com/why-are-name-brandgenuine-toner-cartridges-more-expensive-than-compatibles/


“C2C” Strategy• Hire management that specializes in public relations • Implement a subscription based membership program

–$15 monthly subscription–3 meals included and unlimited beverages–App ordering and a pickup only lane–Points tracker for meals purchased –Refer a friend incentive


“C2C”Strategy: Pros• Revitalize Chipotle’s image• Decrease buyer power • Acquire new/existing customers• Reasonable cost and time to implement


“C2C” Strategy: Cons• Getting initial customers to commit • Attracting new customers


Improve Reputation

Decrease Buyer Power

Decrease Supplier Power

Decrease Competitive

Rivalry

Cost to Implement

Time to Implement

ENE Yes Yes - - Low ShortBackward Vertical Integration

Yes Yes Yes Yes High Long

*C2C* Yes Yes - Yes Low Short


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%20Chipotle%20Sysco%20presenter%20slides.pdf

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Chipotle Presentation