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The Sexy Six
Started in 1993 by Steve Ells in Denver, CO with the idea that food that is served fast does not always come with
the “fast-food” experienceHe wanted to use high-quality, local ingredients, classic
cooking methods, and a fine-dining atmosphere. Chipotle would offer “a few things, a thousand ways.”
McDonald’s invested in the company when they had only 16 restaurants. They handed resources and guidance
down to the young company for 8 years, helping it grow to the publicly traded company that it is today
Company History
During the year of 2014, Chipotle opened 192 new restaurants, bringing their total restaurant count to 1,783.
The fourth quarter of 2014 shows a 26.7% revenue increase from the fourth quarter of 2013.
Vision, Values, Goals
Vision Values Goals
Use higher-quality ingredients and cooking
techniques to make great food accessible to all people at reasonable
prices.
Support and sustain family farmers who respect the land and the animals in their care
Use meat from animals raised without the use of antibiotics or added hormones
Source organic and local produce when practical
Use dairy from cows raised without the use of synthetic hormones
To change the way people think about and
eat fast food
Map the Industry
Raw Materials
Consumers
Industry Boundaries
Product Scope: Fast-Casual Restaurants Geographic Location: United States
Competitors: Panera, Five Guys, Zaxby’s Qdoba Mexican Grill, Einstein’s Bros Bagels, Boston Market, Panda Express, Jimmy John’s, Noodles & Company
Farmers/Ranchers
Distributors
Restaurants
Assess Profitability
Farmers/RanchersMeatDairy
VegetablesPaper productsPlastic products
Dining equipment
Potential EntrantsInternational Quick Service
restaurantsNon-Quick Service
restaurants
SubstitutesFull-service restaurants
Fast-foodCasual restaurants
BuffetsCaterers/refreshment
stand vendorsRetail-host restaurants (Gas stations/grocery
stores)
ComplementsSoft-drinks
JuiceSnacks
BuyersIndividuals
TeamsBusiness
Fast-Casual restaurantsPanera, Five Guys,
Zaxby’s, Qdoba Mexican Grill,
Einstein’s Bros Bagels, Boston Market, Panda Express, Jimmy John’s, Noodle’s & Company
Power of ComplementsBargaining Power of Buyers
Bargaining Power of Suppliers
Power of SubstitutesThreat from New Entrants
Force Factors Strength Profit Impact
Bargaining Power of SuppliersProduct costs % of total? 33.4%Concentration of suppliers? YesSwitching costs? Low
Low
Bargaining Power of BuyersProduct differentiated? YesCriticality? YesSwitching costs? Low
High
Rivalry Among Existing FirmsIndustry concentration Very highDiversity of competitors HighProduct differentiation Med
Low
Threat from New Entrants
Capital requirements LowEconomies of scale YesProduct differentiation YesAccess to channels HighExpected retaliation Low
Low
Threat of SubstitutesBuyer propensity to substitute HighProduct differentiation High
High
Power of ComplementsMutually beneficial industries? YesStronger market position? No
Low Neutral
Industry Key Success Factors1. Strong brand image to help distinguish restaurants from their competitors
• Branding might involve focusing on bold flavors, fast preparation of special orders, better ingredients or healthier diets.
• “By Technomic's estimation, there are at least 10 different markers of restaurants that fall within the category: the quality of the food, the use of better ingredients, food that is wholesome, a perception of freshness, first-rate decor, fair pricing, fast service, friendly employees, flexible offerings, and a full view of how the food is prepared.”
2. The quality of products that a restaurant provides their customers determines how successful they are
• “It’s generally acknowledged that fast-casual concepts are hybrids of quick-service and casual dining that provide counter service and offer more customized and freshly prepared dishes than traditional quick-serves, all in a upscale, inviting atmosphere.”
• “Fast-casual menus feature a wider, more daring range of ethnic fare, which gives chefs and consumers the opportunity to try new tastes.”
3. Restaurant layout
• “In the design of Fast Casual Restaurant Concepts, the restaurant consultant working with the customer, starts with the menu, develops the service model and the menu boards. The service model as the interface between the customer and the restaurant team, dictates the rest of the design and layout.”
4. Price
• “They offer some dishes at around the same price as [those at burger joints], but they seem to be better than McDonald’s at nudging diners towards pricier dishes and extras. Fast-casual chains typically manage to squeeze 40% more out of each diner’s wallet than fast-food joints do.”
• The sector still maintains its traffic count indicating that people prefer quality and hygiene over a rise in item prices.