Chipotle

Which company (or companies) is (are) most likely to take advantage of these opportunities? Why? -What key threats (in terms Of new entrants, product life cycle, product obsolescence, substitute products, etc. ) exist for this industry? Company Analysis: 1. Description of the firm -Company history -Product lines -The scope of the firm (geographic, target customers, technologies, etc) The size of the firm (sales, assets, employees, etc. ) -The firm’s culture and philosophies 2. Strengths and Weaknesses -Which functional areas within the firm are particularly strong and which re particularly weak?

Why? -Discuss in detail the firm’s financial (ROAR ROSS, sales growth, etc. ) and nonofficial (employment stability/growth, innovation, customer relations, etc) performance over the last three to five years as compared to its industry. 3. Opportunities and Threats -Provide a discussion of the opportunities and threats within the industry that are particularly applicable to your firm. 4. Current Strategy -Describe the firm’s strategies at the corporate and business levels. Discuss each in detail, and evaluate the, “soundness” of each. 5. What resources does the firm possess? E Lie’s section and annual report – large network of farmers, good employee base How do they contribute to competitive advantage? *6. Value chain activities -How can the firm take best advantage of or improve each of its primary and support activities? *7. Recommended Actions -What should your firm change about its corporate, business, and functional strategies to become more effective? (Hint: Be creative. Don’t just discuss what they’ve been doing in the past. Provide solid recommendations for future actions. ) What steps can the company take to overcome the particular issue they currently face? Please be specific and action-oriented.

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This section Of your report carries most Of the weight when grade the report. In order to make the workload as even as possible for everyone, let’s divide the sections/responsibilities as follows: There are 11 sections total so 1 person gets 3 sections and everyone else gets 2. The people that have 2 sections should take on something extra such as: Compile/edit the paper, compile the presentation on Prize (l have never used it), Write the intro and conclusion (looks like the conclusion is section 7), and the other person I suppose should take on 2 sections that take more time and effort than there.

Here is a logical division of the sections. Write your name by the one you want *Company 5,6 Connie Cohabitants *Industry 4, Company 7 Drew, I’ll write the intro/conclusion also Company 2,3 Jeanne Joe-Gonzalez Company 1,4 Liz Watson Industry 1 ,2,3 Janis Cornier-Ditz Industry Section 1 (revised) The fast casual restaurant industry is the most rapidly growing sector of the restaurant industry (cite source). Among the top competitors in the industry are Chipolata, Pander Bread, Five Guys.

According to a new study published by market research firm Tech anomic, sales at the top 150 fast casual chains outpaced sales growth for the Top 500 U. S. Chains in 2011 with growths of 8. 4 percent and 3. 5 percent, respectively. In 2011, Pander Bread led the Bakery Care Segment with $3. 3 billion in sales. Chipolata paced the Mexican segment with $2. 3 billion. Five Guys led the better burger segment with $950 million.

Despite accumulating approximately $84 billion in sales, the fast casual industry only contributed “14 percent to the industry’s overall sales in 2011 , meanwhile, McDonald’s contributed 17 percent to the industry’s overall sales” (factual. Com)need to reword. However, the growth of the fast casual industry is promising as it increased 14 percent in five years and “is expected to outpace that of the quick-service segment between 2011-2016” (factual. Com). The fast causal industry has made an impact on the restaurant industry as a whole by offering hybrid of quick service with a casual dining quality of food.

This allows customers to avoid fast food restaurant, such as, McDonald’s that have come under scrutiny after such negative PR that has been displayed in the movie “Fast Food Nation”, or Taco Bell which has been questioned in recent years for the percentage of actual eat that their ground beef contains (may need to find a source). Although this was bad press for fast food, it opened an opportunity for fast casual to satisfy the publics growing desire to eat fresh foods from socially conscious restaurants.

Chipolata prides itself on serving locally raised meats and produce while still maintaining a fast paced service at a small increase to the price of fast food. Pander bakes their own bread everyday and gives any left over bread to local food pantries. Even Five Guys hand forms their own burgers, they give well beyond the amount Of fries that WOUld be expected ND offer free peanuts to their customers. All of these attributes of these businesses show a willingness to go above and beyond in order to ensure the customer’s wants and needs are met and at the same time they keep the price within the range of affordability.

Industry section 2 (revised) The business-level strategies within the fast casual industry take on various degrees of an integrated cost leadership/differentiation strategy. The prices of fast casual dining is higher than fast food because they spend more money on the quality of their ingredients and their employees are better paid ND trained which leads to gaining a competitive advantage based on service and quality of their food. Therefore, attaining the lowest cost is not the ultimate driving force but it is a consideration for how fast casual appeals to a broad enough market to take business away from fast food restaurant.

In order to keep prices low enough to, fast casual restaurant commonly allocate their resources differently from fast food. For example, Chipolata, as well as many other fast casual restaurant spend a much smaller percentage of their revenue on advertising than that of fast food. (Cite Article that backs his). Instead, they rely more heavily on a word of mouth advertising, as well as, strategically positioning themselves on prime real estate where there is heavy foot traffic.

Typically these locations are in urban and suburban areas, which gives these restaurant a more promising level of potential and the shear volume of sales from each store allows the prices to remain low. (cite article on Lateral). Also, they differentiate themselves by catering to their target demographic and the values that they find to be important. For Chipolata, the target customers are young professionals who are conscious of he need for quality ingredients, awareness of environmental responsibility (cite this).

This is part of the reason why they use local produce and meats most of which are organic, and their burrito bowls and napkins are made from 100% recycled materials. Environmental friendliness has become more popular with the growing awareness of the need to make efforts to go green. In addition, Chipolata is an example “Of a fast-casual chain that continues to grow same-store sales with continued smart marketing and a service style that gains efficiency through investments in online ordering” (Nation’s Restaurant News).

Pander has as similar strategy to Chipolata in their target customers and choice of locations. It is not uncommon to find Chipolata and Pander in the same shopping center as each other (find data on this). Pander takes a somewhat different approach on social responsibility, in that, they give bread that was not used at the end of the day to a local pantry for the poor (cite this). Pander currently owns and franchises more than 1650 bakery-cafes and has recently opened five pay-what-you-can Pander Cares cafes through its Pander Bread Foundation. Nation’s Restaurant News). This establishes a level of appeal because the customers know Pander is helping the community and being recognized for philanthropic efforts. Although Five Guys is not known for differentiating themselves on a social or environmental level, there is one major factor that continues to aid in there success, which is the amount of recognition they have received for being the best burger. On their website and in their stores they are not shy to let you know that you are not going to get a better burger anywhere else.

In the press section of their website it states, “Five Guy’s has been GATE survey dated every year since 2001 and has been voted the Washington Magazine’s “Readers’ Choice” #1 Burger every year since 1999! Since expanding outside of the Washington DC metro area, Five Guys has continued to garner awards and praise in nearly every market we Guys website). This exclusivity that they have created for themselves drives up the perceived value of their food because anyone can say they have the best burger, but not everyone has magazines voting them the best burger for over a decade.

END OF SECTION 2 REVISED Industry Section 1-3 A hybrid of quick service and casual dining, the fast casual dining industry revised its customers with “counter service and offer more customized and freshly prepared dishes than traditional quick-serves, all in an upscale, inviting atmosphere” (scrimmaging. Com). Customers visiting a fast casual establishment will spend on average $7. 50, whereas, the customer average is $5 to $5. 25 at quick-serves (scrimmaging. Com). According to a new study published by market research firm Technician, sales at the top 1 50 fast casual chains outpaced sales growth for the Top 500 U.

S. Chains in 2011 with growths of 8. 4 percent and 3. 5 percent, respectively. In 2011, Pander Bread deed the Bakery Care Segment with $3. 3 billion. Chipolata paced the Mexican segment with $2. 3 billion. Season’s Deli was the Sandwich leader with $525 million. Despite accumulating approximately $84 billion in sales, the fast casual industry only contributed “14 percent to the industry’s overall sales in 201 1, meanwhile, McDonald’s contributed 17 percent to the industry’s overall sales” (factual. Mom) However, the growth of the fast casual industry is promising as it increased 14 percent in five years and “is expected to outpace that of the quick-service segment between 201 1-2016” (factual. Com)Janis http://www. Catcalls. Com/article/1 9461 7/Fast-casual-segment-rises-above- competition Leaders in the Fast Casual Dining Industry Pander – ranked #29 in 2011, utilizes a differentiation business-level strategy. Pander provides its customers with high quality, health conscious food offerings at price points affordable for its intended demographic.

In addition, Pander markets itself as a CEO-friendly, socially-conscious brand which appeals to its customers. Pander currently owns and franchises more than 1 650 bakery-cafes and has recently opened five pay-what-you-can Pander Cares cafes through its Pander Bread Foundation. Nation’s Restaurant News). Janis # 2 http://nor. Com/latest-headlines/pander-adds-donation-based-menu-item Chipolata- ranked #6 in 2012 moving up from #7 in 201 1, implements a focused differentiation business-level strategy, Chipolata leads the Mexican segment by providing high quality, healthy, and reasonably priced food items for the time-conscious consumer.

In addition, Chipolata is an example “of a fast-casual chain that continues to grow same-store sales with continued smart marketing and a service style that gains efficiency through investments in online ordering” (Nation’s Restaurant News). Janis #3 http://nor. Mom/latest-headlines/technician-fast-casual-brands-ahead- industry-growth Emerging Brands in the Fast Casual Dining Industry Season’s Deli – ranked 9 in 2012 moving up from #31 in 2011, also adopts a differentiation business-level strategy focusing on healthy menu items prepared and delivered to the customer quickly at affordable prices for the intended demographic.

Beginning in 2008, Season’s Deli began removing high fructose corn syrup from its food products. It is this embracing attitude towards healthy living that has made Season’s Deli an emerging leader in the sandwich segment of the fast-casual industry. As the ranking data demonstrates, emerging brands can quickly become leaders in the fast-casual dining industry as in the case of Season’s Deli. Moving from position 9 to becoming an emerging leader in the fast casual dining industry within one year shows the competitive volatility of the industry.

Whether brands are competing within identical segments of the quick-casual industry or not, consumers have numerous option available to them. Within this industry, from the consumers perspective, one brand is substitutable for another brand as in the case of the quick serve industry. Mcdonald’s is an ideal bustiest for Burger King as is Taco Bell as is Pander Bread a reasonable substitute for Chipolata.. Limited market entry barriers means competition is ever increasing.

Leaders in the industry are required to continuously innovate product selection, increase service quality, and appeal to consumer concerns in terms of ecological and social responsibility. Ranking data provided from the site below: http://redundantly. About. Com/odd/awardwinningretailchains/a/Top-50-Fast- Casual-Restaurants;Movers;Shakers-Comparison-2011 ;2012;Best; Restaurants. HTML The appeal of quick casual dining to consumers has created intense competition for both the quick service and the fine dining industries.

Market research conducted by Technician Inc. Found “85 percent of customers surveyed said they eat at fast-casual restaurants at least once a month and 82 percent reported visiting a traditional casual-dining brand once a month”; whereas, “only 40 percent of respondents who recently patronized a casual-dining restaurant also visited and upscale eatery in the same time frame” (National Restaurant News). The statistical evidence suggests customer traffic is increasing for the lower-costing options provided by both he fast-casual and the casual dining experiences.

However, neither industries have entirely replaced the fine-dining industry, as “41 percent Of consumers polled said the price of eating at an upscale establishment was worth the elevated overall dining experience they would expect to receive” (National Restaurant News). In an effort to gain market share, the top quick-casual brands have expanded their breakfast offerings by 31 % since 2011. There is still significant room for market share expansion as only 31 percent of the dominant leaders within the industry offer traditional breakfast food/ beverage items.

In addition to offering breakfast items in order to compete with quick serve and casual dining facilities, quick-casual business have emphasized the variety of “healthful” food items available to the consumer. “At fast-casual restaurants, 36 percent of consumers reported that they ordered low-calorie or healthful options more often than they did a year gag’ (National Restaurant News). The research demonstrates, consumers are seeking more healthful alternatives, and the continuous innovation of menu items to serve this consumer need will provide another opportunity for quick casual brands to gain market share.

SECTION 3 General Environment Within every industry, there are external factors that influence the probability of success or failure for a business. These factors: political, economical, sociological, technological, and legal, when combined create a foundation from which a business should analyze its resources, capabilities, and competencies to determine if its structurally strong to withstand external pressures. Political Businesses within the fast casual industry may not be as susceptible to political strife and changes as other businesses in other industries.

However, consumer preference regarding healthy dining and the Government’s encore with its constituent’s health means businesses within the food industry have to be constantly aware of public opinion regarding chemically processed and bioengineering foods. Economical Within the fast casual industry, the threat of financial hardship due to an economic recession is always of concern. However, consumer demand within the industry held consistent as the the industry as a whole enjoyed moderate growth and prosperity despite the most recent recession.

In addition, overall, business were able to maintain prices and a quality experience of which consumers were familiar. In addition, to changes within the overall economic conditions of the nation, businesses such as Chipolata are susceptible to cost fluctuations as the supply of raw food materials rise and fall due to changes in demand, transportation costs, as well as natural disasters. Such vulnerabilities require businesses to adequately forecast demand, possible cost variances for raw materials, and to develop viable supply chains as well as menu selections that best take advantage of the most cost efficient food products..

Sociological As with the political factors that influence the fast casual industry, sociological actors are just as varied and quick to change. Within this industry, the primary concerns are regarding food quality and food source. There is a strong consumer movement for organic, locally produced food products. In addition, consumers are eager for restaurants to innovate and implement more CEO-friendly strategies for operation. Businesses within this industry, consistently, have to survey and align their strategic vision with the needs and wants of their customers.

Technological Continuous advances in technology allow businesses within the fast casual industry to adopt new approaches to better serve their consumers. For example, Season’s Deli utilizes RIFF technology (in the form of a coaster) to track its customers within the restaurant and to ensure each customer is delivered the right order in a timely fashion (Might need reference here). In addition, the collection, manipulation and storage of consumer data provide businesses with the opportunity to customize reward programs for it customers, and in general, provide a better experience.

However, the wide availability of the technology to all within the public sector limits the competitive advantage, if any, that can be gained from its usage. Legal The physical expansion of a restaurant brand requires either the new construction of a building or the leasing of a pre-existing building. Either option is vulnerable to real-estate constraints in the form of business licenses, permits and/or zoning regulation. In addition, to real-estate law, all business hiring employees are subject to labor laws that regulate minimum standards in wager occupational environment, and access to employer-provided insurance (beginning year 2014).

Finally, when offering a product or service to the public sector, a business, regardless of industry, is liable for the ability of TTS product or service to meet the intended fit, form, and function of the product/service. A business’ inability to comply with quality standards, whether it be the consumer’s, the legal environment’s, or its own standard make the probability of incurring financial and/or civil penalty higher. Industry Section 4 Key Issues and Future Scenarios Why? What key threats (in terms of new entrants, product life cycle, OPPORTUNITIES In recent years the fast casual restaurant industry has come to realize tremendous growth that has outpaced every other sector of the restaurant industry. With growing health concerns stemming from eating fast food, fast casual offers a healthier, higher quality food option at a marginally higher cost “Price for a typical meal range from $8 to $15 dollars, but as the fastest growing segment Of the restaurant industry, consumers have seemed quite willing to pay for quality (Article 3).

Although health is becoming a growing concern when people decide where to eat, they are still on the go and want food that can be served quickly. In addition, this industry has become seemingly resilient to economic downfall such as that of 2008. “The extremely popular fast casual franchises Chipolata and Winnings grew 20. 7% and 17. 8%, respectively, compared to McDonald’s growth of 4. 4% and Burger King’s of 6. 6% during the same period. The 500 largest chain restaurants in the U.

S. Only expanded revenue by 3. 4% during 2008. (article 3)” This proves their ability to maintain sales through hard times without having to lower their price because fast casual dining is in such high demand, even in comparison with fast food. In addition, the use of higher quality foods also allows these restaurants to contribute to the local economies because they nearly use fresher, organic local ingredients (produce and meats)( check other sources).

As stated in the fast casual analysis 201 3, “Another positive sign for the sector is the increased consumer willingness to try new types of cuisine. Consumers are more interested than ever before in modern, authentic cuisine that is affordable for the family. (article 3)” Fast casual Mexican and Asian concepts are experiencing double digit growth in sales and small chains offer such novelties as home-made sodas. Consumers are becoming more discerning and the economy is continuing to improve, and fast casual restaurants are primed for profits!

Article 3). ” Also, socially and environmental responsibility is gaining higher recognition and demand due to the growing awareness of the effects our lifestyles have on the environment, the food that we eat and the ability of the company to contribute to philanthropic causes that help to better the community. Entrepreneurs are realizing the opportunity to start new fast casual concepts due to this thriving industry. In addition, the growing use of technology allows fast casual restaurants to find new innovative ways to operate and become more efficient.

COMPANIES THAT ARE TAKING ADVANTAGE OF THESE OPPORTUNITIES In the fast casual industry, which is continually, seeing growth, there is a constant need to innovate and take advantage of opportunities in order to out pace the growing competition. Many of the top level competitors in this industry have used their successful execution of these opportunities to make a name for themselves, as well as, increase affiance. A prime example of successfully branding is Chipolata. They saw the growing concerns for eating healthy and social responsibility that are often disregarded in fast food.

This was an opportunity to alleviate the concerns of the customers by using only coal (an in many cases organic), meats and produce. Also, as stated in Article 1 5, “Their salad bowls and napkins are made from 100 percent recycled newspaper-?totally comfortable-?but at Gotcha outposts, it goes in the garbage. “The plan is to get the composting program into all Of our restaurants,” vows Chi pipette’s communications director Chris Arnold, explaining that over 1 00 of the chain’s other venues already compost scraps like onion skins, avocado pits and pepper seeds. ARTICLE 1 5)” This formula of consciousness for the food we eat and the environment we live in makes a use impact on the customers choice because people know the customer’s interests are at heart as opposed to operating on the basis of strictly increasing profits. This is part of the reason fast casual chains do not advertise nearly as much as fast food. In fact “Chipolata will spend about 1. 4 percent of sales on marketing this year, while McDonald’s ad expenses were $768. 6 million in 2011 , or about 2. Percent of revenue, which doesn’t include “significant” costs incurred by franchisees at the local level, according to a company filing (Article 12 chipolata effect). ” . They use a higher percentage of heir resources in comparison to fast food, in order to make a make their product and experience of the customer of a better quality, which in turn, creates a word of mouth advertising. Another opportunity that this industry has realized is that expansion during a recession can be very profitable because the cost of construction is much lower. **(Article 16 pander-need to cite directly). Another great opportunity is the use of modern technology. Many fast casual restaurant are implementing online ordering through phone APS a company websites as to allow the customer to bypass the that hey would wait in line to receive their food (get the actual percentage/portion of this industry that does this). This can set some restaurant ahead of others for the customers that are truly in a hurry and/or want to spend absolute minimal time in the restaurant. A newer implementation of technology has been used in Season’s deli.

They are starting to use RIFF coasters to track the time that is takes for the customer to get served and where the customer is sitting as to make for faster service, and also allowing the people preparing the food to know how much time has elapsed from the time of the order. The way this works is, “When the guest places their coaster-like device on the table of their choice, the device immediately reads the table number information from the ‘mat and broadcasts it to a computer at the order expediter station.

The food runner then looks for an RIFF device ID number on the order ticket and aligns it with the location information for that device to quickly figure out where the food should be delivered (Article 14). ” The aim is to have the customer served within six to eight minutes and once it has reached six minutes a yellow light shows up on the counter so the person aging the food knows that they need to hurry up.

The use of this technology allows the customer to have their food in a guaranteed time frame and also allows the management to see where and who is causing time lags so the can pinpoint and improve there operations. KEY THREATS IN THE INDUSTRY Although the fast casual industry is thriving and seemingly resilient to the negative effects of recession, the larger and more recognized companies in this industry face issues that threaten to slow down their ability to continue to grow at the same rate in the future (cite this or the next sentence).

The increase in opportunity and low entry barriers in this industry opens opportunities for more competitors to thrive as well, which can dilute the market for the titans of the industry because as time moves forward, their customers will have more options to choose from, some of which are expanding at seemingly exponential rates right now. One great example is the restaurant chain Freebie’s which is a company that started in 2007 that saw a growth of 62% last year (cite this).

Though they are relatively young in the industry, they have the same cuisine as chipolata and are viewed as a force o be reckoned with once they become as prevalent on a national stage(Possibly incorporate projections for the future). The larger companies are still in the growth stage but may have to seek new methods of increasing sales in order to retain and expand their market share in the future.

As stated in the chipolata effect,” Ells suggested strategic changes one might expect from his counterparts at McDonald’s Corp.. (MAC) or Burger King Worldwide Inc. (BIKE) They include running more commercials that drive traffic rather than celebrate the brand, and possibly adding breakfast items and installing drive- wrought windows (Article 13 chipolata effect). ” These new strategies if implemented could effectively turn these restaurant into a product that they have spent their existence trying not to be, fast food.

The possible reproductions may entail loss of that experience you get from current fast casual, slower service, a loss of their original identity which made these businesses successful and differentiated from fast food to begin with (cite this). -The scope of the firm (geographic, target customers, technologies, etc) Chipolata Mexican Grill, Inc. Opened its first restaurant in Denver, Colorado in 993 under the ownership of founder Steve Ells (“Chipolata Story,” 2012).