Competitive Strategy Assignment :Fast Casual Industry

Competitive
Strategy
C h i p o t l e M e x i c a n G r i l l

COMPETITIVE STRATEGY 1
Table of Contents
Introduction................................................................................................................................3
About Food Casuals Industry.................................................................................................3
Strategic Issues.......................................................................................................................3
Challenges in Retaining and Attracting Employees...........................................................4
Attacks from Critics...........................................................................................................4
Slowing Sales Growth........................................................................................................5
Supply Chain Problems......................................................................................................5
Recommendations..................................................................................................................5
Part 2..........................................................................................................................................6
The vision of Chipotle Mexican Grill....................................................................................6
Business Model......................................................................................................................6
Business Canvas Model of Chipotle Mexican Grill...........................................................6
PEST Analysis of Fast Casual Industry.................................................................................8
Political Factors..................................................................................................................9
Economic Factors...............................................................................................................9
Social Factor.......................................................................................................................9
Technological Factors......................................................................................................10
Industry Analysis.................................................................................................................10
Dominant Economic Traits of Fast Casual Industry............................................................10
Growth rate and Market size............................................................................................10
Number of Rivals.............................................................................................................10
Product Innovation...........................................................................................................11
Porter Five Force Framework..............................................................................................11
Suppliers Bargaining Power.............................................................................................11
Customers Bargaining Power...........................................................................................12
Threats of New Entrants...................................................................................................12
Threats of Substitutes.......................................................................................................12
Competitive Rivalry in the Industry.................................................................................13
Drivers of Change................................................................................................................13
Changes in the Government policies and regulatory influences......................................13
Marketing Innovations.....................................................................................................13

COMPETITIVE STRATEGY 2
Changing lifestyles, and attitudes....................................................................................13
Competitors of Chipotle Mexican Grill...............................................................................14
Strategic Moves by the Chipotle’s Rivals............................................................................14
Moe’s Southwest Grill.....................................................................................................14
Qdoba Mexican Grill........................................................................................................14
Strategic Group Map............................................................................................................14
Key Success Factors of Fast Casual Industry......................................................................15
Simple Menu....................................................................................................................15
Efficiency.........................................................................................................................15
Strong Employee Staffing................................................................................................15
Artistically Pleasing Interior of Restaurants....................................................................16
Management of supply chain...........................................................................................16
Strategic Expansion..........................................................................................................16
The attractiveness of the Industry and Personal Assessment...............................................16
Competitive Analysis...........................................................................................................17
Current Competitive Strategy of Chipotle.......................................................................17
Supporting Business Strategies........................................................................................17
SWOT Analysis of Chipotle................................................................................................18
Competitively Important Competencies..............................................................................19
Value chain analysis of Chipotle..........................................................................................19
Inbound Logistics.............................................................................................................19
Operations........................................................................................................................20
Marketing and Sales.........................................................................................................20
Competitive Strength Analysis of Competitors...................................................................20
Financial Analysis................................................................................................................21
Major Trends and Red Flags............................................................................................21
Conclusion................................................................................................................................21
References................................................................................................................................24
Appendix..................................................................................................................................28
Financial Analysis of Chipotle Mexican Grill.....................................................................28

COMPETITIVE STRATEGY 3
Introduction
I was appointed by the Chipotle’s Senior Management in order to provide a current
assessment of the Fast Casual industry and in particular Chipotle’s competitive position
within that industry. A brief review of my methodology to the analysis of the Fast Casual
Industry conclusions developed based on that analysis, identification of the significant issues
facing the company’s current strategic approach, and, the recommendations that had been
developed around these conclusions which are focused on these strategic issues. Besides this
the report will elaborate the vision, the business model of the company and its external
analysis. The analysis of the industry and competition will be performed to give an overview
of the operations of various businesses in the industry. Further, SWOT Analysis of the
company and its core competencies will be explained. In the end, financial analysis of the
company will be done.
About Food Casuals Industry
When we talk about the restaurants, fast casual is the only growing industry for almost 20
years. While it only covers less than 10% of the complete market, the variety and number of
the restaurants of the fast-casual have been developing all over the country, with an amazing
progress of approx. 500% since 1999 (Franchise, 2018). Changing preferences of the
customers and creative concepts of the restaurants are the motivating forces behind this
development. Gradually customers are considering more for healthy substitutes and are more
dynamic in their flavours. They are searching for more than the classic fries and burger.
Chipotle Mexican Grill is the part of this industry and it is the first chain of fast casual dining
formations.

COMPETITIVE STRATEGY 4
Strategic Issues
Strategic issues are those issues which are said to be an unsolved question and require a result
or waiting for some descriptive future event. Furthermore, it is strategic and has an impact on
the development and course of the business (Ambler, 2018). Every organization faces some
type of strategic issues which provide threat or opportunity for the future of the business so as
Chipotle Mexican Grill. The company is dominating the fast-casual restaurant's industry from
last many years.
The chain of burrito has enjoyed the sales growth in double-digit for last many years. Along
with this, it has high favourability among those diners who are health-conscious and
searching for a meal with reasonable price. But recently, the sales growth of the Chipotle is
going down, due to which the investors are in shock because after 22 years of the
commencement of the business the company is losing. Even the number of competitors of the
company are increasing, as the fast-casual industry is becoming more crowded with the
opening of new concept restaurants and trying to copy the success of Chipotle. As per the
analysis, Chipotle Mexican Grill is facing some major challenges such as a tightening labour
market, new attacks from critics, slowing sales growth and supply chain issues.
Challenges in Retaining and Attracting Employees
The restaurant is struggling with the narrowing market of labour because of increasing
demand for the meals of the restaurants and strengthening the economy.
Attacks from Critics
Chipotle has now become the new target of some attack advertisements which are advertised
by the Centre for Consumer Freedom, which is a non-profit organization situated in
Washington, DC.

COMPETITIVE STRATEGY 5
The advertisements, which were advertised in the New York Post, blame Chipotle for
misleadingly publicizing its food as a healthy and free of extra hormones (Peterson, 2015).
Slowing Sales Growth
For several quarters the sales of Chipotle is narrowing. That metric raised 4.3% in the second
quarter, succeeding a 10.4% rise in the first quarter. Store sales rose to 16.8% in 2014. The
revenue of the restaurant is still increasing but at slow growth rate.
Supply Chain Problems
Chipotle stopped providing beef at many of its restaurants due to its harsh ethics for how
animals must be raised and nourished. The shortage of beef started when the company
canceled the ties with one of the suppliers who breached its standards, according to that the
use of antibiotics and hormones are ban.
After ceasing the contract with the supplier, chipotle has faced many problems in searching
for the replacement which can meet its standards.
Recommendations
In order to solve the strategic issue of retaining and attracting employees, Chipotle
Mexican Grill should improve its compensation and incentive policies to retain the
employees. Along with this if the revised policies will be attractive then it will attract
new employees available in the industry and will help in increasing the productivity
of the business.
The company can improve its training sessions by making them more interactive,
entertaining and learning to retain its existing employees.
Due to the negative critics about the food manufactured in the restaurants the
company can face huge losses. In order to fight with this criticism, the company can
make their videos of some particular dishes and can telecast it on Television, upload