Thursday, February 4, 2016

Chapter 2: Firm Performance and Competitve Advantage

Recently, Chipotle has acquired a vast amount of bad press in the media outlets due to the outbreak of Ecoli in some of it's locations. While this has certainly left Chipotle executives and shareholders looking to pick up the pieces of the overwhelmingly popular food chain, it is certainly worth noting how Chipotle made it's rise to the top of the market was through the annihilation of its competition through economic value.

Economic value is one of the key contributors to the competitive advantage held by a particular organization. The notion that one is acquiring a good or service at a price less than what should be accepted given it's quality is something that most individuals constantly seek. As a result, Chipotle was able to enter the marketplace and completely revolutionize the arena by it's emphasis on quality and customization when others companies were relying more on gimmicks and cost saving efforts.

Fresh ingredients and meat devoid of all hormones and other "fillers" at a reasonable price was certainly the biggest selling point for Chipotle. In a society where "going green" and "eating healthy" is all the rage. Chipotle found a niche market in the fast food industry with it's dedication to bringing integrity to the food it serves. Unlike other restaurants, they state that their meats "(Animals) have received no added hormones, no antibiotics ever, and were humanely raised." Therefore, droves of patrons flock to the restaurants in hopes of being able to eat this responsibly cultivated product that seemingly fits into everyone's budget.

Additionally, there are very few other companies that exist in the same subgenres as Chipotle thereby creating a competitive advantage for Chipotle. Taco Bell the original "Mexican" fast food chain lacks the creativity, perceived healthfulness and social responsibility of Chipotle. Ultimately, their similarities end with the same product offerings. Nothing else between these two is comparable; therefore, Chipotle has all but stolen a vast majority of Taco Bell's customers and has the competitive edge. The same is also true for the few smaller chain "Mexican" restaurants such as California Tortilla, Moe's and Lime. While they all sell tacos and burritos, the others are mainly typical fast food filled with mystery meats, processed nacho cheese and unnecessary fillers.

Conversely, you have restaurants like Subway who have the same serving/customer service setup as Chipotle (where customers can customize their items). In  a marketplace, where many who consume fast food complain about the pre-constructed quality (lack of freshness) of their food Chipotle has not only allowed patrons to see their food cooking behind the counter, customers can finally successfully manipulate the portion size of each item received (for most items free of charge). The only competition in this realm for Chipotle is Subway who may construct the items in front of the customer but the cuisine is far from fresh. As a result, many individuals can feel the high economic value of Chipotle based on the quality of service and food received.

Ultimately, Chipotle since it's inception in 1993 has been striving to solidify it's position in the fast food world by emphasizing quality food and service; thereby acquiring a competitive advantage. While this advantage has all but disappeared over the last few months (due to the Ecoli scare), slowly but surely Chipotle using previously utilized tactics to move back to the top of the fast food restaurant market.

Food with Integrity

Ingredients Statement

8 Tips to Get Your Money's Worth at Chipotle

Chipotle vs. McDonald's: The Rise Of Fast Casual Food In 'The New Yorker

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