Typically, Porters Five Forces is the framework employed to describe the environmental effects that dictate the organization's competitive advantage. The five forces are listed as threat of entry, threat of rivalry, threat of substitution, threat of powerful suppliers and threat of powerful buyers. Below is the application of this framework to Chipotle.
Threat of Entry
Chipotle has been so innovative in a variety of niche markets that it is hard for one competitor to enter into the marketplace and be a direct threat. There has yet to be a fast food restaurant (besides Chipotle) whose entire mission is to provide GMO and fresh ingredient food. Other establishments in the recent past have looked to increase the healthfulness of their items but none have gone so far to assert that they utilize solely organic ingredients and take no short cuts in the preparation process. Chop't is the only restaurant that comes to mind that could be anywhere close to Chipotle in their mission of "food with integrity". However, this would come with much scrutiny as Chop't (which serves customizable salads) does not use the variety of meat products as Chipotle and primarily serves raw food items thereby making it a much less daunting task in providing organic items.
Threat of Rivalry
In every marketplace there is always a threat of competition (unless you have a monopoly). For Chipotle, there are a few competitors who are looking to take over in the Mexican fast food category. Some examples that come to mind are: Moe's Southwest Grill, Lime Fiesta Kitchen and California Tortilla. Moe's and Lime are similar to Chipotle in the regard that they provide highly customizable options for all of their items. However, they do not emphasize the organic/non-organic quality of their ingredients nor does each allow for the flexible portion size.
Conversely, California Tortilla provides ample portions to patrons but definitely lacks the overall healthfulness provided by the other three options. Filled with processed cheese and pickled veggies CalTort is more of a "upscale"/more diverse Taco Bell versus a direct competitor for Chipotle.
Lastly, none of these organizations encompass the serving/customer service style employed by Chipotle and Subway. Due to the incidents publicized in the media regarding disgruntle food workers, many people prefer to watch their food prepared directly in front of them. While this method works well, it is more expensive to hire workers who provide this method of customer service than continue with the same standard of service that is employed in the majority of fast food restaurants. Along with the higher prices Chipotle spends for its organic food, it seems unlikely that others will follow suit.
Threat of Substitution
In the fast food industry, there is always a threat of an organization coming in and providing a similar item or type of cuisine. The same is true for Chipotle. Nothing Chipotle sells or does is proprietary; therefore, it is just a matter of time before someone steps in and claims the "Mexican" fast food market due to the Ecoli issues currently plaguing the mega chain. To help curb this, Chipotle should start a rewards program to incentivize people who frequent their restaurants. Similar to those free grocery store cards, these programs drive brand loyalty as the perks definitely make a difference in how the consumer spends their money.
Threat of Powerful Suppliers
The threat of powerful suppliers could be somewhat detrimental to the Chipotle brand. While there are several suppliers Chipotle could purchase from, the price at which they are able to acquire these "fresh ingredients" and hormone free meats is the real issue here. Typically, items that are organic or "healthy" tend to cost a great deal more than the cheaper alternatives. As a result, the suppliers truly control the successfulness of Chipotle as the price of goods is almost always transferred over to the consumer. Higher prices could result in a decrease in business as the perceived economic value would be diminished.
Threat of Powerful Buyers
As a fast food chain, powerful buyers are of little consequence to the overall successfulness of Chipotle. Even now in the midst of the Ecoli scandal, people are still flocking in droves to the locations. While the volume in the stores have decreased, Chipotle is still profitable during this time. As long as patrons continue to love the product, people will continue to purchase and Chipotle has the ability to recover from this setback.
Ultimately, these five factors could change at any time. However, Chipotle has positioned themselves to continue being at the forefront of the fast food market for years to come.
Chipotle outpaces rivals on strong sales
Another Chipotle Rival Bites the Dust
Chipotle Points Finger at Australian Beef as Source of E.Coli Outbreak
No comments:
Post a Comment