Limited diversification is the strategy where all or most of a company's business activities fall within a single industry. Two kind of firms exist in this realm, single business firms which are firms that have more than 95 percent of their total sales in a single industry and dominant business firms that which have between 70 and 95 percent of their business within a certain industry.
Related diversification is when less that 70 percent of revenue comes from a single industry and the different businesses share some links and attributes. Unrelated diversification is when less than 70 percent of a firm's revenue comes from a single business and there are few links or attributes shared between businesses.
Chipotle as a company certainly encompasses the limited diversification strategy. The fast food chain that has reinvented and raised the standard on quick eats pretty much stays within the confines of the empire they have created. While most can certainly agree with the old mantra of "if it ain't broke, don't fix it", for Chipotle to grow it needs to create other avenues in which they can thrive.
In 2011, they capitalized on this notion and created ShopHouse. An Asian inspired Chipotle with organic ingredients, ShopHouse currently has four locations across the United States. While they have a long road ahead before they are able to reach the successes of the flagship brand/restaurant of Chipotle, ShopHouse is making progress one customer at a time.
Utilizing the information provided in the text, these two businesses are reflective of the limited corporate diversification model because they are both in the same fast food industry and for the most part rely on the same distributors and suppliers to do business. Although the type of food being offered is different, more or less everything else is the same or is constructed in a similar fashion.
Shop House
Five Reasons Why ShopHouse, the Asian Chipotle, Will be the Next Big Thing
Chipotle's ShopHouse Expansion
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