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Module 1: introduction and getting to know the business Industry: Specialty eateries company: chipotle. Matt Ramirez Section 2. Industry Discussion: Specialty eateries. Specialty eateries. Focus on specialty items and serving a broad customer base

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module 1 introduction and getting to know the business industry specialty eateries company chipotle
Module 1: introduction and getting to know the businessIndustry: Specialty eateriescompany: chipotle

Matt Ramirez

Section 2

specialty eateries
Specialty eateries
  • Focus on specialty items and serving a broad customer base
  • Have the option for customers to dine-in or take “on the go”
  • Usually focus on quality while maintaining efficiency and reasonable prices
  • Can be seen as “in the middle” between fast food and regular sit-down restaurants
specialty eateries1
Specialty eateries
  • Sales increased 13.1% in 2012
  • High growth rate
  • Do not rely as much on traditional advertising as fast food companies do
  • Many specialty eateries are known as “fast-casual”: Chipotle, Einstein/Noah, Panera, etc.
industry competition
Industry competition
  • Influenced by demographics, consumer taste, consumer base, and income level
  • Top 50 companies gain about 45% of the revenues
  • Competition among fast-casual/specialty eateries in addition to competition between specialty eateries and fast food
  • Success and growth will create new competition: diversification is key
buyer power
Buyer power
  • Can look for substitutes and lowest costs
  • Declining coffee prices (i.e. Starbucks or Einsteins)
  • Future low cost of corn (affects meat prices)
supplier power
Supplier power
  • Focus on quality diminishes supplier number and increases supplier power
  • Certain products are a necessity for buyers (i.e. meats, grain, coffee, etc.)
substitutes
substitutes
  • Fast food restaurants: cheaper and quicker
  • Casual dining and sit-down restaurants: presumed higher quality and better experience
  • Other fast-casual or specialty eateries: better prices, type of food, quality
  • Depends on economic factors, GDP, disposable personal income, CPI, etc.
threat of entry
Threat of entry
  • Low barriers to entry, but high fixed costs and high competition
  • Franchising can help expansion of new competition
  • Bigger and more established franchises hold advantage
  • Newer, smaller companies can succeed through diversification, customer service, and high quality food
chipotle background
Chipotle background
  • Mexican grill that focuses on serving quality food while maintaining speed and efficiency
  • Found in 1993 by Steve Ells in Denver, Colorado
  • Considered a “fast-casual” restaurant: food that is served fast without the “fast food” methods or ambiance, allows customers to eat “on the go” or in a nicer restaurant environment
  • Not franchised, centrally-owned
porter s value chain model inbound logistics
Porter’s value chain model: inbound logistics
  • Establish and maintain relationships with top suppliers of ingredients in order to maintain quality (i.e. “responsibly raised” meat and other organic ingredients)
  • Quality assurance department monitors food safety and quality from suppliers
  • Formula, fixed, and forward pricing protocol for raw materials to establish quality control
  • Distribution centers purchase materials from suppliers who purchase from other approved suppliers
porter s value chain model operations
Porter’s value-chain model: operations
  • Training and risk management department implements standards for food preparation, safety, and restaurant cleanliness
  • Classic cooking methods (i.e. a restaurant and not fast-food)
  • Food is constantly prepared throughout the day (not at the beginning of the day) in order to maintain freshness and fulfill constant demand
  • Point of Sales System: records sales transactions, monitors employee hours, etc.
porter s value chain model outbound logistics
Porter’s value-chain model: outbound logistics
  • Heavy focus on hiring quality employees to deliver the finished goods/food to customers in a timely manner
  • Focus on the floor plan and serving line in order to increase efficiency and reduce waiting time
  • Orders are accepted through the internet or smart phone apps to let customers order food in advance and pick up later
  • “Front Line” focus- open kitchen design, customer interaction
porter s value chain model marketing sales
Porter’s value-chain model: marketing & sales
  • “Food with Integrity”: high quality ingredients
  • Maintain reasonable prices to attract customers ($7-$9)
  • Methods: print, outdoor, online and social media, “Cultivate” festivals
  • Focus on differentiating Chipotle with “fast food” restaurants and align with like-minded organizations
  • Based more on experience, not necessarily advertising
porter s value chain model servicing
Porter’s value-chain model: servicing
  • Maintain quality food and quality standards to keep customers coming back
  • The “Farm Team”: customer loyalty program focused on educating and rewarding customers for expanding this knowledge
porter s value chain model support activities
Porter’s value-chain model: support activities
  • Human Resource Management: emphasize identifying, hiring, and developing top employees for restaurants and/or management positions (i.e. Restaurateurs), cross-training for increased efficiency
  • Product/Technology development: point-of-sales system to monitor and improve, focus on smaller menu with minor improvements
  • Procurement: strong vendor/supplier relationships for high quality and reasonable pricing
  • Infrastructure: management hierarchy and mentorship programs, contains all necessary entities for continuous operation
swot analysis
Swot analysis
  • Strengths: focus on quality and speed, not franchised, limited menu, strong supplier relationships
  • Weaknesses: focus on quality (more difficult to manage)
  • Opportunities: Take advantage of growing consumer consciousness, expanding “fast casual” restaurant market, continued expansion and growth
  • Threats: Rapid growth, food supply and costs subject to change, difficulty maintaining quality standard, competition from other fast-casual or fast food restaurants, ability to differentiate from fast food market
sources
Sources
  • Chipotle (CMG) 2012 Y.E. 10-K
  • Standard & Poor’s Restaurant Industry Report
  • http://www.hoovers.com/industry-facts.specialty-eateries.1445.html#megamenu_0.html