Chipotle Presentation

1. Tori Esser, Cole Monroe, Rachel Peck, Stephanie Steuck, and Joann Wolfenberg Strategic Review

2. Our Recommendation C2C: “ Commit 2 Consume ” Strateg y https://en.wikipedia.org/wiki/File:Chipotle_Mexican_Grill_logo.svg

3. Presentation Agenda 1. Company Snapshot 2. Trends 3. Porter’s Five Forces Model 4. Resources and Capabilities 5. Diagnosis 6. Strategies

4. Company Snapshot Locations in large, populated cities especially along the coasts Fast-Casual environment Quality ingredients from local suppliers Loyal customers Jason Mraz supplies avocados to Chipotle http://www.huffingtonpost.com/2015/01/13/jason-mraz-avocado-farmer_n_6430822.html

5. In the News E. coli: July, 2015 Norovirus: August, 2015 Salmonella: August and September, 2015 E. coli: October, 2015 Norovirus: December, 2015 E. coli: December, 2015 http://a57.foxnews.com/images.foxnews.com/content/fox-news/health/2015/12/08/30-boston-college-students-sickened-after-eating-at-chipotle/_jcr_content/par/featured-media/media-0.img.jpg/876/493/1449546512064.jpg?ve=1&tl=1

6. Trend: Minimum Wage Planning and Preparation - Customer retention - Offset costs Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

7. Trend: Healthy Food Options Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

8. Trend: Aging Population Millennials are the Future - Higher quality food - Affordability http://yourmarketingdepartmentct.com/millennials-what-makes-tick/ Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

9. Porter’s Five Forces Analysis Power of Suppliers Power of Buyers Threat of Competitive Rivalry Threat of New Entrants Threat of Substitute Products Porter’s Five Forces Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

10. Power of Suppliers: High Concentration Product differentiation Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies https://www.chipotle.com/food-with-integrity

11. Power of Buyers: High Switching costs Threat of backward integration Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies http://www.gettyimages.com/detail/news-photo/bags-of-chips-are-seen-ready-for-customers-in-a-chipotle-news-photo/471371484

12. Threat of Competitive Rivalry:High Number of competitors Switching costs Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies http:// hackthemenu.com/taco-bell/secret-menu / http://cincinnatizoo.org/events/wild-about-wine/qdoba-logo/

13. Grant Model

14. Resource : Reputation Encourage new and maintain loyal customers Satisfy customers’ expectations Maintain reputation over competition Control products/ingredients Strong brand appearance Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

15. Resource: Physical Resources No physical location = unsuccessful Favorable location to attract customers More restaurants = more income/access http://abc7ny.com/food/all-chipotles-open-late-for-employee-presentation-offer-customers-free-burrito/1191719/ Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

16. Capabilities: Food Prep Sets fast-casual apart from fast-food Prevents the spread of diseases https://www.chipotle.com/foodsafety Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

17. Capabilities: Supply Chain Management Cost management Inventory control Menu planning variability http://www.biz-development.com/SupplyChain/6.20.1.supply-chain-management-overview.htm Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

18. Concern Levels INSERT GRID HERE Primary Secondary Not a Concern Reputation Buyer Power Supplier Power Competitive Rivalry Substitute Products Physical Resources Food Preparation Cost Management Supply Chain Management Minimum Wage Healthy Food Trend Aging Population New Entrants Finance Trade Secrets Customer Service Human Capital Management Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

19. Diagnosis Our feasible strategy must : Improve Chipotle’s current reputation Decrease buyer power http://www.health24.com/Homepage/Tests/Whats-your-diagnosis-Case-16-numbness-in-forearm-20150618 Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

20. Three Feasible Strategies ENE: Encourage and Educate Customer s Backward Vertical Integration C2C: Commit to Consume Subscription Model Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

21. Breakdown of Strategies Improve Reputation Decrease Buyer Power Decrease Supplier Power Decrease Competitive Rivalry Cost to Implement Time to Implement ENE Yes Yes - - Low Short Backward Vertical Integration Yes Yes Yes Yes High Long *C2C* Yes Yes - Yes Low Short * Recommended Strategy Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

22. Encourage & Educate Customers Incorporate membership program Publicize new changes Hire new management http://careers.chipotle.com/ Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

23. Encourage & Educate Customers: Pros Decreased buyer power Informed customers Relatively low cost Easy implementation http://www.prweb.com/releases/2013/2/prweb10388212.htm Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

24. Encourage & Educate Customers: Cons Competitive parity Limited impact New food preparation - must be effective Too little, too late? https://lh3.googleusercontent.com/-SJlYRlsdfOOLU8l6D5SfvBdE5yfA6f7rCAYHIIRJyjkVJBGgzA8JlZv8_mvJvmS Tnk=w300 Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

25. Backward Vertical Integration Become our own supplier Complete control over ingredients/products Encourage safety to customers Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

26. Backward Vertical Integration: Pros Establishes control over ingredients Decreases the risk of disease Reduces cost in the long run Decreases buyer power Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

27. Backward Vertical Integration: Cons Expensive Difficult to implement Lengthy process http://www.chenxicartridge.com/why-are-name-brandgenuine-toner-cartridges-more-expensive-than-compatibles/ Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

28. “C2C” Strategy Hire management that specializes in public relations Implement a subscription based membership program $15 monthly subscription 3 meals included and unlimited beverages App ordering and a pickup only lane Points tracker for meals purchased Refer a friend incentive Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

29. “C2C” Strategy: P ros Revitaliz e Chipotle’s i mage Decrease buyer power Acquire new/existing customers Reasonable cost and time to implement Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

30. “C2C” Strategy: C ons Getting in itial customers to commit Attracting new customers Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

31. Improve Reputation Decrease Buyer Power Decrease Supplier Power Decrease Competitive Rivalry Cost to Implement Time to Implement ENE Yes Yes - - Low Short Backward Vertical Integration Yes Yes Yes Yes High Long *C2C* Yes Yes - Yes Low Short Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies

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34. Thank You QUESTIONS ?