Exploiting Innovation: Chipotle Mexican Grill

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Exploiting Innovation (Deliverable 3) – Chipotle Mexican Grill

From the same case that you have chosen for Deliverables 1 and 2 (I’ve attached deliverable 1 and 2 paper for you to see Deliverable 1 and 2 that way you do not repeat the same things in this new paper, deliverable 3), you will determine the company’s top advantage(s) and recommend alternative strategies that the company could take in order to beat its competitors. Write a three to five (3-5) page paper in which you:

  • Evaluate the importance of innovation for the long term survival for your chosen company as well as the industry that your chosen company fits in. Next, recommend an overall strategy in order to foster innovation in your chosen company. Provide a rationale for your response.
  • Speculate on how you would expect the industry to evolve over a period of five (5) and ten (10) years, based on your analysis on the innovative and technology trends from Project Deliverable 2. Provide a rationale for your response.
  • Determine your chosen company’s top advantage(s) over its competitors. Justify your answer.
  • Determine two or three (2-3) strategies that the company could use to exploit its innovation breakthroughs, using the top advantage(s) that you determined in Question 3. Analyze the main advantages and disadvantages of each strategy.
  • Recommend one (1) of the strategies that you determined for the company, and suggest how pursuing that strategy would exploit the company’s advantages over its competitors and minimize its key weaknesses. Provide a rationale for your response.
  • Use at least three (3) quality references. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

Running head: INNOVATION AND COMPETITIVE ANALYSIS Innovation and Competitive Analysis from Case 10: Chipotle Mexican Grill, Inc. Student’s Name Professor’s Name Course Title Date 1 INNOVATION AND COMPETITIVE ANALYSIS Chipotle Mexican Grill is a fast-casual chain restaurant specializing in Mexican cuisine. It was founded in 1993 by Steve Ells, who was inspired by local taquerias which used fresh ingredients to make high-quality food at low prices. His vision to combine fine-dining quality dishes with the service and reliability of a fast food restaurant saw him start his first Chipotle Mexican Grill in Denver, which has since grown exponentially becoming one of the leading chain restaurants in the USA. The food industry is competitive and over the years, Chipotle Mexican Grill has seen its fair share of competition. The Porter's five forces of competition framework analyze the competition of business thus aids a business in anticipating competition and coming up with strategies for the future. It also informs a business of its position in the industry it serves in. The framework focuses on five forces that determine competition which in turn affect the profitability of a business. There is a threat when new businesses enter the same market space as they take up a percentage of the market share of the existing businesses (Tang, 2014). In recent years, new restaurants have come up with food and service models that are similar to that of Chipotle. As food trends move towards conscious eating, the number of people who prefer to eat food prepared from organic ingredients is on a steady rise. Chipotle’s model of using organic ingredients from sustainable sources has become a benchmark for emerging restaurants. Even though these new emerging restaurants take up a small market share, using a model similar to blunts Chipotle’s competitive edge in the restaurant industry. The threat of substitutes is one of the five forces of competition. A substitute uses a different technology to solve the same need as a business. New and more innovative technology and models emerge every day in the food industry. Online fast food restaurants provide the 2 INNOVATION AND COMPETITIVE ANALYSIS convenience and reliability of fast food restaurants with the added advantage of food delivery. For Chipotle to remain competitive it needs to come up with new innovations and models of customer service as an incentive for customers to remain loyal. Bargaining power of consumers refers to the ability in which consumers have the power to affect business. These include things like prices and quality. It also regards the loyalty of a consumer to a brand. Creating brand loyalty gives business stability when new businesses emerge and during inflation of prices. Bargaining power of suppliers assesses the effect of the supplier on a business’ operation and its profitability. An ideal situation involves a business having substitute suppliers to reduce the suppliers' control over the business. Chipotle’s main overhead is the fresh ingredients as they are organic and are acquired from sustainable sources. One aspect of sustainability is acquiring ingredients locally. Sourcing fresh ingredients that meet Chipotle’s standards will prove challenging in the future with the rate of its growth. An issue arises as there are no set standards for what organic food is, and Chipotle uses its own resources to ensure the credibility of their suppliers. Competitive rivalry is the measure of the intensity of competition in an industry. It focuses on the number of companies in a given industry and what those companies are doing (Tang, 2014). Chipotle Mexican Grill faces competition from fast food giants McDonald’s, Subway and Burger King. It also faces direct competition from fast food restaurants specializing in Mexican cuisine. Yum Brand's Taco Bell is leading in its category of Mexican fast food restaurants with Del Taco and Qdoba Mexican Grill coming in third and fourth. Chipotle Mexican Grill commands 17% of the market share which is only second to Taco Bells 58% market share. 3 INNOVATION AND COMPETITIVE ANALYSIS Chipotle Mexican Grill has been at the forefront of fast food restaurant innovative trends. It has been considered a benchmark in food preparation and service, changing how people perceive and consume fast food. Chipotle Mexican Grill was the pioneer of fast-casual dining offering affordable food that was not only of good quality but also made from organic ingredients sourced from sustainable sources. This was far from the greasy, suspect food that fast food restaurants of the mid-90s were known for. Steve Ells married the idea of fine dining and fast food that went beyond the food and customer service. The interiors of their restaurants feature a minimal industrial design with emphasis placed on space utility. The three core principles in which Chipotle is based on form a model of the fast-casual dining. Using sustainably grown ingredients, cooking the food using traditional methods in front of the customer and offering interactive customer service are the core principles. This model can be applied to different cuisines Food delivery has been one of the rising trends. More consumers prefer to have fast food delivered to them in the easiest and most convenient ways. With the majority of those consuming fast food being millennials, the fast-food restaurant is coming up with innovative ways to appeal to them using social media. Domino’s customers can now make a default “pizza profile” on their online site and can order by tweeting a pizza emoji to them anytime they want to order. They have gone a step further and created a Facebook bot so one can order by sending one word or an emoji to the bot. The bot also updates customers on offers and vouchers by Domino. Through social media, Domino’s has been able to reach to more clients as a majority of their clients are aged between 18-24 years. Fast food delivery is no longer a trend but a necessity for fast food restaurants. Emerging trends like Fooji, which lets customers place their orders using emojis will continue to emerge to improve food delivery services. 4 INNOVATION AND COMPETITIVE ANALYSIS Chipotle Mexican Grill is a fast expanding company with hundreds of branches opening annually in different countries. It is still among the best fast food restaurants in food innovations and service delivery. Offering healthier fast food options to a population that is growing more and more conscious about what they are eating. The use of sustainable and organic produce and cruelty-free meat puts them in the current space where people are concerned with the integrity of food. Although their prices are higher compared to those of giant fast food restaurants, they are satisfying a need in an ever-growing niche. Chipotle’s clientele comes from both all economic classes as the food is affordable to the general population and is good enough for the upper classes to consume. One of Chipotle’s principles, ‘A few things, done a thousand ways” has helped the company increase their speed of service while still letting the customer tailor-make their own orders. However, having three food items on a menu, burritos, tacos, and salads, runs the company the risk of becoming repetitive and less exciting. Expanding to different cuisines with the same model will keep the restaurant exciting and offer customers more variety. Management of staff at Chipotle’s with the prospect of the staff to be promoted ensures loyalty and efficiency from the workers. This improves customer service and staff interactions with the clients. The innovations at the in-house service of Chipotle is to be rivaled, however, there is lacking in online and virtual innovations. More fast food restaurants are focusing more on food delivery and online services as that are where the future of the food industry is headed (Machlin, 2011). In summary, Chipotle’s founding principles put them ahead of the curve and made the restaurant ahead of its time. Most of its successes can be attributed to innovation and integrity. It continues to spearhead change and help people perceive and eat fast food differently. 5 INNOVATION AND COMPETITIVE ANALYSIS References Machlin, S. (2011). American Foods by the Decades. Tang, D. (2014). Introduction to Strategy Development and Strategy Execution. Wylie, K. (2003). Marketing Analysis Chipotle Mexican Restaurant and Applebee's Restaurant. Germany: GRIN Verlag. 6

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