Chipotle Mexican Grill Essay Example for Free

Chipotle Mexican Grill seeI. Key Problem What Steven Ells began with a small taqueria in Denver, Colorado in 1993, one may non have foreseen this venture to ferment the fastest growing restaurant drawstring in the last go. By 2006, Ells idea made its initial public offering with 535 restaurants throughout the world. Things were going tremendously well for CMG until recently subsequentlynoon on October 18, 2012 when Ells finished receiving the companys third quarter results. While data indicated an overall satisfactory outcome, it was the competition from Yum Brands greaser toll and their recent launch of the Cantina campana circuit board that would result in what seemed to be the onset of a major problem. greaser campana had now become a major competitor to Chipotle since the launch of their new Cantina Bell menu releaseing them to enter into the fast-casual segment in offering ex mixed bagable ingredients and items as Chipotle had. At the equal time CMG paid a si gnificant amount more for their products forcing them to bespeak a higher legal injury on their menu items. Taco Bell, however, now offered similar items for half the price. The diffuse line competition was the root of this problem. The fact that Chipotle menu prices were higher as compared to that of Taco Bells new menu would lead to consumers or normally loyal nodes to give the Cantina Bell menu a try.After the launch of the Cantina Bell menu in the summer of 2012, CMG stock significantly declined just after third quarter results were announced. To add insult to injury, Jeff Einhorn, a hedge fund leader, presented at the harbor Investors collection in New York City proclaiming that CMG was an attractive stock for short-sellers because of the considerable competition from Taco Bell. He save stated, 23% of Chipotle customers had already tried Taco Bells Cantina Bell menuand two-thirds of those customers indicated they would return. Whats more, the customers well-nigh worry ly to return to Taco Bell were also those most interchangeablely to eat at Chipotle, a dynamic that indicates to me that Chipotle is most at risk of losing its frequent customers.This message led to CMGs stock falling by more than 4% at bottom hours of the conclusion of the presentation. The announcement of projected increases in aliment be on the part of CMG also contributed to the competition between them and Taco Bell. While Chipotle stood by its belief that it is nutriment with Integrity because of better ingredients, the Cantina Bell menu produced something similar while lowering the address a customer would have to pay for a meal, therefore, causing further competition between the two.II. Relevant TheoryBy looking at the items offered on the Cantina Bell menu versus those on Chipotles menu, I determined that they twain have a competitive advantage. Chipotle is a bonus product offered at a higher price where it reaches a broader market answer that is testament to pa y more money. On the other hand, Taco Bells main strategic course is apostrophize leadership which enables them to reach a broader market share with a lower price for the desired item.As shown on Example 1 the Competitive vantage and Economic Value Created are somewhat assorted between the two companies. Since Chipotle offers a better tincture of ingredients, consumers are volitioning to pay a higher price. As a result, creating a higher Value (V) for a burrito is at the same time creating a greater sparing encourage (Value-Cost.) Meanwhile the economic value created by Taco Bell is smaller since the value of their product is less and consumers maximum resultingness to pay ordain be lower. Example 1Since Yum Brands launching of the new Cantina Bell menu, this new radical ingredient-driven list of selections has been a pretty obvious attempt to compete with fast casual giant Chipotle. This is what has become the major concern for Chipotle where competition is becoming fierc e and for practically half the price the Cantina Bell menu is a definite value. However, you do get what you pay for and the overall forest and taste of Chipotle still has a slightly greater edge over Taco Bell. The value someone ordain be willing to pay for a Taco Bell burrito will be less than the value Chipotle has created with their better quality ingredients, hence creating a greater economic value.III. Assessment of AlternativesHow could Chipotle effectively approach their key problem which is Taco Bells new Cantina Bell menu? What seems to be the main concern for Chipotle is that Taco Bell is trying to entrust a similar product for half the price. Some of the alternate(a)s available to Chipotle to are bargain for low follow goods to reduce prices using Concentrated Animal Feeding Operations (CAFOs) Another pick could be to offer a smaller burrito for a smaller price, or to include less amounts of warmness as Taco Bell does Continue doing what they do outgo and dif ferentiate themselvesShould Chipotle buy low cost goods to reduce prices using Concentrated Animal Feeding Operations (CAFOs), it would allow them to offer menu items at a lower cost to the consumer providing greater competition between them and Taco Bells Cantina Bell menu. However, in doing so would contradict their philosophy of providing the best quality ingredients in their food. In doing so, it will change CMGs strategy from being a premium product and higher price to a cost leadership strategy and at the same time reducing the value of its product.Another option could be to offer a smaller burrito for a smaller price, or to include less amounts of meat as Taco Bell does in its Cantina Bell menu. This would also allow for cost effectiveness on both the consumer and Chipotles side, however, it would go against CMGs mission statement of being Food with Integrity, lower its value and become a cost leadership strategy as opposed to being a premium product and higher price.A third alternative is for CMG to continue to compete effectively by doing what they already are doing which is note based on quality and sustainability. This approach supports its philosophical message of better food for the consumer and community as well as being environmentally conscious. This allows CMG to maintain its values and remain within their strategy segment. On the contrary, this alternative force Chipotle to increase their menu prices while reducing its consumer surplus.IV. Suggested Course of follow throughAfter carefully analyzing the different alternatives, the best course of action is to continue to compete effectively on differentiation based on quality and sustainability given the mounting competitive and sourcing challenges. Even thought Taco Bells new menu seems like a significant threat they are out-of-the-way(prenominal) from creating the same value and reputation Chipotle has created since it opened its first restaurant in 1993. Not only does Chipotle provide the neatest and best ingredients with a bold flavor, they are setting themselves apart from any other restaurant chain and main competitor since they continuously are working toward better practices.They continue to push to sustainable sourcing like getting their meat form non Concentrated Animal Feeding Operations (CAFOs) while at the same time contributing to the promotion of good animal health and fighting against animal abuse. In addition, CMG buys products from local farms, builds restaurants to be eco friendly and LEED certified (leadership in Energy and Environmental Design) while trying to keep the cost and price of other items down. As their value statement proclaims, Food with Integrity is a mission of serving good quality food with inputs sourced using sustainable farming practices.Even thought new threats like Taco Bells Cantina Bell menu are presenting a challenge there will always be competition. CMG upholds strong beliefs to do what is best for the environment and for its communities in order to provide the best products to its consumers. This is precisely why they have grown so fast from the opening of their first taqueria, to the capital selection from McDonalds, to its initial Public offering (IPO.) They have been the fastest growing chain in the last decade and just like any fast growing business, regardless of their success, they will reach a bumper-to-bumper growth as they approach maturity.There will still be opportunity for expansion. Chipotle is certainly intention toward a different direction than their competitors making them stand out and become a lot harder to imitate. This alternative is truly the only logical option for Chipotle as it continues to enforce its philosophy of providing Food with Integrity. There will always be competition between companies and products, however, if Chipotle make outs another route for combating this rivalry with Taco Bell, it would not allow itself to differentiate from them.V. Key TakeawaysBefore course session this case, I knew nothing about Chipotle but after reading it I am quite impressed by the approach CMG has taken choosing to go a different route most companies are afraid of doing because of higher cost prices. I was equally impressed they choose organic products, to buy from local farms, being against massive animal feeding as well as animal cruelty and that they are eco friendly and are looking to make all their restaurants like this. Of course, I should also mention that one knows one will be eating the best ingredients and most fresh available foods. I am confident as the values of this company are brought to the attention of more of the public, Chipotle will reach a bigger market share as the public demand will rise. I would also predict other companies and restaurants will follow similar suit.As mentioned earlier, there will always be competition in business, but a firm must find their differentiation advantage. As individuals become more educated and understa nd the factor facing the environment people will be willing to make a change and help make a difference.