Chipotle’s strategy for overall competitive advantage is based on differentiation. Unlike most large chains for fast foods, in-store workers for Chipotle actually cook and prepare their food inside the restaurant. The workers do not just assemble frozen the reheated then pre-cut, pre-cooked food, instead they chop the raw vegetables that are fresh with knives. They also readily cook meat that is raw and fresh on grills in kitchens in open air where customers can see the food that is being cooked unlike many other fast foods companies. This is how through differentiation, Chipotle had been able to achieve competitive advantage over its competitors (Singh, 2013).
The company’s generic competitive strategy entails low cost differentiation, best cost and focus. Due to the increase in demand by customers, the company is strategizing on opening additional warehouses, increasing the number of hired workers so as to run the warehouses and has also bought more inventories for sale. To reduce the costs, Chipotle’s has partnered with their distributors in the region for food, materials, and beverages, brokers in the real estate, landlords and farmers network. All these partnerships have enabled the company to succeed in the past and future projections as well. However, the company’s local farmers’ network has played a key role as the proposition for value has a direct relation to the company’s integrity and quality of products (Demodaran, 2012).
Chipotle has highly been impacted by the external environment factors such as technology, economy, and political, socio-cultural environmental and regulatory factors. Today, advancements in technology in point of systems for sale, methods of payment, both online and mobile and the social media is also providing fast food companies with new methods of ales increment thus improving service to customers. Pertaining to the economy, in the fast food industry the overall economic environment has played a key role. Certain economic metrics and variables which can be termed as important to profitability of the industry are interrelated and co-dependent. For instance, the rate of inflation globally has led to rise in prices of food products by Chipotle, thus leading to reduction in consumption of fast foods by Chipotle. Political instability and lack of political good will has led to closure of certain Chipotle’s branches thus leading to decreased sales. Chipotle has however worked on strategies to curb these political drawbacks. Sociocultural factors such as over preferences by the society, aspirations, beliefs and concerns have greatly affected demand for goods and services, not only to Chipotle but entire fast foods industry. These social factors have proven to influence changes over time and corporations need to adjust continually to these alterations in the due course of their development (Fromm & Garton, 2013).
Factors that affect changes in the discretionary income of fast foods consumers and spending play a key role to the company. For instance, the overall economy’s health has influenced rates of unemployment, which in turn has greatly affected disposable income by consumers, consumer confidence and discretionary spending in the most ultimate manner. On political or legal environment that is ever changing, Chipotle has been greatly influenced as far as its profitability is concerned. In (Grant, 2010),Even though industry’s laws and regulations are designed to protect the consumers and workers at Chipotle, the requirements for compliance generally lead to an increase in industry participants cost. For instance, in the United States, majority of workers on hourly basis in the fast food industry do not get insurance benefits from their bosses. Cost in the industry has also been increased by changes in federal and local requirements for wages (Gamble, 2014).
References
Gamble (2014). Essentials of Strategic Management: The Quest for Competitive Advantage McGraw-Hill Education. Kindle Edition.
Fromm, J., & Garton, C. (2013). Marketing to Millennials: Reach the Largest and
Most Influential Generation of Consumers Ever. Print. Damodaran,A.(2012).Investmentvaluation:Toolsandtechniquesfordeterminingthevalueofanyasset.JohnWile&Sons.Print.
Singh, A.(2013).Is Leasing a Substitute or Complement to Debt? Evidence from the Restaurant and Retail Industry .Journal of Hospitality & Tourism Research, Print.
Grant,R.M.(2010).Contemporary Strategy Analysis: Text Only. John Wiley and Sons. Print.
