The Sexy Six

Started in 1993 by Steve Ells in Denver, CO with the idea that food that is served fast does not always come with

the “fast-food” experienceHe wanted to use high-quality, local ingredients, classic

cooking methods, and a fine-dining atmosphere. Chipotle would offer “a few things, a thousand ways.”

McDonald’s invested in the company when they had only 16 restaurants. They handed resources and guidance

down to the young company for 8 years, helping it grow to the publicly traded company that it is today

Company History

During the year of 2014, Chipotle opened 192 new restaurants, bringing their total restaurant count to 1,783.

The fourth quarter of 2014 shows a 26.7% revenue increase from the fourth quarter of 2013.

Vision, Values, Goals

Vision Values Goals

Use higher-quality ingredients and cooking

techniques to make great food accessible to all people at reasonable

prices.

Support and sustain family farmers who respect the land and the animals in their care

Use meat from animals raised without the use of antibiotics or added hormones

Source organic and local produce when practical

Use dairy from cows raised without the use of synthetic hormones

To change the way people think about and

eat fast food

Map the Industry

Raw Materials

Consumers

Industry Boundaries

Product Scope: Fast-Casual Restaurants Geographic Location: United States

Competitors: Panera, Five Guys, Zaxby’s Qdoba Mexican Grill, Einstein’s Bros Bagels, Boston Market, Panda Express, Jimmy John’s, Noodles & Company

Farmers/Ranchers

Distributors

Restaurants

Assess Profitability

Farmers/RanchersMeatDairy

VegetablesPaper productsPlastic products

Dining equipment

Potential EntrantsInternational Quick Service

restaurantsNon-Quick Service

restaurants

SubstitutesFull-service restaurants

Fast-foodCasual restaurants

BuffetsCaterers/refreshment

stand vendorsRetail-host restaurants (Gas stations/grocery

stores)

ComplementsSoft-drinks

JuiceSnacks

BuyersIndividuals

TeamsBusiness

Fast-Casual restaurantsPanera, Five Guys,

Zaxby’s, Qdoba Mexican Grill,

Einstein’s Bros Bagels, Boston Market, Panda Express, Jimmy John’s, Noodle’s & Company

Power of ComplementsBargaining Power of Buyers

Bargaining Power of Suppliers

Power of SubstitutesThreat from New Entrants

Force Factors Strength Profit Impact

Bargaining Power of SuppliersProduct costs % of total? 33.4%Concentration of suppliers? YesSwitching costs? Low

Low

Bargaining Power of BuyersProduct differentiated? YesCriticality? YesSwitching costs? Low

High

Rivalry Among Existing FirmsIndustry concentration Very highDiversity of competitors HighProduct differentiation Med

Low

Threat from New Entrants

Capital requirements LowEconomies of scale YesProduct differentiation YesAccess to channels HighExpected retaliation Low

Low

Threat of SubstitutesBuyer propensity to substitute HighProduct differentiation High

High

Power of ComplementsMutually beneficial industries? YesStronger market position? No

Low Neutral

Industry Key Success Factors1. Strong brand image to help distinguish restaurants from their competitors

• Branding might involve focusing on bold flavors, fast preparation of special orders, better ingredients or healthier diets.

• “By Technomic's estimation, there are at least 10 different markers of restaurants that fall within the category: the quality of the food, the use of better ingredients, food that is wholesome, a perception of freshness, first-rate decor, fair pricing, fast service, friendly employees, flexible offerings, and a full view of how the food is prepared.”

2. The quality of products that a restaurant provides their customers determines how successful they are

• “It’s generally acknowledged that fast-casual concepts are hybrids of quick-service and casual dining that provide counter service and offer more customized and freshly prepared dishes than traditional quick-serves, all in a upscale, inviting atmosphere.”

• “Fast-casual menus feature a wider, more daring range of ethnic fare, which gives chefs and consumers the opportunity to try new tastes.”

3. Restaurant layout

• “In the design of Fast Casual Restaurant Concepts, the restaurant consultant working with the customer, starts with the menu, develops the service model and the menu boards. The service model as the interface between the customer and the restaurant team, dictates the rest of the design and layout.”

4. Price

• “They offer some dishes at around the same price as [those at burger joints], but they seem to be better than McDonald’s at nudging diners towards pricier dishes and extras. Fast-casual chains typically manage to squeeze 40% more out of each diner’s wallet than fast-food joints do.”

• The sector still maintains its traffic count indicating that people prefer quality and hygiene over a rise in item prices.