Chipotle Mexican Grill has redefined the restaurant industry over the past twenty years. Before Chipotle, there were essentially no restaurants that offered high quality food and tailored orders at fast-food speeds. Chipotle successfully created this experience, which is now considered “fast casual” dining. Steve Ells, the founder of Chipotle, opened his first restaurant in 1993 in Denver, Colorado. Now there are more than 1,500 locations across the globe. Ells focuses on “sourcing the best possible ingredients, serving the tastiest food, and growing the most capable team”. He calls this “Food With Integrity”, which has become the mission statement for the company.
Chipotle’s menu is simple yet customizable. The menu lists Mexican food such as burritos, tacos, and salads, each of which comes with a choice of five types of meat. Along with picking the type of meat, customers can choose to add other toppings to their order ranging from corn salsa to sour cream. The basic menu with numerous toppings to add on creates endless variations of things to order at Chipotle. Their menu is also comprised of mostly naturally raised, organic, and sustainably grown food products.
Recently, Chipotle has begun expanding by creating new restaurant chains. In September 2011, Chipotle opened an Asian restaurant in Washington, D.C. called ShopHouse Southeast Asian Grill. The company has now opened six new locations, and they’re planning to continue to open more locations. Less than two years later, in May of 2013, Chipotle launched Pizzeria Locale in Denver, Colorado. Both restaurants follow the fast casual vibe of Chipotle. This sauce competes within the fast casual segment of the restaurant industry. In the broadest scope, Chipotle competes to fulfill the human need for food. Customers can get food in numerous ways, including buying food from grocery stores to make at home, fast-food restaurants, and more formal dining options. In the restaurant industry alone, there are tens of thousands of possibilities for consumers. If a customer is looking for a fast meal, Chipotle competes with McDonald’s, Wendy’s, and many other choices. Some customers choose Chipotle for their more health-conscious menu; in this segment, they compete with restaurants such as Subway. For a more “fast casual” feel, customers can eat at Noodles & Company or Panera Bread. If they prefer a Mexican version of fast casual dining, Chipotle’s closest competition is Qdoba and Moe’s Southwest Grill.
Specifically in the fast casual segment of the restaurant industry, there is a high threat of substitution, which has a negative impact on the profit potential and attractiveness. Home-cooked meals, fast food, casual dining, and fine dining restaurants are examples of the main substitutions that threaten Chipotle and its fast casual segment. These substitutions pose a high threat for a few main reasons. First, the consumer switching costs for consumers are very low. Consumers can obtain food outside...