Case Study Chipotle
Climate changes and increasing global temperatures affect not only the company but the industry as well. Recent increase in global temperature, rising water levels, and low availability of fresh water represented a challenge for CMG in obtaining its raw products at reasonable prices while at the same time offering its customer fresh, high quality natural ingredients. This was seen in 2013, when price fluctuations for agricultural and meat products were the highest in comparison with the Consumer Price Index for Urban Consumers.
Even though it was not specified in the case study, severe weather-related events such as storms, floods, and droughts, have a direct effect to CMG. For example, droughts in the eastern US region would affect production …show more content…
One of the immediate effects is shortage of raw ingredients which might either create an increase of the menu prices or a change in menu options as a way the substitute the unavailable ingredient. Either option could drive some customers away from Chipotle and revenues and sales would suffer.
Climate changes and increasing global temperatures affect not only the company but the industry as well. Recent increase in global temperature, rising water levels, and low availability of fresh water represented a challenge for CMG in obtaining its raw products at reasonable prices while at the same time offering its customer fresh, high quality natural ingredients. This was seen in 2013, when price fluctuations for agricultural and meat products were the highest in comparison with the Consumer Price Index for Urban Consumers. Even though it was not specified in the case study, severe weather-related events such as storms, floods, and droughts, have a direct effect to CMG. For example, droughts in the eastern US region would affect production of one of the main raw ingredients of Chipotle’s food menu such as avocados and floods in the southern most region of the US affect production of tomatoes which is another product used in the …show more content…
Task Environment
The forces below are focused on the domestic market. At the time this case was publicized, CMG had a limited amount of international stores. CMG’s bargaining power internationally is weak due to its small amount of location. Yum Brands and other competitors have a much larger presence internationally and can negotiate better quality inputs at lower prices.
Threat of New Entrants: High Barrier of Entry is relatively Low. Brands in the Quick-Service segment are establishing their own Mexican Fast-Casual (I.E, Qdoba Mexican Eats – by Jack in The Box). Fast-Casual is the fastest growing restaurant segment.
Bargaining power of buyer: High
Chipotle has high leverage as a buyer due to the sheer volume. CMG will use its leverage to require high quality inputs at low prices. With CMG’s high cash reserves, the capital could be used to backwards-integrate the production of inputs.
Threat of substitute products or services: High
Consumers can substitute with other fast-casual restaurants such as Panera or food trucks. In addition, prepared foods at supermarkets are a common
Even though it was not specified in the case study, severe weather-related events such as storms, floods, and droughts, have a direct effect to CMG. For example, droughts in the eastern US region would affect production …show more content…
One of the immediate effects is shortage of raw ingredients which might either create an increase of the menu prices or a change in menu options as a way the substitute the unavailable ingredient. Either option could drive some customers away from Chipotle and revenues and sales would suffer.
Climate changes and increasing global temperatures affect not only the company but the industry as well. Recent increase in global temperature, rising water levels, and low availability of fresh water represented a challenge for CMG in obtaining its raw products at reasonable prices while at the same time offering its customer fresh, high quality natural ingredients. This was seen in 2013, when price fluctuations for agricultural and meat products were the highest in comparison with the Consumer Price Index for Urban Consumers. Even though it was not specified in the case study, severe weather-related events such as storms, floods, and droughts, have a direct effect to CMG. For example, droughts in the eastern US region would affect production of one of the main raw ingredients of Chipotle’s food menu such as avocados and floods in the southern most region of the US affect production of tomatoes which is another product used in the …show more content…
Task Environment
The forces below are focused on the domestic market. At the time this case was publicized, CMG had a limited amount of international stores. CMG’s bargaining power internationally is weak due to its small amount of location. Yum Brands and other competitors have a much larger presence internationally and can negotiate better quality inputs at lower prices.
Threat of New Entrants: High Barrier of Entry is relatively Low. Brands in the Quick-Service segment are establishing their own Mexican Fast-Casual (I.E, Qdoba Mexican Eats – by Jack in The Box). Fast-Casual is the fastest growing restaurant segment.
Bargaining power of buyer: High
Chipotle has high leverage as a buyer due to the sheer volume. CMG will use its leverage to require high quality inputs at low prices. With CMG’s high cash reserves, the capital could be used to backwards-integrate the production of inputs.
Threat of substitute products or services: High
Consumers can substitute with other fast-casual restaurants such as Panera or food trucks. In addition, prepared foods at supermarkets are a common