Porter's Five Forces Analysis Of Chipotle

As many of us have read over the last couple of weeks, Chipotle has been plagued with food safety problems. The Mexican Grill restaurant has been linked to 52 people becoming ill due to contaminated food. The company operates on the notion of fast casual restaurant, unlike numerous fast food chains. Initially, it was difficult to determine where the contamination occurred because Chipotle depends on a more complex supply chain for its 1,900 outlets that includes scores of small, independent farmers that can lead to ingredient shortages and questions about food safety. Sales tumbled 16 percent 2015, prompting Chipotle to rescind its 2016 forecast and announce a $300 million stock buyback to shore up the company’s sliding share price. Chipotle’s shares are down 22 percent over the last four months, the worst performance among restaurant
Since the outbreak, Chipotle has executed four action plans to make sure their food is safe to eat: supplier interventions, advanced tools to eliminate pathogens, framer supply training, and enhanced restaurant procedures. Last, intense competition could have a long term effect on Chipotles future outlook. Porters Five Forces model is an excellent illustration of how the competitive landscape of a company is impacted by competitive rivalry. Consumers are growing weary of Chipotles basic menu and high prices; the company will have to invest more in advertising and offer promotion for many years in order to drive revenues up. Even though, there aren’t many organic restaurants, Chipotles six main competitors, McDonalds, Yum Brands, Wendy’s/Arby’s, Burger King, and Subway occupy 35.5% of the market, making new start-up uninviting for new entrants. With a zero debt to equity ratio, Chipotles is generally debt-free, but a constant cash flow will require Chipotle to introduce new products and new marketing strategies to differentiate itself from its