Question

Please Create a Porter's Five Force Industry Analysis for Chipotle

Answer 1

Porter’s five forces model for Chipotle:

Chipotle is the chain of Mexican food that is located in US, UK, Canada, Germany & France. Though most popular in US, their food is loved by people all over the world.

• Threat of new entrants: there can be threat of new entrants because the cost of establishing these kinds of businesses is not very high & also not difficult for brands to penetrate into the market. But still chipotle can have advantage over these threats with the help of brand image & loyalty that they have developed all these times. Hence new entrants would take time in reaching such a position.
• Threat of substitutes: apart from having substitutes like taco bell, chipotle has other brands that serve cuisines from all over the world. Chipotle provides good affordability & convenience but the substitutes compete through good marketing strategies to maintain through brand image. Chipotle also faces drop in sales due to food quality issues. Chipotle also launches a new marketing campaign in order to regain their position in the market.
• Bargaining power of suppliers: companies like chipotle need to be very cautious in selecting their suppliers as their supplies are important for the final product. The suppliers are important because they have to maintain a standard of food to ensure that they follow the laws. So in the case of chipotle, the suppliers have very moderate bargaining power.
• Bargaining power of buyers: the buyers generally have lot of options to select from the cuisines. The buyers have a very good bargaining power over chipotle because they have wide range of restaurants that meet their prices, tastes & preferences.
• Industry rivalry: chipotle face heavy rivalry from chain of restaurants in different cuisines. Restaurants like taco bell are in high competition with chipotle. Hence they try to build brand image by offering coupons to the customers & also by launching new marketing campaign.