They have a range of restaurants that meet their needs of price or quality food. With all the competition present in the restaurant industry, buyers have a lot of options to choose from in all cuisines. So in the case of Chipotle, the suppliers have very moderate bargaining power. These suppliers are also crucial because these brands have to maintain a certain standard of food to follow the laws and any fault found in their food harms their reputation. Thus, these brands try to have those suppliers on board who have a very good reputation in the market. However, companies like Chipotle have to be very cautious when choosing their suppliers, as their supplies are very important to their final product. Suppliers compete with each other in terms of price and quality in order to get into a contract with these big restaurants chains. With so many competitors acting the industry, the suppliers are on the look out to seal the deal with these big companies to improve their sales. It can be seen that Chipotle is facing a high level of threat from its substitutes. To come out of that, Chipotle is all set to launch a brand new marketing campaign in 2017 to regain their position in the market. It was seen that Chipotle faced a drop in sales due to food quality issues. The substitutes of Chipotle try to compete in the restaurant industry through their marketing strategies and maintaining their brand image. Chipotle claims to provide a perfect combination of affordability and convenience. These companies in the restaurant industry compete on different factors including menu, price, quality, geographic reach, their brand image and marketing strategies. Chipotle does not only have substitutes in the form of brands like Taco Bell which serve Mexican food, but also other food chain brands serving cuisines from all over the world. When it comes to food, there are always many substitutes present in the market. Though there are fewer barriers to entry in this market, the threat of new entrants on Chipotle is still moderate.
In order for new entrants to reach that position and compete with such brands, it will take them some time. It must also be kept into notice that brands like Chipotle will have an advantage over these new entrants because of the kind of loyalty and brand image they have developed over time.
So there is a possibility of new entrants in this industry considering the cost needed to establish such business is not very high and it is not difficult for brands to penetrate into the market. There is already various numbers of alternatives for Chipotle present in the market however it does not mean that if the market is saturated, new entrants will not enter. Here in this report, we will apply these forces on Chipotle to see where its position in the market. This model uses five forces including threat of new entrants, threat of substitutes, bargaining power of suppliers, bargaining power of buyers, and industry rivalry to study how these forces can act on a certain company. Porter’s five forces model analysis is used to analyze the external factors of forces that act in an industry and effects any company’s competitiveness and position in the market.
However, it is most popular in the United States. People from all over the world love their food because of their authentic Mexican taste. Their most famous dishes include Tacos and burritos. Chipotle is the chain of Mexican food located in United States, United Kingdom, Canada, Germany and France.
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