Relevant factors in Macro Environment-PESTEL - Fast food Essay Example
Appendix A- External Analysis
Relevant factors in Macro Environment-PESTEL
Consumers want a place to eat that can be healthy with quick service - Relevant factors in Macro Environment-PESTEL introduction. (C-13) • Chipotle offers a social value to customers through:
• Friendly servers and quick service
Chipotle biggest innovation was to complete the customer order quickly (C-6) Was able to provide friendly service while serving over 300 customers per hour (C-6) • Brand values (Chipotle Experience)
Founder wanted to create a fast food service with great quality products (C-3) • Urban atmosphere and attractive design
Chipotle wanted to create a fast food environment that is more upscale and appealing. (C-3) • Nutritional foods and ecological ethics
Consumers want and are willing to go places that serve healthier choices (C-13) Ecological Drivers:
Consumers are attracted to healthier choices and are willing to return given the choice (C-13) • Chipotle focuses ecological factors such as:
• Hormone/anti biotic/organic products
Chipotle started to shift in the direction of growing local produce and using organic products. (C-6) • Follows US department of agriculture standards
To show that chipotle is using organics products, they are following animal welfare standards. (C-6) • Efforts in sourcing local products
Chipotle increased its use of local organic grown products and started a program called “food with integrity” Supporting farms that support humane farming environments. Chipotle strategy adapts the social and ecological drivers of PESTEL, as in today’s time, consumer want to know what they eat. With this information, Chipotle are now aware of what the consumer need is and are implementing strategies that offer the satisfaction.
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More Fast food Essay Topics.
Overall Industry RatingFavourableModerateUnfavourable
Threat of New Entrants
Threat of new entrants are favourable because the general industry requires high capital and experience. New entrants will require lower costs, brand awareness and higher customer experience Bargaining Power of Buyers
Bargaining power of buyers are Moderately favourable. Although only 3-4 percent of the restaurant industry sales are from fast casual locations, it still made sales of 22 billion dollars (C-13). Customers can be sensitive to price and also want to know what to know what their eating (C-13).
Threat of Substitutes
Threat of substitutes is considered to be Moderate. Although the customer will not incur cost when switching to a substitute, they are many substitute options available, and can be likely for them to choose one. Substitute product advantages and limitations compared to price is subjective – some may see value, some may not
Bargaining Power of Suppliers
Bargaining powers is favourable because it can easy to switch from suppliers and it is also not difficult to find different suppliers. The standards for most fast casual industries are unique and differentiated. Intensity of Rivalry Among Competitors
The rivalry amongst existing competitors is moderately-unfavourable. The industry is growing rapidly and its fixed costs of the business are relatively low portion of total costs (C-3). However, there are similar product differences and brand identities amongst competitors. (C-11) In addition, the products are not complex and do not require a detailed understanding on the part of customers. It would not be hard to get out of this Business because there are no specialized skills. The competitors are diverse and specialized. The customers would incur similar costs by switching to some competitors, while cutting costs by going to others. Competitors such as Moe’s Southwest Grill, and Qdoba Mexican Grill comparable in size. (C-12) Taco Bell, however, is significantly larger. (C-11) Based on the chart above, it is safe to assume that the industry
Chipotle is in is Moderately Favourable. The relevance of this information indicates that Chipotle is in the right industry and there is no need for them to leave. Driving Forces:
In reference to our PESTEL analysis, Social drivers is the key driver within the industry. The key social characteristics relate to consumers demanding healthier, organic, and sustainable agricultural practices. Competitors such as Qdoba Mexican Grille and Moe’s Southwest Grille have always incorporated these social trends as the foundation to their business. They focus on a socially-aware market. For competitive advantage, competitors must source organic and natural meat ingredients. However, these products remain more expensive and harder to source then conventionally raised commodity-priced equivalents (C-7). In the National Restaurant Association’s 2012 Restaurant Industry Forecast, nearly 75 percent of consumers are more likely to visit a restaurant that offered locally produced food items; a similar percentage said they were trying to eat healthier now at restaurants than they did in 2009-2010. (C-13). Restaurant industry sales were expected to be about $632 billion in 2012. (C-13). Rivals positioned in market
Given the current forces that are driving the industry, we segmented competitors by the number of locations and the prices of the product that are being sold. Chipotle is currently near Qdoba with prices and number of locations in the market making Qdoba the main competition for Chipotle right now. Taco Bell is on low corner with many locations and low prices while Moe’s is on the higher side with fewer locations and similar prices with Chipotle. Clearly Chipotle and Qdoba the best competitive mix on this map as they have a fair amount of locations with decent prices. Strategic Moves Rivals Are Likely to Make
Current Strategy- has been hugely affected with the openings of the new fast casual restaurant and the current strategy of offering cheap low quality products was not working anymore (C-12). Objective- Taco Bell is now responding to the fast-casual industry and is moving towards this market, they are introducing a group of upgraded products through a ‘Cantina Bell’
Menu. (Chipotle Case, C-12) Capability- Taco Bell has the advantages with many locations therefore can get the new products known faster. (C-11) However, Taco Bell is known for low quality products and consumers might always think that. Assumption- Consumers will to want it, as taco bell is too big to fail. Strategic Move-Taco bell is moving towards Chipotle prices while having the same amount of locations.
Current Strategy- being known as an artisanal restaurant by creating dishes that hand crafted with fresh ingredients and innovative flavours. (C-12) Objective- expand into the market to be more known. (C-13)
Capability- Huge success for the past few years with increasing sales. (C-13) Assumption- Consumers will to want it to purchase fresh made Mexican food with a unique favlour (C-13). Strategic Move-Qdoba is staying with the current prices however plan to open new stores.