Chipotle

1. Identify Companies: Chuy’s and Chipotle will be the two companies that we are using for our strategy analysis.

2. Identify Industry: Both Chuy’s and Chipotle are restaurant operators.

3. Chipotle Value Chain Analysis: http://www.scribd.com/doc/208867971/Chipotle-Presentation\

Chuy’s Value Chain Analysis: Incredibly similar to Chipotle (could not find a helpful link)

4. Five Forces (Marketline):

A. Buyer Power- Buyers in this industry are individual consumers, and as such they hold little financial muscle and are vast in number. The large number of transactions means that the impact of any single customer on revenues is likely to be fairly small.

B. Supplier Power-

a. Labor - The restaurants industry is a labor-intensive industry, with workers’ wages forming a significant proportion of operating costs. The existence of a statutory minimum wage in many countries increases the need for players to keep other costs as small as possible. Consequently, this increases the importance of suppliers. Foodservice companies tend to be low-margin businesses, and it is important for them to be able to source good quality food at low prices. Switching costs may be increased by supply chain disruption, or the inability of a supplier to offer food of adequate quality.

b. Food suppliers – Suppliers are typically large companies serving numerous businesses. They have less pressure to keep prices down and have a strong influence on restaurants, exerting significant negotiating power.

C. Threat of New Entrants- Despite the recent financial crisis, which strongly affected many markets and industries, the US restaurants industry has maintained moderate growth in recent years. Moreover, low asset specificity, an abundant amount of suppliers, low levels of capital outlay needed, and the inability of many players to establish a true competitive advantage further entice new entrants. Despite these enabling factors, there are many barriers to this industry. In a generally low-margin industry, new entrants will face large, multi-national incumbents.

D. Threat of Substitutes- The restaurants industry is not essential to consumers, as they are able to cook their own food. The main switching cost for consumers is the time and effort spent in the kitchen. Home-cooked food tends to be cheaper than a meal in a restaurant. Additionally, non-home-cooked food, especially food from fast food and takeaway outlets, tends to be unhealthier than home-cooked food, with more calories, fat and salt content. Furthermore, a cultural increase in snacking and 'eating on the go' has tended to reduce the number of formal meal occasions in