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The modern fast food market is competitive, with most firms developing healthy menus and food safety policies. This project focused on developing novel techniques to help Chipotle remain competitive. Because to tough competition and changing customer preferences, Chipotle must devise unique tactics to win more loyal customers and overcome the competition. The company's competitive advantage is based on its ability to devise novel approaches, improve flexibility and operational efficiency, provide an amazing customer experience, and leverage social media and digital technology. The research recommends three novel initiatives for Chipotle based on these abilities. First, the company should utilize the mobile technologies and social media platform to create a strong customer relationship. Second, the firm should use its information systems and applications to create an integrative supply chain operation. Third, Chipotle needs to improve its storage and cooking technologies to ensure food safety and improve operational efficiency. Through analyzing the change valence and contextual factors of Chipotle, the report concluded that the company will respond to the recommended changes in a positive way. The available resources like qualified staff, information system, mobile and digital technologies provide the basis for implementing the innovative strategies. On the other hand, the organizational culture of Chipotle that encourages risk-taking, innovativeness, and continuous learning will stimulate the change.
Table of Contents
Strategy Development 4
Innovation and Competitive Analysis 4
Exploiting Innovation 5
Recommended Change 9
The Organization’s Response to Change 9
Chipotle’s Change Efficacy 10
Chipotle’s Contextual Factors 12
The current fast food industry is experiencing significant changes in terms of customer demand and technological advancement (National Restaurant Association, 2017). Customers have become time and health conscious. They demand to be served with healthy food at a faster rate. This implies that companies in this sector like Chipotle Mexican Grill should adopt innovative strategies. Innovative initiatives should aim at providing services and products efficiently to save time and lower operating costs. This report analyzes the disruption that is being witnessed in the fast food business and offers a recommendation for Chipotle on how to exploit innovative technology to gain a strong competitive advantage.
The strategic development at Chipotle is based on its mission, “to change how people think about and eat fast food” (Chipotle Mexican Grill, 2017). Accordingly, the company has four main strategic goals that guide its operations. First, the company procures ingredients of the highest quality to offer a great food tasting to the customers. Second, Chipotle nurtures a strong culture that is people-centered to offer an excellent experience to the customers. Third, the company designs food-stores that are efficient in terms of operation and also aesthetically pleasing. Lastly, Chipotle focusses on food safety and increasing environmental awareness across the US. The company provides customers with a focused menu of burrito bowls, salads, tacos, and burritos using ingredients that are fresh (Chipotle Mexican Grill, 2017). In order to achieve these goals effectively, Chipotle need to leverage on the innovative technology.
Chipotle should integrate innovation in sourcing the raw materials from farmers, prepare food onsite, accessing the customers across the market, and customize the menu to suit the customers' needs. According to National Restaurant Association (2017) for restaurants to gain an upper competitive edge in the current market, they will need to implement innovative tactics aimed at offering exceptional value, service, and experience to judge customers into action. In addition, social media marketing provides an opportunity for growing a loyal customer base (Brockhurst, Ruff, Mack, & Burachio, 2017).
Innovation and Competitive Analysis
The fast-food industry is dynamic and experiences constant changes in consumer spending and preference (Villan, 2016). The market experiences weaker customer spending during economic uncertainty and difficulties. Consumers have become more knowledgeable in terms of healthy diet and sustainable production (National Restaurant Association, 2017). As a result, provision of fast food has become concept based and firms are focusing on food preparation, sourcing, and production. The market is competitive and due to low barriers to entry, the number of competitors in the casual segment is rising. Moreover, most competitors have adopted the concept of Food With Integrity to meet the changing customer needs. Close competitors of Chipotle like Qdoba Mexican Grill are pursuing aggressive product promotional strategies and cost lowering initiatives to increase sales revenue (Shen, 2016). Panera, a close competitor of Chipotle though operating outside the cuisine niche, follows the fresh and additive free menu. Panera is growing rapidly through opening new restaurants near Chipotle stores to act as a substitute for customers. The restaurant gained market advantage when Chipotle was faced with an outbreak of E.coli bacteria and norovirus. Other competitors include Moes, Del Taco, and Ell Pollo Loco (Oyedele, 2017).
Companies in this industry can improve competitive advantage through differentiation of products and services, changing prices, fostering distribution channels, and leveraging on supplier relationships. In order to remain competitive, Chipotle need to leverage on innovation in key areas of operations. These areas include branding and marketing strategies; expanding digital ordering and online platforms; improving the quality of consumers' experience; establishing a strong relationship with suppliers; increasing the speed of operations and flexibility of the menu; and fostering the quality food mission (Villan, 2016). These areas will enable the company to acquire new customers, defeat competition, and maintain the best suppliers (Hana, 2013). Moreover, these innovative strategies will enable Chipotle to leverage on the bargaining power of both customers and suppliers to attain the competitive advantage.
Currently, Chipotle utilizes technological innovation in several ways. The company uses classic cooking methods in preparing food and offering a focused menu. Walk-in refrigerators are used to stock various fresh spices, dry foods like rice, spices, and herbs (Chipotle Mexican Grill, 2017). Efficient production of food depends on the availability of ingredients and innovative cooking technologies (Villan, 2016). Therefore, the storage facilities and modern kitchen utensils and cooking tools will enable Chipotle to meet the increased demand, especially during peak hours. Moreover, Chipotle relies on advanced technology to eliminate pathogens that may cause food poisoning and thus maintain the quality of the food. This shows that the firm needs to enhance restaurant procedures like sanitizing surfaces and developing protocols for ingredient handling. This will help eliminate challenges like those experienced in 2015 when customers got ill due to E.coli bacteria and norovirus found in food served in restaurants in Washington and Brighton respectively (Chipotle Mexican Grill, 2017).
Offering excellent experience and services to customers in the fast food industry requires innovative thinking (Stevens & Lunsford, 2014). Customer loyalty and strong brand image are created through continuous fulfillment of the customers demand in more than expected way (Taleghani, Gilaninia, & Mousavian, 2011). Therefore, to remain resilient in this area, Chipotle need to utilize the existing innovative capabilities. Stiff competition in the market implies that the company should focus on strengthening customer relationships through social media platforms, providing quality food, and investing in employees (Rashkin, 2015). Social media platforms provide an opportunity for building strong ties with profitable customers while expanding the customer base. Consistent employee training is essential and necessary in offering exceeded services to the customers. The company should invest in its human resource to improve their abilities and skills of offering better services and designing menu that meets the changing needs of consumers. Active learning strategies stimulate the development of managerial, technical, and institutional capabilities that gives firms an upper competitive advantage (Goedhuys & Veugelers, 2008).
Chipotle focuses on serving better food prepared from high-quality ingredients (Stevens & Lunsford, 2014). In order to achieve this goal, the company needs to improve its supply chain management. The company should use supply chain integration technique to foster the relationship with suppliers (Mattos & Laurindo, 2015). Integrating the supply chain through electronic platforms like Enterprise Resource Planning will enable the company to monitor supplier activities. The technology will help the firm to acquire fresh ingredients and high-quality supplies that meets its specifications. Collaboration relationship developed through ERP will facilitate the development long-term relationships that are mutually beneficial (Nathalie Fabbe-Costes & Roussat, 2011). Sharing of information and knowledge between Chipotle and the farmers through electronic platform will enable the farmers to understand the mission of the company (Matopoulos, Vlachopoulou, & Manthou, 2009). dients. Innovative supply chain strategies will enable the company to expand its supplier base through reaching a variety of farmers in the US and abroad.
Integrative supplier chain will enable the company to incorporate the quality and safety food measures in its supply chain. Cooperation with suppliers through the virtual platform enhances monitoring the flow of food and related ingredients from the farms to the front line stores and then to the final consumers (Trkman & Groznik, 2006). Furthermore, the virtual platform will create new ways of training the farmers. The company can offer online training and education to the farmers on sustainable agriculture such as organic crop growing and animal rearing. This innovation in the supply chain will enable the company to maintain its leadership position in the fast food industry.
Efficient operation of the restaurants requires frequent deliveries of the supplies and food ingredients (Rashkin, 2015). This implies that the company need adopt innovative thinking in the supply chain to foster its agility and responsiveness (Nathalie Fabbe-Costes & Roussat, 2011). Innovative supply chain strategies will also help Chipotle to mitigate supply shortages and price volatility challenges. The integrated supply chain will enhance the traceability of the ingredients purchased from the farmers. With efficient supply chain operations, Chipotle will meet the existing market while adhering to its mission of quality food and health standards. The efforts of the firm will be focused on promoting internal and external coordination while offering quality products to consumers in a consistent and efficient way (Lawson & Samson, 2001).
Chipotle operates stores in various locations in the US and other foreign markets. The company should offer standardized operations and employee training. The training, risk management, and operations of the company should be uniform across the stores. Besides, operating standards like cleanliness, food quality, restaurant safety, and staffs health protocols should be applied across the restaurants (Chipotle Mexican Grill, 2017). To achieve this uniformity and standardized operations across the restaurants, the company need to invest in innovation. For instance, training of the staffs should be done through e-learning websites to ensure that they have similar guidelines and standards that define healthy menu and food safety. Moreover, the company needs innovative thinking to find an efficient location to establish the stores. For instance, the company should utilize predictive modeling approaches like proprietary formulas to determine the return on investment and projected sales for a preferred location. Such approach will enable the company to use fewer efforts and time in locating its restaurant (Villan, 2016).
From the above discussion, this report suggests for the following changes and improvements to be considered by Chipotle. The changes aim at fostering the firm's strategies focusing on increasing customer experience; enhancing the quality food and restaurant safety; improving efficiency in supply chain management, and creating a resilient and agile restaurant.
The company should utilize focus on establishing a strong relationship with loyal customers through social media and relationship marketing.
Chipotle need to adopt an integrative supply chain approach through using techniques like Enterprise Resource Planning (ERP) or Electronic Supply Chain Integration (ESCI).
The company should leverage on modern innovation technologies in both cooking and storage to provide quality food using fresh ingredients and improve efficiency.
The Organization’s Response to Change
The response of an organization to change is determined by the extent to which it is ready to integrate the desired transformation. According to Weiner (2009), the readiness of an organization to change refers to the commitment and efficacy of the firm to execute the change. Commitment in this case refers to the shared resolution by the members of the organization to pursue the designed transformation goals. The readiness for change in the organization is promoted by factors like change valence, change efficacy, and contextual attributes (Weiner, 2009). This report will utilize these three factors to evaluate the response of Chipotle to the recommended change. The results will indicate if the company is either ready or not ready to integrate the improvements.
Chipotle’s Change Efficacy
Weiner (2009) argued that change efficacy relates to the perceived capability of organizational members to perform certain tasks. The capability, in turn, depends on situational factors, tasks demand, and availability of resources. Chipotle has enough resources in terms of information, finance, and human to implement the above-suggested changes. The company has valuable resources like the mobile or digital ordering platforms, catering choices, and delivery services and the website www.chipotle.com (Chipotle Mexican Grill, 2017). Social media platforms like Facebook, Twitter, Instagram, and LinkedIn need to be utilized in establishing customer relationship through improving consumer engagement and involvement. The online ordering platform should be improved by integrating the second make lines. This implies that the chefs will be working on orders from both the service line and the second line. The second-line focusses on orders placed through the online platform. Therefore, Chipotle will be able to optimize the sales from online orders without disrupting those customers served in the physical stores. Through the online platforms, the company can offer the clients with earlier and precise pick-up times of their orders because the virtual platforms enhance efficient interface communication between the staffs and customers (Chipotle Mexican Grill, 2017). The company should encourage customers to use the mobile technology or interface in locating the store location, viewing the menu, making reservations, paying for the products, reading online reviews about the menu, using loyalty rewards and programs, and accessing nutritional information of the products (Riehle, 2017).
Accordingly, technological innovations based on online engagement with customers will enable the company to collect customer data and information (Martín-de Castro, Delgado-Verde, Navas-López, & Cruz-González, 2012). Such information is essential in identifying the unique consumption patterns and preferences of the customers. As a result, the company will be able to focus on the menu offering that fulfills the preference. In addition, the company will be able to develop customized promotional and marketing efforts to target the customers. The company should encourage royal online customers to recommend the restaurants' menu to friends and family members (Farooq & Jan, 2012). Social media and online interaction will enable Chipotle to target the lapsed consumers and also establish frequent communication with new customers. This innovative strategy will enable the company maintains the loyal customers, attract new ones, market the exceptional experience it offers to a wider customer base, and increase customer turnover (Vinerean, 2013). This shows that the available digital and online platforms show that Chipotle can respond positively to implementing the recommended changes.
Chipotle has a variety of information systems and applications which can be used to develop an integrative supplier chain management (Villan, 2016). The current information system of the company is used to manage information flow within its restaurants and centralized corporate infrastructure (Chipotle Mexican Grill, 2017). This shows that the systems can be extended to integrate and incorporate information from Chipotle’s main suppliers. Therefore, they provide the basis of establishing the Electronic Supply Chain Integration which will enhance the selection of best suppliers, tracing the ingredients from the farm to the kitchen, providing safety programs, and monitoring the activities of farmers.
In terms of human resources, Chipotle has a strong restaurant team composed of a Restaurateur or general manager, an apprentice manager, at least two hourly services and kitchen manager, and at least 23 part-time and full crew members (Chipotle Mexican Grill, 2017). The company provides cross-training to these staffs to enable them to work in various stations and improve work efficiency during busiest times. Besides, the training enables the workers to develop a variety of skills aimed at improving customer services. A well trained and skilled workforce shows that the organization promotes creativity and innovativeness (Noruzy, Dalfard, Azhdari, Nazari-Shirkouhi, & Rezazadeh, 2013). These employees should be utilized to create strong supplier and customer relationships. The front-line employees should be trained on customer interaction and welcoming skills to facilitate in-store interaction. Moreover, those employees managing the online and social media platforms should understand ways of engaging customers like responding to their inquiries and stimulating their participation.
In terms of financial resources, Chipotle has a strong balance sheet with positive revenue growth (Chipotle Mexican Grill, 2017). Therefore, it can utilize the revenues to meet costs related to implementation and improvement of social media platforms, online ordering, mobile payment, and electronic supply chain platforms (National Restaurant Association, 2017).
Chipotle’s Contextual Factors
According to Weiner (2009), contextual factors relate to the culture of the organization that promotes risk-taking, continuous learning, and innovation. Besides, an organization with effective working relationships and flexible procedures and policies is highly responsive to positive change (Nybakk & Jenssen, 2012). Chipotle’s culture is centered on employees, customers, and suppliers. The firm’s culture aims at providing greater experience to customers through training workers and collaborating with suppliers to provide quality and fresh ingredients. Such a culture will stimulate the change valence. Chipotle has flexible operation policies and procedures. The company trains its staffs to equip them with a variety of skills and competencies to work in different stations. Hana (2013) argued that internal learning facilitates the generation of new insights, concepts, and ideas that stimulate innovation. This implies that the workers of Chipotle are more likely to design new procedures, practices, and policies that stimulate the change process (Weiner, 2009). Moreover, the firm provides its products through both physical and online platforms. With these flexible operations, Chipotle will respond effectively to the recommended changes aimed at fostering customer and supplier relationships (Martín-de Castro, Delgado-Verde, Navas-López, & Cruz-González, 2012).
From the internal analysis based on contextual factors and change valence, this report has established that Chipotle will respond positively to the recommended changes. The organizational resources of the company like information systems, digital and mobile technology, website, trained human resource, and finance will enable the company to implement the changes in a successful way. Accordingly, with highly trained staffs, flexible operation policies and procedures, and people-centered culture, the company will be able to initiate and stimulate positive transformation.
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