Chipotle Business Model

953 Words4 Pages
Trevir Nath Between fast food and fine dining lies the rapidly growing fast casual business sector. Many companies have incorporated the experiences of casual dining and fast food creating the fast casual industry. Operating within this model are restaurants including Chipotle, Shake Shack and Panera. Notably Shake Shack, a burger chain originated in New York, has found success offering casual dining experience at fast food pace. Shake Shack’s recent IPO valued the company of 63 restaurants around $700 million. After its first day of trading the chains stock grew 123% with a market cap north of $1.5 billion. Fast casual restaurants, including Shake Shack, provide consumers freshly prepared and high quality food traditionally absent in quick…show more content…
Conversely the fast casual concept incorporates affordability with high quality ingredients. While the typical cost of fast casual meals are more expensive than its quick service counterpart, consumers are afforded more natural ingredients and custom meals. At the forefront of the rapid growth are brands including Chipotle Mexican Grill. Chipotle offers made to order meals at the discretion of consumer. Utilizing fresh and local ingredients, a typical meal within a fast casual outlet generally does not contain frozen ingredients found in fast food burgers. As consumer habits shift to healthier life choices ingredients labeled organic, fresh, and non GMO are associated with price markups. As a result, the average consumer for Chipotle spends $11.56 per visit with prices continuing to rise as a result of commodity price fluctuations. However the sector still maintains high volume sales indicating that people prefer quality and hygiene. Furthermore a typical menu of a fast casual restaurant contains less fixed items and more customized meals. At the forefront of fast casual success is the shift in consumer…show more content…
Growing at roughly 11 percent per year, companies operating as fast casual outlets have found success for a number of reasons. Restaurants, such as Chipotle, promise fresh ingredients typically absent from a fast food meal. Likewise customization has become a staple for many fast casual outlets. Building your own burrito, sandwich, or salad allows appeals to picky eaters. It is estimated, prices within a fast casual establishment can be up to 40% higher than a comparable fast food chain. Consumer’s willingness to pay is clearly more for a higher quality meal. While it is safe to assume the rapid growth rates of the industry will slow down, American fast casual restaurants boasted revenues of $21 billion in 2014. While the individual sales of a fast casual outlet does not compare to the likes of McDonalds, major players in the fast food industry have witnessed slowly decreasing sales as a result of consumer preference to fast casual
Open Document