Posted on 07/29/2014 6:28:27 AM PDT by C19fan
Corporate America can learn a lot from a chicken burrito. As many companies struggle to boost prices without alienating consumers, they may want to study Mexican-food chain Chipotle, which has managed to do both.
Companies including Chipotle Mexican Grill Inc (CMG.N), Apple Inc (AAPL.O) and PepsiCo (PEP.N) have shown they're able to take advantage of quality, trendiness, and, in the case of Pepsi's snack foods, market dominance, to maintain high prices or even raise them faster than the inflation rate, now at about 2.1 percent in the U.S. Chipotle raised chicken-dish prices by 5 percent this year after leaving them untouched since 2011, and sales went up 29 percent last quarter.
(Excerpt) Read more at finance.yahoo.com ...
When they retracted they shut them all down in multiple states. A big part of over expanding was thinking the fad bump would be permanent. Smart businesses understand that the fad time is a good time to hoard money, not to blow it. They thought they’d never stop growing, and created their own destruction.
I think it all depends on where you live. Because Chipotle started in Denver where I live (Tucson) was one of its first expansion places. They might have been a fad here 15 years ago, but that time has passed, now they’re a regular fast casual restaurant competing well in a crowded market. They might be a fad where you’re at, but they’ve proven they can make the transition and keep a solid market share in the process.
Chipolte is ok with me. I usually let others choose the place, since I eat just about anything they can run across a flame.
However, living in soCal, I can beat their prices by 50% just about anywhere and get a very good burrito too.
Did you even read the article?
It doesn’t even mention food trucks (but they are a foodie trend that the corporate brick and mortar franchises like Chipotle are trying to target).
I don’t have a television so I don’t recall which chain was boasting of selling “street tacos”. At a franchise box restaurant. Street tacos is the term for those you buy from a vendor on the street.
Subway kind of locked themselves in the school/business “lunch crowd” for $5 dollar footlongs.
The ARTICLE’s headline mentions “hip” as a demographic.
Here are some $4 tacos (that are worth about $2.50 in an honest market) that include terms like The Democrat and the Trashy Trailer Park anbd “Dirty Sanchez” (DON’T look that one up) and all sorts of “edgey” (look FLAMES and DEVILS!) graphics.
If you were too blind to see how HOPEY-CHANGEY Obama was branded to sell him to young voters, then you missed out. PepsiCo (another “hip” company according to the article) used the same HOPE and YES YOU CAN slogans that Obama did in the wake of his victory.
I’m not just here ranting. I’m commenting on the marketing ideas in the article.
A fool and his money are soon parted. A sucker is born every minute.
Did you even read the article?
It doesn’t even mention food trucks (but they are a foodie trend that the corporate brick and mortar franchises like Chipotle are trying to target).
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Hilarious. Yes I read the article and your comment about food wagons. YOU brought it up, friend, and I responded.
I’ll try to avoid that going forward, as it seems to bother you to have to respond to issues you yourself raise.
Remember, you wrote the following: “Hipster douchebags (aka “foodies”) have bought into trends like paying $11 for a hamburger from a food wagon “OMGFOODGASMNOMNOMNOM!”
Low information consumers being played like a fiddle.”
This IS the Foodie trend and gulible persons paying $11 for a burger that is NOT all that are the segment that Chipotle is trying to reach.
You seem to be touched off by my use of the term hipster douchebag. Got something to hide?
Not everyone who lives in Brooklyn is a hipster douchebag but every hipster who lives in Brooklyn because it’s hip is a douchebag.
hipster burritos
The Chipotle closest to us finally went back to the TEXMEX flavors they had a long time ago. Now there are long lines at lunch. The regular Mexican food flavors were just not good for business. We have a TEXMEX restaurant less than 5 miles from home that beats Chipotle by a big margin.
I hated hipsters before it was cool.
Honestly blaming everything on what’s actually a very small group of people is silly. Even sillier when the thing you’re upset about isn’t even bad.
America’s pallet is improving, has been since the late 80s. We are no longer the country that willingly drink instant coffee that admits in its advertising it tastes like crap. There is now room for $11 burgers in our world, at least for people that have enough money, and are willing to try a little something different. I like food trucks, not because it’s “hip”, never really cared about popularity and have no ego tied to my taste, but because they do interesting things. Some of it is just stuff you can’t get elsewhere, the only German restaurant in Tucson anymore is a food truck. Some of it is just oddball stuff that the higher overhead of a building would make the owners to risk averse to try to sell, like the brats in curry that the German food truck has on its menu (quite good actually).
Of course none of that is really Chipotle’s market. While they might have gotten some hip cred in some places they’ve really built themselves as Mexican Subway. The food is good for fastfood, fairly healthy if you construct it right, but you can construct it “wrong” so you’re not forced to eat healthy (an important market, not everybody cares if their food is healthy), you watch them make it, having them add ingredients as it moves down the line, and the end result is a meal that is truly yours, customized to your specs not mass produced.
It’s a solid market concept. Subway already showed it. And so long as they keep the quality and customer satisfaction up it will work LONG after foodies and hipsters have left the earth.
Krispy Kreme has been going strong in most of the south for over 50 years.... Fads are fads though. I am not saying Chipotle is going out of business, I am saying that they being cited as able to buck the market is a fad/trend that will not continue.
5-10 years from now, there will not be articles about how they can raise their prices while others cannot... because by then tastes will have changed and another company will be holding that spot and Chipotle will be like Olive Garden or any other number of established boring chains.
You seem to be touched off by my use of the term hipster douchebag. Got something to hide?
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LOL.
Nothing says we’re done better than your comment above.
Well Subway was never going to be much more than a low end sandwich shop and not a great one at that. In terms of quality they get beat by nearly everyone else (Debella’s, Firehouse Subs etc), but they are ubiquitous and cheap so they will continue to exist.
They are basically the McD’s of the sandwich chains.
Beating any chain by a wide margin is not hard to do...
In fact, beating a chain restaurant should be the minimal bar any restaurant should strive for.
Better to make it at home. Tastier too.
Yep, they WERE strong, then they grossly over expanded. At their height there were 2 or 3 DOZEN places in Tucson you could get KK, 4 actual stores, plus at 2 different sets of grocery store chains, and a coffee shop chain. And that situation wasn’t unique to here, they tried to capitalize on the fad by being everywhere, which meant they competed with themselves, which meant when the fad faded they were over extended. If they’d have only expanded here to their own stores (or only the grocery stores) they probably would have survived in the area.
Meanwhile Chipotle has been here 15 years and has 8 stores, include 3 in fairly distant suburbs. If they keep their growth smart 5 to 10 years they will still be able to raise their prices and survive. Because they’re offering something that’s good and unique. Subway style built before your eyes customized by you food is a solid market, it’s been working for Subway for a long time, and it’s working for Chipotle too. Good food made fast will always have a market. That’s been one of the big revolutions in the food market the last 20 years, first pushed by Subway and now embraced by a lot of “fast-casual” places. There’s a new understanding that fastfood doesn’t have to suck, that you can go to a place and get food in under 5 minutes that tastes pretty good, has a decent price, can actually be healthy, and doesn’t have to feel like it’s a factory mass produced product.
Which also separates them from Olive Garden and other boring chains. OG’s trouble is they are at best a mediocre sit down restaurant. The food’s not that great, the service is standard sit down, and the prices aren’t so good either, and they don’t really have anything that separates them from the market. There’s better food cheaper in identical atmosphere nearly everywhere.
The only thing that will really beat up Chipotle is if they lose separation. If another fast-casual Mexican place comes up that does their shtick better then they’ll be hurt. So far I’m not seeing it. The other FC Mexican places tend to focus on sea food, or they’re not as good, or they don’t have the “built on command” Subway style. Currently everybody is carving their own space, when there’s overlap is when there’s danger.
I eat there frequently. Their gun ban doesn’t mean much to me because I live in CA. The quality is good and it’s better than eating McDonald’s or a gay whopper at Burger King.
The space has gotten very competitive and the quality of the food is comparable to upscale restaurants in a lot of cases.
I don't understand all the negative comments on this thread. You'd think most Freepers are shut-ins whose only dining out experience is some downscale all-you-can-eat buffet joint. And they want the rest of us to feel like we are being pretentious for wanting better for ourselves.
What Era are you posting from? I haven't bought a compact disc since about 1998. Everybody is downloading music for about a dollar a track these days. CD's have gone the way of platform shoes and 8-track tapes.
Anyway, what evidence do you have that Chipotle's is "price-fixing". So they raised their chicken burrito prices by 5%. That is first increase in three years and with a 2% inflation rate, consumers are actually paying less for a burrito from Chipotle's today than they were three years ago.
Fact is that Chipotle's offers a far superior "fast-food" experience than Taco Bell with a more upscale clientele, a better ambiance and better quality food product. In spite of a "down" economy, they are absolutely killing it and gaining market share in their space at a rapid clip.
Instead of trying to tear them down, conservatives should be emulating them in their own business endeavors.
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