Competitive Strategies and Government Policies ECO/365 May 4, 2015

From humble beginnings, Chipotle has revolutionized the restaurant industry. Opening up a whole new sub-genre, “fast casual,” in which, customers can receive a quality meal freshly prepared just minutes after ordering. Chipotle has expanded rapidly in recent years. In 2013, Chipotle was trading at 40 times their earnings. In order to sustain this dominance, Chipotle needs clear answers to a few key questions. Chipotle first needs to evaluate future competition and possible merger options as well as franchising. Understand regulations both current and future that address externalities related to Chipotle. Finally discuss issues in regard to management and their ability to stay competitive at the local level.
Mergers are a subject matter that can positively and negatively affect the market. An example is a small company in the fast food industry that upholds a very good association with its consumers, and who would constantly repeat their business for food, not only for the comfort, but for the value of their food. Because of their great relationship with the consumer, they give their food to people at a great price. The company is then able to run a very profitable business. However, in order for a fast food industry to be profitable it must find a cheap yet reliable supplier when purchasing its goods. If the establishment collects a notice from the suppliers affirming that they no longer can stream to the company because of a merging with a rival competitor (Free Birds). Since the suppliers can only supply to one opponent, Chipotle must seek other suppliers who must be close to their previous price while having the same quality and freshness of items they buy. A scenario like this would cause profit margins to drop negatively distressing the company and the market at the same time. These