Many companies today undertake strategic repositioning to increase sales. Repositioning is endless, and businesses execute it with the intention to adapt to the dynamic environment.
Chipotle have for many years been the most successful establishment in the Fast Casual Restaurant Industry. However, several Chipotle outlets were temporarily closed due to the outbreak of E. coli disease. The outbreak desecrated the customers trust and public relations which has caused the business to incur huge losses. Chipotle needs to modify its business model to overcome these challenges.
The food crisis that Chipotle is facing is the same that Jack in the Box battled in 1993. The company had to implement changes to reinstate the business. In fact, the situation that Jack in the Box faced back then was worse because the company was not as popular as Chipotle. Jack in the Box was able to regain its glory by halting advertisements. Advertising reminds the customers of what occurred in the company. McDonald and its universal franchisers have been adopting modifications in its menu skewing towards health trends since 2003. Similarly, by Chipotle changing its business model or repositioning itself, customers will be able to forget about their experiences in the giant food joint.
Reasons for adopting a new Business Model
There are several reasons why Chipotle need to implement change. E. coli is a fatal disease. Since the illness has compromised Chipotle operations, it is only logical for the enterprise to alter its strategy by modifying its business model. Additionally, sales have significantly declined despite the fact that the company have embarked on product promotion practices and ascertained the public that their products meet the health standard measures since the announcement of the illness scandal (Roger et al., 1). Moreover, competition from other renowned operations such as McDonald has largely contributed to revenues plummeting. Furthermore, Chipotles revenue has tumbled by eleven percent while the net income fell by thirty-three percent which was lastly recorded in 2007 (Roberts and Karlinsky). If the fast food giant is interested in restoring the business then, business remodeling or repositioning is appropriate.
Steps in changing the Business Model
Chipotle needs to come up with a new business plan or reposition the brand. The first step in business repositioning is to comprehend what exactly caused the problem. It is vital for a business to take time and evaluate the conditions of the company, and the purpose why the enterprise requires change. The insight can be obtained from the employees and the clients. Secondly, the business needs to research and decide on the position that it will take. Altering the business position is associated with a lot of uncertainties which necessitates scrutiny of the venture. Establish a well-written business plan which stipulates the new course, objectives and the plans to accomplish them. The third step is to prepare and include your workforce in the change. Employee morale is affected by changes in the business. Change should be implemented gradually. At all times, ensure the workers are enlightened. Finally, deal with the legal consequence of undertaking repositioning. Business rules vary according to the industry, location, nature and other considerations. It is important to consult a lawyer to help the business stay ahead of the anticipated compliance issues which will prevent the company from incurring unnecessary legal expenses.
Roberts, Robin and Neal Karlinsky. Chipotle linked to E. Coli Outbreak. Good Morning America (ABC), 02 Nov. 2015, p. 1.
Roger, Yu, et al. Chipotle Shuts Virginia Location Following Reports of Norovirus. USA Today, 2015, p. 1.
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