Business Strategy

Competitive Strategy: 

Chili's competitive strategy, which is differentiation because it helps them gain a competitive advantage by offering unique products. This franchise industry is very competitive and new competitors can rise at any moment, so Chili's has to stay innovative and attentive in order to have the advantage over its rivals. When it comes to the competitive strategies of Chili’s restaurant they take the approach of making every experience a fun and welcoming one. They train their staff to get to know the regulars on a more personal level. They are best known for the ribs and burgers. They try to promote lively drink specials throughout the week as well as a very diverse menu to go along with it. They focus on customer satisfaction by allowing their customers the opportunity to rate their experience using an online survey.


Porter’s 5 Forces Model:
"Porter’s 5-forces model is an industry structure framework developed by and named after Michael E. Porter. The model classifies and examines 5 competitive forces; Bargaining power of suppliers, Bargaining power of customers (buyers), Threat of new entrants, Threat of substitute products or services and Rivalry amongst existing competitors. These 5 forces are drawn from business-structured economics that develop the five forces in which determine the competitive force of an industry and the desirability of a market. The 5 forces shape every industry and also benefit the business to become aware of its strengths and weaknesses."

Business Strategy

Force	Force Strength	Chili’s Response
Bargaining Power of Suppliers	Low	Chili’s can choose from numerous suppliers that offer the same products.
Bargaining Power of Customers	High	Customers can go to other restaurants that provide similar products and service.
Threat of New Entrants	High	All restaurants pose a threat especially other Tex-Mex style chain restaurants.
Threat of New Substitutes	Low	Service and products Chili’s offers are unique and distinguishable.
Rivalry Amongst Existing Competitors	High	Our main competitors offer similar products and service.

  Bargaining Power of Suppliers:
For Chili’s there are many external suppliers: food suppliers, liquor suppliers, furnishing, & decor. The bargaining power of suppliers for Chili’s is low because it would be easier for the Chili’s to get these supplies from different suppliers because there are numerous suppliers that sell these products. 

Bargaining Power of Buyers:
Chili’s has a huge customer market because they want to sell food and drinks at cheap prices. Chili’s target market is families, teens, and adults of low to middle class people, who want good food but aren’t demanding or expecting a high level of quality that one would expect of an Olive Garden. The bargaining powers of buyers for Chili’s is high because it is easy for the customers of Chili’s to go somewhere else and to get the same type of food.

Threat of New Entrants:
Threats of new entrances to the Chili’s Corporation is high would only follow from large restaurant chains that have as much diversity on its menu as Chilis. Some restaurants that may have the possibility to tap into the market that Chilis has established are Qudoba and Chipotle, 5 Guys and Bobby’s Burger Palace. 

Threat of Substitute product or services:
Threat of substitutes refers to alternative products or services that customers can purchase or use in place of a company’s products or services.  The main competitors include Darden Restaurants (DRI) which own and operate dining places such as The Olive Garden, Red Lobster, and Bahama Breeze to name a few (wikinvest.com).  As well as, Applebees Neighborhood Bar and Grill is one of the main competitions of Chili's Bar and Grill (wikinvest.com).  Therefore the threat of substitute products and services are relatively high.  

Rivalry Amongst Existing Competitors:
"Industry rivals are direct competitors that provide similar services to a company."
When it comes to competition Chili's biggest competitors are Fridays and Applebee’s. Being that these two restaurants serve similar dishes at similar prices to Chili's, Chili's has to have an innovative competitive strategy to increase customer retention. One way that Chili's does this is with their competitive strategies, which are cost-differentiation because it helps them gain a competitive advantage by having low costs and by offering unique products. Chili's tries to stay ahead of its competitors by using effectiveness rather than efficiency to gain a competitive advantage. This franchise industry is very competitive and new competitors can rise at any moment, so Chili's has to stay innovative and attentive in order to have the advantage over its rivals.