Chipotle co-chief executive Monty Moran explains that the strength of the popular burrito chain, which has more than 1,500 restaurants worldwide and saw revenue increase 14.1% to $1.2bn and comparable restaurant sales climb 7.1% in its most recent quarterly update, is the result of the brand’s focus on its unique food and people cultures. Currently more than 90% of its restaurant managers come from within the ranks of its crew.
He says: “Our excellent results are possible because of the strength of our very special people culture. By hiring teams of top performers, empowering them to achieve high standards and developing them to be leaders for our company, we are providing a consistently extraordinary restaurant experience, while also running our restaurants in a way that helps us maintain a strong unique economic model.
“Having the best teams requires that we provide extraordinary opportunities for our people. The most unique benefit that we provide is the opportunity for our people to develop into the most effective leaders they can be with the most rewarding career possible, and this is at the core of our culture. But we also invest in benefits and compensation packages that match the talent of our teams.
“During our last quarter, a number of up and coming leaders took advantage of new opportunities, as we promoted 39 managers into restaurateur positions and also promoted 16 new field leaders including nine apprentice team leaders, three team leaders, and two team directors. These promotions are what we’ve come to expect at Chipotle. Currently, more than 90% of our restaurant managers come from within the ranks of our crew and we’ve promoted 5,900 people who started as crew into management positions just this year, on top of the 10,500 people who started as crew and were promoted into management positions last year.
“With our strong ability to develop our leaders from within and the importance of establishing restaurateur cultures in all of our restaurants, our people culture continues to be a primary asset leading to our growth and also gives us great optimism that we will continue to experience strong growth going forward.
“The leaders we are developing are able to attract other talented people to our company and are deeply committed to having these new people reach their full potential. By hiring only top performing employees and developing them to be at their very best, we are able to do things that other restaurant companies simply can’t do. Not only do our teams run extraordinary restaurants, preparing delicious food using classic cooking techniques and providing exceptional customer service, they also elevate the people around them. This approach to running our restaurants is what enables us to create such an outstanding dining experience and to deliver such strong unit economics.
“To help perpetuate our culture and the development of our top performers, we held a meeting during the last quarter with field leaders, some of them new to the company and others with long careers here, to discuss and clarify the role of all field leaders at Chipotle. We were pleased at how committed our leaders are to the concept of achieving success by making others better. Our field leaders see more clearly now than ever that their success depends on the success of the people they lead. There’s no ambiguity as to the priorities we have for our leaders at Chipotle. They know that their job is to develop restaurateurs and they have a very clear understanding as to how to do that.
“We’ve told our field leaders that we define their success by looking at three things: first, that each general manager that they lead must know exactly why they’re not a restaurateur; second, each of their general managers must be able to clearly state exactly what their plan is to become a restaurateur and what their priorities are in order to do so; third, the general managers must be actually developing into restaurateurs. The most important tool field leaders have to help them succeed in this task is the Restaurateur diagnosis and plan tool. Using this tool allows our field leaders to uncover the positive and negative themes that may exist in each restaurant and to make a specific plan for how to best eliminate those negative themes.
“With the tool now well established, field leaders are using it as the basis for each visit to a restaurant, and with the proper progress updates, it is allowing our field leaders to chart the development path for restaurateur cultures, with each visit and each revision to the plan serving as a new chapter in the development story for the general manager. Of course all of these stories should have the same ending, another team establishing a restaurateur culture and adding to our group of elite leaders who are changing the way people think about and eat fast food.
“During our last quarter, we took some important steps to strengthen our compensation and benefits programs, particularly at the crew level. We completed the first installment of our twice-annual merit increases for crew and made a one-time compensation adjustment for our kitchen managers and service managers to ensure compensation for those positions is consistent with the very high expectations that these roles carry. We also made improvements to the benefits we offer hourly crew by increasing paid vacation and adding paid sick days, and by expanding our tuition reimbursement program to include hourly employees in addition to the salary managers to whom this benefit was already available.
“One of the greatest benefits of having such strong cultures in our restaurants is that it enables us to deliver excellent customer service, which generates great throughput. Our teams understand the qualities that make for great throughput are the same qualities that provide the very best customer service, having everything ready in the restaurant before customers arrive so that we’re prepared for service, particularly at our busiest times, as well as clear authentic communication with customers to keep our lines moving quickly without making people feel rushed.
“During the quarter, we held a national throughput competition to emphasize the importance of the four pillars in our restaurants. We achieved a number of new one-hour throughput records by reiterating the fundamentals of throughput and we continue to increase the number of restaurants that are implementing the four pillars during our peak dinner periods.
“As a result, we were able to largely maintain the substantial gains we made during 2014 to our throughput during our peak lunch and dinner hours. This is significant because last year was a tremendous year in which we delivered double-digit transaction comps that created the very tough comparison for this year. Our restaurateurs continue to find opportunities to improve our standards and increase throughput, and we know that we’re in a stronger position today to provide a more favourable customer experience.”
