When Scott Boatwright joined Chipotle Mexican Grill as chief operating officer eight years ago, he worked closely with the burrito chain’s founder, Steve Ells. Chipotle was laser-focused on operations at the time, as it looked to rebuild sales after a safety crisis a couple of years earlier. But Boatwright felt that there was one ingredient missing: an extra touch of hospitality.
As Boatwright, CEO since last November, recalls it, Ells told him that Chipotle didn’t need to be friendly, it just needed to be fast. That’s changing now that Boatwright is in charge. And friendlier service is a key prong in his plan to leave his mark on a quick-service chain.
“Our team members got so focused on creating the experience efficiently that they can just forget to smile,” Boatwright tells Fortune in a recent interview at Chipotle headquarters in Newport Beach, Calif. That doesn’t mean an in-depth exchange about how your kids are doing in school, he hastens to add. But it does mean basic greetings and questions like “What can I make fresh for you today?” or phrases like “Thank you for spending your hard-earned money at Chipotle,” which Boatwright says do not slow employees down, but rather add a more welcoming vibe to what is after all a hospitality business.
(His predecessor and former boss Brian Niccol, who decamped for Starbucks last year after a highly successful six-year stint at Chipotle, is doing something similar at the coffee-shop chain, instructing baristas to leave short personal notes on cups. But the trick, Boatwright cautions, for such touches to work is for them not to feel “forced.”)
“We’re all fighting for market share, we’re all fighting for dollars,” he says. And that means the right-brain skills of making customers feel welcome have to be deployed along with the left-brain skills needed for best-in-class operations.
That’s all the more important given that Chipotle’s plan to grow includes more international expansion, notably its bold bet on Mexico, going deeper into smaller U.S. cities and trying to get more business from each of its 3,500 existing restaurants. In the 10 months since he took the reins, initially on an interim basis, Chipotle shares have barely budged, reflecint a “wait-and-see” attitude on Wall Street.
Chipotle wants to sell Mexican food to Mexicans
On the same day Boatwright told Wall Street investors about the smile-more campaign, Chipotle announced its plan to work with a partner to open restaurants in Mexico, the spiritual home of the burritos and quesadillas it sells. The news raised eyebrows, given that Taco Bell’s attempts to conquer Mexico a few years ago flopped. Analyst Antonio Hernandez at Actinver Research wrote in a research note that “familiarity with its ingredients does not necessarily predict success,” according to Reuters.
But Chipotle’s top executives insist there is place in the market for its Americanized Mexican food given its focus on freshness and high standards.
“We’re not just another American fast-food place that’s coming,” says chief brand and marketing officer Chris Brandt, using a term many in the industry find derogatory, preferring “quick-service restaurant.” “It seems a bit like a selling-ice-to-Eskimos type of thing,” he jokes. But, he says, the white space in the market for Chipotle is Mexican-esque food of a certain quality, and freshness of ingredients in a faster environment.
What’s more, the Mexican experiment, done in partnership with a restaurant operator, Alsea, that has extensive experience there, will tell Chipotle if and how fast it can go further afield in Latin America. Brandt and Boatwright both say they are not worried about any anti-American sentiment abroad that would affect Chipotle expansion, in light of the sparring between the U.S.’s and Mexico’s governments in recent months. “I don’t know if that trickles down to brands,” says Boatwright.
In addition, Chipotle plans to grow by generating more business at restaurants it already has and expanding to new markets Stateside. Last year, the average Chipotle had annual sales of $3.2 million, but chief financial officer Adam Rymer says that figure can hit $4 million in the not too distant future. (Rymer also sees the potential for Chipotle to hit 7,000 stores by expanding not only abroad but also domestically into smaller markets of say 30,000 people where restaurants like a Chili’s or an Olive Garden might not go but where people might want more options than McDonald’s or KFC.) As his colleague, brand chief Brandt, puts it: “We are a real restaurant, and most places in our space are not.”
This is where operations, Boatwright’s area of expertise for years, comes in. Chipotle uses 53 ingredients to prepare its food and is working hard on equipment innovation to make cooking easier without affecting the final product. A produce slicer and a device to help workers cut onions quickly are just two of the changes being made to speed up production without, the executives insist, affecting quality.
Boatwright would also like to see quicker food innovation and go from two limited-time-offer (LTOs in industry jargon) items a year, or a temporary additional menu item meant to stoke interest, to perhaps three. Data analytics more sophisticated than the ones it used just a few years ago have allowed Chipotle to avoid misfires with its LTOs, like the Garlic Guajillo Steak disappointment in 2022, giving Boatwright and his team more confidence to innovate.
Currently, Chipotle has a hit on its hands with honey chicken bowls and burritos, a product inspired by a Nashville food trend. “We’re not adventurous at all,” says the CEO. “We follow a very strict stage-gating process. We’ll know long before its hits the market whether it’s going to be successful or not.”
But one thing no one should expect: lower priced items gumming up the menu. Chipotle tried that during the financial crash of 2008–2009, only to find customers yawning.
“We’ve seen in the past is that it really didn’t lead to more visits,” says CFO Rymer. “The market testing we’ve done found that people are really stuck on what it is they go to Chipotle for.” (The company was able to pass on much of the inflation in recent years to customers with little pushback, though executives say they are being careful regarding the impact of tariffs on items like avocados and Australian beef.)
And so as Chipotle looks to build on its 2024 sales of $11.3 billion, and quickly reverse a same-restaurant sales decline last quarter, it has a number of levers at its disposal. But execs say they are mindful of the changes that can add to sales initially but that ultimately would damage a brand anchored in what it calls food integrity.
“When brands start trying to be everything to everyone, they lose their identity,” says Boatwright.
This story was originally featured on Fortune.com
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Politics8 years ago