The Secret Ingredient Behind Chipotle’s Successful Transformation

Sahul Flores, left, at one of the restaurants he oversees (Chipotle)
Sahul Flores, left, at one of the restaurants he oversees (Chipotle)

During a busy lunch rush at a typical Chipotle restaurant, there are 20 steaks on the grill, and workers preparing massive batches of guacamole and seamlessly swapping out pans of ingredients. Compared to most fast-food chains, Chipotle favors human skill over rules, robots, and timers. Every employee can work in the kitchen and is expected to adjust the guacamole recipe if a crate of jalapeños is particularly hot.

So how did the Mexican-style food chain come to be like this while expanding massively since the 2000s?

In 2005, the US company underwent a transformation that would make its culture as distinct as its food. As more than 1,000 stores opened across the US, the company focused on creating a system where promoting managers from within would create a feedback loop of better, more motivated employees. That year, about 20% of the company’s managers had been promoted from within. Last year, nearly 86% of salaried managers and 96% of hourly managers were the result of internal promotions.

Fundamental to this transformation is something Chipotle calls the restaurateur program, which allows hourly crew members to become managers earning well over $100,000 a year. Restaurateurs are chosen from the ranks of general managers for their skill at managing their restaurant and, especially, their staff. When selected, they get a one-time bonus and stock options. And after that they receive an extra $10,000 each time they train a crew member to become a general manager.

Co-CEO Monty Moran described the program to Quartz as a way to create “gravity” at the managerial level—to make sure that great managers are given the chance to make individual stores great. They stay involved training excellent people instead of leaving to become less effective middle management at the corporate level.

“The foundation of our people culture, on which everything else stands, is the concept is that each person at Chipotle will be rewarded based on their ability to make the people around them better,” Moran told Quartz.

The origins of the restaurateur
One of Chipotle’s first restaurateur was Sahul Flores. Eleven years ago, Flores was 22 and a part-time crew member in Milwaukee, Wisconsin. Today, he runs more than 60 restaurants as a team director. He spends his days going store to store, talking to each crew, and helping to identify future managers.

But it was a lucky accident that brought him to Chipotle in the first place.

In 2002, Flores worked in a restaurant in Houston, Texas with no plans to leave. But after his sister tracked down their father, whom the pair had never met, Flores agreed to join her on a trip to Milwaukee to meet him. After deciding to spend the summer there, Flores wandered into a Chipotle restaurant looking for a job. It happened to be a training day, and the restaurant wasn’t open yet. He wound up chatting with the manager and eventually was hired part-time to prepare the tortillas for burrito making.

Two-and-a-half months later, Flores was promoted to kitchen manager and two months after that, apprentice manager. It took him two more months to become acting manager, and another three to be a full manager. In just over nine months he’d risen through the ranks, much more quickly than workers typically do in the industry.

“In about a year I went from crew to general manager, from making $7 bucks an hour to a good salary with benefits and everything,” Flores said. “It’s funny because you would think, in a year I got promoted, all these great things happened, how could you top that? That was barely even the beginning. It was just a step.”

In the fall of 2005, a group of Chipotle executives walked into the Milwaukee location where Flores worked. One of the men was Chipotle’s founder, Steve Ells. Another was Moran, who was then COO and is a high school friend of Ells. Moran and Ells were traveling across the country for investor meetings ahead of the company’s impending IPO. At each store visit they talked to managers and crew members, the beginning of a process that would change Flores’s life as well as the Chipotle’s trajectory.

Moran had been the company’s outside lawyer. His transition to working full-time as the company’s COO in 2005 was part of a huge cultural transition, which helped enable a big business one, too. The company was going public. Longtime partner McDonalds was no longer an investor, and Chipotle had never franchised. It had to manage and fund its own growth. It needed a culture that was scalable and could produce a multitude of excellent managers.

Flores recalls Ells saying to him: “Do you know that you run your restaurant as good or better than I did the stores in Denver?”

After talking to the crew and inspecting the restaurant, Moran asked Flores how he liked it at Chipotle, and wondered who was teaching him to succeed.

Flores told him the company didn’t teach him—he learned on his own, mostly from his crew. He liked working there, but was frustrated by the fact that the manager at a nearby branch was rewarded despite his store’s poor performance.

“The problem was we weren’t picking the best people,” Moran said. “Why? Well, the best people don’t come from fast food that often to be honest and if they do they’re usually employed. They’re not looking [for a job] if they’re good. We were taking bad people and putting them over managers [who were] good people.”

When Moran asked about the company’s hiring policy, Flores told him that he could train all nine of his crew members to be better managers than the culinary school graduates he had been training for the company.

Moran said he agreed 100% and told him things were going to change.

“Since then, he’s kept that promise,” Flores says.

Click here to read more.
http://qz.com/183224/how-chipotle-transformed-itself-by-upending-its-approach-to-management/

SOURCE: Quartz
Max Nisen

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