Food with Integrity: How Chipotle maintained growth, improved values, and silenced the critics


Chipotle Mexican Grill

Founded in 1993, Chipotle Mexican Grill is a popular restaurant chain that operates based on a very apparent set of values. The organization believes the idea that the quality of ingredients is the most integral part of the equation in the restaurant/fast food business. After dealing with criticism for some of its sourcing policies in 2010 Chipotle redefined its mission and focused on developing best practices for food sourcing. This newfound importance placed on food sourcing is evident in the way that the company handles animals, people, and the environment. It’s ethical approach to the fast food business has been extremely effective and has created a competitive advantage that sets Chipotle Mexican Grill apart from the competition. The business successfully demonstrated that employing ethical practices does not necessarily have to detract from financial gains and customer base. The revamped strategy was a huge success and reaffirmed that Chipotle would intend to only serve food with integrity.

In the mid-2000s Chipotle fell under media scrutiny with allegations that they had not been transparent with their mission. Particularly in 2006 when they failed to sign an agreement supporting tomato workers in Florida until a protest occurred outside their corporate office. Realizing the company reputation was at stake, they rebuilt their campaign and implemented various initiatives to strengthen it. Chipotle created the Chipotle Cultivate Foundation, a non-profit focused on three food issues: supporting family farms; increasing animal welfare and pasturing; and increasing nutrition and reducing obesity in children (Baylis). The campaign has been credited with increasing awareness and connection with consumers while simultaneously putting Chipotle at the forefront of many pressing food issues.

Focus on Animals

            One of the main focuses for Chipotle is guaranteeing that all suppliers are treating animals in a humane manner (besides the whole killing and eating them aspect). Furthermore, they require that the animals be raised in what would be described as their natural environments. This ensures that the final products put out in the restaurants are not genetically modified and meet the specific requirements laid out by the business. All of the chicken, beef, and pork is labeled as open range and naturally raised which is fundamental to their mission. CEO, Steve Ells, made the decision to require open range and naturally raised food after he visited a Concentrated Animal Feeding Operation location and witnessed the atrocities that occurred there (Mack). This has resulted in fairly impressive statistics. In 2011, 80% of chickens were raised without antibiotic supplements, 85% of cows were raised in a “natural” environment, and 40% of beans were organic (Roston). The business obviously had to deal with higher costs associated with this shift, but experienced dramatic increases in profit regardless.

Going Local

In order to truly provide food with integrity, Chipotle could not simply stop this internal revolution after guaranteeing the use of open range/naturally raised livestock. A pressing issue in the culinary world today revolves around utilizing food from local sources and reducing the amount of transportation involved in the supply chain. This not only benefits local farmers and small businesses, but also significantly reduces an organization’s carbon footprint. Sustainable and organic food sources must meet legal requirements that are very clearly defined, whereas the idea of “local produce” is slightly ambiguous. According to the Grace Communications Foundation, local produce “can be thought of in concentric circles that start with growing food at home. The next ring out might be food grown in our immediate community – then state, region, and country. For some parts of the year or for some products that thrive in the local climate, it may be possible to buy closer to home. At other times, or for less common products, an expanded reach may be required.” Chipotle defined its stance on buying locally; determining that it would favor suppliers within 350 miles of the specific restaurant. In 2010, Chipotle reported that approximately 35% of produce items were sourced from small local farms meeting this 350-mile specification (Baylis).

People Problems

An area that Chipotle has been heavily criticized is in its interactions with people. Despite the fact that utilizing local farms has visible benefits for the farmers and their families, Chipotle has been accused of lacking dedication to various stakeholders. The most prominent example of this revolves around the Coalition of Immokalee Workers (CIW) and their efforts to end “agricultural slavery,” improve working conditions, and diminish poverty for farmworkers. The CIW has signed eight agreements with major food retailers like Whole Foods and McDonalds to help improve the farm labor conditions for workers participating in these corporate supply chains (Sellers). The organization has been endorsed by farmworkers, retailers, and even high-ranking government officials like Hillary Clinton. Therefore it is extremely odd that for the past four years, Chipotle had refused to commit itself to the coalition and align with other food retailers in the fight against abuse in the agricultural fields of Florida. They eventually signed an agreement on October 4th, 2012 following protests outside of their headquarters. It is troubling that a company priding itself on food produced with integrity is avoiding an opportunity to introduce more of that very integrity to the supply chain and overall system. While the dilemma with the Coalition of Immokalee Workers is not necessarily indicative of systemic issues countering Chipotle’s mission, it does provide grounds to question the transparency and ethics of the organization.

Ethical Applications

From an ethical perspective the work conditions on these farms should be an important concern for Chipotle’s executives and employees. Kant believes that a pivotal part of business ethics is treating stakeholders as persons. He argues that business organizations and business practices should be arranged so that they contribute to the development of human rational and moral capacities, rather than inhibit the development of these capacities. During Chipotle’s four years of refusal to sign on with the Coalition of Immokalee Workers, it technically was inhibiting the development of the farm workers. This NGO was attempting to assist the poverty stricken workers, who were making legal claims of extortion, physical abuse, and even rape- let alone the terrible working conditions and low wages.

The business decisions made in regards to supporting local farmers and utilizing open range/naturally raised livestock is a representation of Kantian morality. Chipotle is structuring its environment to have the feel of a moral community. The entire business model revolves around the belief that as a profit-making firm it has a responsibility to do good for the greater community. Many organizations make donations and set up charities (which has also been done by Chipotle), but Chipotle has gone a step further. The decisions made by the restaurant chain have created value for farmers and increased awareness of the need for humane treatment of animals while simultaneously having operational benefits.  It takes a very special company to challenge an ethical dilemma head on and turn it into the foundation of a very profitable business model.

Chipotle’s focus on the distribution of humanely raised livestock can be described through Michael Walzer’s theory of goods. Walzer states that, “the meaning of goods determines their movement” which essentially means that one can develop an understanding of a fair distribution method if one understands what a particular social good means to different people. He also believed that any particular good means something different in different situations. Chipotle Mexican Grill is bringing humanely raised livestock and organic produce to the fast food industry for a (relatively) low price. To a consumer it means peace of mind and healthier food options.  The local farmers working as suppliers for Chipotle see these goods as a means of revenue for their business. A huge issue today is the limited accessibility of healthy organic food sources to low-income communities/families. We live in a world where fast food is convenient, cheap, and accessible but have serious financial limitations imposed on high quality, sustainable, healthy food production. By combining the worlds of locally grown, sustainable, naturally raised food sources and fast food, Chipotle is providing accessibility of these goods to families that they may not have had otherwise.

The Utilitarian means of ethical thinking is also applicable to Chipotle’s business decisions regarding naturally raised livestock. A utilitarian believes that an ethical decision is one that produces the greatest good for the greatest amount of people. In the case of Chipotle there is so much positive value created by the utilization of the humanely raised and high quality produce. Local farmers benefit from the revenue they see as a result of their business with the restaurant. The process of raising the livestock in this manner is extremely costly so the increase in business/profits is pivotal. Value is provided to consumers through high quality, humanely raised food sources. The minimal reduction in profit margin for Chipotle is significantly outweighed by the profits and customer satisfaction it generates as a direct result of its business model. From the utilitarian perspective, Chipotle has done a phenomenal job of acting ethically.

Conclusion

Chipotle is doing a lot of things right. They have dominated a niche of burrito-loving, green-going, organic-consuming customers with acute focus and understanding of the marketplace. Financially the business has dazzled Wall Street, recognizing double figure profit increases for the fifth consecutive quarter (Hoffman). What is more impressive is that Chipotle accomplished this financial feat while knowingly sacrificing profit margin to maintain its values. It has demonstrated that upholding ethical beliefs does not have to destroy the balance sheet and can even improve the business financially.  The dedicated and borderline fanatical customer base is clearly buying into the philosophy as well. But there are still quite a few red flags in regards to Chipotle. The language used is often vague and confusing, preventing the customers (who actually read into the company) from developing a completely accurate understanding of the company mission. There are claims that they have “put policies in place” to protect human and animal rights, but never divulge information on what these policies actually are. I believe that Chipotle is ahead of its time in its efforts to propose an organic, locally grown, sustainable means of production. Unfortunately the business cannot achieve all of its lofty goals due to the high costs associated with these production methods. The best part about Chipotle is that it formally recognizes that more work needs to be done from an ethical perspective. It does not simply rest on its laurels and accolades (or customer base), but rather constantly pushes to set the bar for ethical treatment of animals, people, and the environment.  One day a business model will allow a restaurant or fast food chain to accomplish all of their sustainability/best practice goals. Chipotle isn’t there just yet. However, it is certainly a part of the solution and not the problem.

Works Cited

Baylis, Bettina. “How Chipotles ‘Food with Integrity’ Strategy Can Really Succeed.” Triple Pundit: People, Planet, Profit. Presidio Graduate School, 15 Oct. 2012. Web. 8 Nov. 2012. <http://www.triplepundit.com/2012/10/chipotle-food-with-integrity/&gt;.

“CAFO – The Tragedy of Industrial Animal Factories.” CAFO – The Tragedy of Industrial Animal Factories. N.p., n.d. Web. 11 Nov. 2012. <http://www.cafothebook.org/index.htm&gt;.

“CMG Income Statement | Chipotle Mexican Grill, Inc. Co Stock – Yahoo! Finance.” CMG Income Statement | Chipotle Mexican Grill, Inc. Co Stock – Yahoo! Finance. N.p., n.d. Web. 11 Nov. 2012. <http://finance.yahoo.com/q/is?s=CMG&gt;.

Gordon, Sarah. “Chipotle: The Ethical Future Of Fast Food?” Earth Eats. Indiana Public Media, 11 June 2012. Web. 8 Nov. 2012. <http://indianapublicmedia.org/eartheats/chipotle-ethical-future-fast-food/&gt;.

Grieder, Erica. “GOOD.” The Ethical Burrito: Chipotle Makes Fast-Food Nation Sustainable. N.p., 30 Nov. 2011. Web. 8 Nov. 2012. <http://www.good.is/posts/the-ethical-burrito-chipotle-makes-fast-food-nation-sustainable/&gt;.

Hoffman, Derek. “Wall St. Cheat Sheet.” Wall St. Cheat Sheet. N.p., 18 Oct. 2012. Web. 11 Nov. 2012. <http://wallstcheatsheet.com/stocks/chipotle-mexican-grill-earnings-profit-rises-by-double-figures-for-fifth-consecutive-quarter.html/&gt;.

“Philosophical Investigations.” Philosophical Investigations. N.p., 23 Mar. 2010. Web. 8 Nov. 2012. <http://www.philosophicalinvestigations.co.uk/index.php?option=com_content&gt;.

Roston, Tom. “By The Numbers: Chipotle.” Food Republic. N.p., 15 Dec. 2011. Web. 11 Nov. 2012. <http://www.foodrepublic.com/2011/12/15/numbers-chipotle&gt;.

Sellers, Sean. “Chipotle’s ‘Integrity’ Doesn’t Reach Its Farmworkers.” The Huffington Post. TheHuffingtonPost.com, 14 Sept. 2010. Web. 11 Nov. 2012. <http://www.huffingtonpost.com/sean-sellers/chipotle-farmworkers-integrity_b_712007.html&gt;.

“Sustainable Table.” Sustainable Table. Grace Communication Foundation, Jan. 2009. Web. 8 Nov. 2012. <http://www.sustainabletable.org/home.php&gt;.

Walzer, Michael. “Complex Equality.” Spheres of Justice. N.p.: n.p., n.d. 211-27. Print.

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