This story first appeared in Sustainable Brands June 1, 2012.
Chipotle is a restaurant chain that does extremely well serving fresh food fast. I was going to call it fast food, but that seems a bit denigrating to what Chipotle offers. Writer Tom Roston went so far as to say “comparing a Chipotle taco to one from Taco Bell is like comparing apples to Apple Jacks.”
So is their approach to sustainability just as fresh? I chatted with Chris Arnold, Chipotle’s Communications Director, to discover if there was anything remarkable about Chipotle’s approach to green.
Arnold has a terrific story, one which he’s sharing at this year’s Sustainable Brands Conference. Like most of the keynotes at SB, this one will give your head a turn and make you consider a whole new angle on sustainability.
In a nutshell, Chipotle has a product that is leagues ahead of most fast food restaurants in terms of responsible sourcing and organic content. But until recently the majority of their customers didn’t care. They just came for the great taste.
Actually, this isn’t hard to understand. One look at OgilvyEarth’s Mainstream Green study confirms the vast majority of Americans think green is synonymous with high priced elitist fare that will single you out as a hippie or snob. Definitely not the persona of the average fast feeder.
“To tell the truth, we never sourced healthier, organic, local ingredients as part of a marketing platform” confirms Arnold. “It just made better tasting food. No great insight there.”
Arnold’s challenge was, in his own words, “…to let consumers in on the secret, and educate them on why this matters – without freaking them out.”
The Balancing Act
Chipotle’s solution has been to make nutrition and sustainability information available for customers who want it. At the same time, the company takes the occasional stab at less healthy alternatives in their advertising, including this truly inspiring TV commercial that managed to grab headlines – even getting chatter on traditionally anti-sustainability networks like Fox.
As Arnold explains it, this slow convergence of Chipotle’s practices and communication have followed the journey of food enlightenment we seem to be on. “People have become more aware, books are coming out, movies are coming out – we’re all starting to add ‘sustainable’ to our grocery list.”
At the same time, Arnold is quick to emphasize that it’s still a balancing act. Chipotle’s needs to be very careful about how much sustainability to serve up to its mainstream customers
If It Pays, Keep Doing It
The formula has proven itself financially.
Chipotle has the highest food costs in the industry, but still generates the highest profits.
As Arnold says “We went public in 2006, and our ‘good food tastes better’ ethos was embedded into the offering. If our earnings slip a bit, our shareholders understand that ingredient quality will not be compromised.”
That said, even during the recession, the company never went same-store negative. In fact, it has posted same store sales growth the past seven quarters.
“We have an efficient real estate model, we don’t franchise, and we don’t do quick-hit promotions that drain resources” says Arnold. “What’s more, we hire for the long term, not just to put bodies behind the counter. It takes us longer to find the best people, but when we do, their performance and loyalty make them incredible assets.”
Chipotle’s model echoes the innovative thinking that companies like Ford are engaged in. In both cases, a higher price for environmentally friendlier product was offset by creative business model thinking.
Lessons For Innovators
- Green makes sense, even if consumers don’t care – To Chipotle, fresh, organic, local ingredients made for better food. Consumers are slowly starting to appreciate the sustainability aspect of Chipotle’s offering, but it isn’t something the company relied on for marketing.
- Higher cost can equal higher profit…if you inject creativity – Chipotle has the highest profit in the industry, despite carrying higher costs. It all comes down to finding innovative ways to offset the investment. In Chipotle’s case, with better hiring and smarter real estate decisions.