How Chipotle survived a food safety crisis and a pandemic to debut on this year’s Fortune 500

June 2, 2021, 10:45 AM UTC

When Chipotle Mexican Grill tapped Brian Niccol to run the Mexican fast casual chain in 2018, the former Taco Bell CEO faced a stock price and customer base that had cratered amid a string of food safety issues.

On Niccol’s watch, the company has come roaring back and is making its debut on the Fortune 500 at No. 464 in a year when much of the restaurant industry was wrecked by COVID-19. Fortune talked with Niccol about navigating the pandemic and what the future holds for Chipotle and the rest of the sector. Edited excerpts follow.

Fortune: Are we creeping back toward normalcy?

Brian Niccol: Consumer demand is just taking off. It’s exciting to see people wanting to get back to normal, but it creates new pressure on our business to get ourselves staffed and supplied to catch up.

What does normal look like? Will we go back to the before times?

I hate the term “the new normal” because the reality is we’re just in a world where change is part of how you do business. When I talk about normal, it’s the normalcy of kids back in school, people are back out socializing, they’re meeting a friend for lunch, they’re doing their job without the capacity constraints or the additional PPE. But I do think businesses are going to be changed forever.

How has your business changed forever?

The most obvious change is that we now have a multibillion-dollar digital business, which we didn’t have 18 months ago. It has to be staffed, just as much as our front line has to be staffed.

The other change culturally is this idea that we are a company that does more than just make burritos. More and more, employers have to be crystal clear on what their purpose is that goes beyond how they basically make money. We’re very fortunate because we’re a company that was founded on this idea of giving people access to great food with integrity. We’ve evolved that into cultivating a better world, because we want to do the right thing for our people and the right thing for the planet.

There’s been pushback on this idea that companies should take a stand on social issues. What do you think the role of a corporation should be?

Where the debate gets clouded is sometimes companies get involved when it’s hard for the business to make sense showing up on the issue. Where it works for us is when it comes to food. We have a strong point of view on the right way to raise and treat animals, the right way to farm, as well as taking care of the farmer.

There are other issues where you can have a personal opinion, but I’m not sure the organization necessarily needs to have such a strong position on every issue.

There’s a culture war taking place over meat right now. Should we be eating less meat? What’s Chipotle’s role in that debate?

I don’t think it’s an issue of “stop eating meat.” I think it’s an issue of raising the animal correctly.

Eventually we’re not going to be talking about plant-based alternatives as alternatives. People are going to say, “I want plant-based, delicious entrée experiences to be part of the rotation.” So we’re going to try to lead on plant-based solutions. We’ve got our Sofritas, which is an organic tofu. We’re working on others, and most recently did cauliflower rice.

Much of the restaurant industry has been devastated by the pandemic. Why has that not been the case for Chipotle?

Back when the news was breaking about what was happening in China, I remember asking our person in charge of wellness and food safety, “What will we need to change in order to make sure we’re doing everything possible in regard to COVID-19?” Her response was, “The good news is we’ve already put in the air filtration systems. We’re already doing wellness checks. We’re already getting paid sick leave. We have zero tolerance around working if you have any symptoms. We were already very aggressive with hand washing, hand sanitizing, wearing gloves.”

I’m guessing that a lot of the protocols came out of the food safety issues that you’ve had in the past.

We learned from those mistakes in 2015. We had to go further on these things than probably a lot of other places because we’re going to continue handling fresh food. That’s why we put a lot of practices in place.

Big restaurant players are positioned to come out of the pandemic as winners. But what’s at stake if we see the demise of the independent restaurant industry?

We had a really strong balance sheet, a really strong people culture, and a really strong digital proposition that helped us weather the storm. The scale definitely helps, but I think you can’t ever underestimate the creative spirit and resiliency of the restaurant entrepreneur. Some restaurants may have to totally reset, but they’ll come back with some great, creative new concepts. Our company at one point was one restaurant in Denver. It’s an amazing story, but I think there’s more amazing stories to be had in the restaurant industry.

There’s been a lot of discussion about a labor shortage. What are you seeing in your restaurants?

Look, it’s real. We’re fortunate to be getting good applicant flow, but this is what I talked about earlier. We haven’t been able to hire as fast as the business has come back, which puts more stress and pressure on our existing employees. They’ve been working hard for a really long time, and some of them are questioning: Do they want to stay in the industry? What happens if there’s another event that forces retail or restaurants to have to take a step back?

We’re doing everything we can to make sure that we’re going to have the right wage, the right growth opportunity. You can find yourself in three years making $100,000 running a Chipotle. That is a tremendous opportunity, and the good news is we’re going to build another 200-plus restaurants, and every one of those restaurants creates the opportunity to have another $100,000 general manager and a team of 35 employees earning a really great wage with some really great benefits. But it’s challenging, and the onus is on us to continue to demonstrate our employee proposition. I think it’s going to be even more competitive to get across, “Why Chipotle versus some other industry or some other restaurant?”

What’s your position on a federally mandated $15 minimum wage? [Editor’s note: After this interview took place, Chipotle said it would increase its average wage to $15 an hour.]

In our case, the minimum wage really doesn’t dictate what we pay. It obviously creates a floor, but we’re already paying above all the various minimum wage programs across the country. I subscribe to the idea that I want to pay a wage that will attract and retain people, and more importantly get the right people that fit with our culture.

The New York Times recently came out with its analysis of CEO compensation [Niccol was the 12th-highest-paid CEO last year at $38.04 million]. How do you think about your compensation in comparison with the issues around employee wages?

Our average employee works about 20 hours a week and is in their early twenties, so the discrepancy in the pay sometimes doesn’t tell the whole story. I think the way this works is we all have our performance appraisals, and I’ve got my objectives, and every employee in our company has their objectives. If you accomplish them, we believe we’re paying commensurate to you successfully executing your performance point. That’s how we do this, from my job all the way down to somebody that just joins the team and is working at Chipotle part-time.

What’s your policy on vaccinating employees?

We’re not mandating it. We are strongly encouraging it. We are trying to enable the least path of resistance to get a vaccine for every one of our employees. We do ask people to voluntarily report. Myself and our leadership team, pretty much everybody’s been vaccinated, so we’re leading by example. The good news is we’re seeing a high percentage of employees saying they’re willing to get vaccinated once they have the opportunity. So I don’t see it as an issue.

Why didn’t you mandate?

It was one of those things where we looked at the pros and cons, and where we landed on this was giving people their personal choice to get the vaccination versus us forcing it on them.

You came to Chipotle from Taco Bell. How has that background served you during what’s been described as the “fast food–ization” of the restaurant industry in the past year?

The company was founded on the idea that fast food could be great food. Said another way, great food can be done fast. It’s a trend that got sped up because of the pandemic. Fine dining, the white tablecloth restaurants, were trying to figure out how they could do their great food fast. It was no longer the two-hour dinner.

Chipotle created the fast casual category, giving people customization and speed. That was never seen before. What we’ve said is, “How do we give people more access to that speed?” That’s why we’ve done things like digital ordering, Chipotlanes where you order ahead and pick it up. I don’t think that convenience and speed is going away, because that’s just what younger people demand.

Do you expect delivery to continue at these levels?

Delivery won’t be at the level it was when we peaked during COVID. But I do think the occasion is always going to have a place. How predominant it is I think frankly will be dictated by how convenient and accessible the other access points are. What I’m finding is if you can order ahead in your app, select your pickup time, pull up to our window, and get your food in a matter of 30 seconds, that’s really convenient. And it doesn’t come with a premium.

There’s always been that infamous line at Chipotle. Is that part of the future or will people not want that in a post-COVID world?

The Chipotle line is already back. Now we’ve got to make sure we’re staffed so we can get that line moving fast again.

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