Inside Chipotle’s mission to become the ‘fastest path to the middle class’

In 2018, Chipotle tapped Brian Niccol, formerly CEO of Taco Bell, as its chief executive, replacing founder Steve Ells. Once one of the hottest names in the fast-casual restaurant scene, Chipotle was rocked by food safety scandals in 2015, prompting its stock price to plummet 39% in the final four months of the year, and fall even further in 2017.

But by the middle of 2019, the company’s stock price had recovered. That turnaround, Chipotle says, is partly a result of its investment in employees, increasing pay for frontline workers—among them line cooks, cashiers, and servers—and providing career development opportunities in an effort to spur employee mobility.

Early in his tenure, Niccol sought to embed the company’s talent function into its larger business strategy, including chief people officer Marissa Andrada on earnings calls to discuss the role of culture and talent in leadership efforts to restabilize the company.

In doing so, Chipotle has reported improved retention, noting that it has also been able to address key talent gaps across its teams, such as career stagnation among frontline workers. The company partnered with the education benefits provider Guild Education in 2016, and in 2019 began offering frontline employees access to 75 degree-granting programs across 10 nonprofit institutions, as well as ESL classes, debt-free.

Andrada, who was hired as the company’s first-ever head of HR in 2018 and also holds the chief diversity and inclusion officer title, says frontline workers can rise to restaurant manager roles in three and a half years or less, earning six figures. In 2021, 90% of restaurant management roles were internal promotions, including 79% of general managers. Chipotle did not disclose what percentage of crew members have been promoted to general managers within the three-and-a-half-year time frame.

Employees who enroll in courses are 7.5 times more likely to be promoted to management and 3.5 times more likely to stay with the company, according to Chipotle. And even those who simply inquire about the educational benefits tend to stay at the company longer, Andrada says. The frontline restaurant staff, known as “crew” at Chipotle, represent 85% of employees who take advantage of the benefit. Last year, an average of six employees per restaurant were promoted for a total of over 19,000 promotions.

Chipotle points to its recent pay increases for frontline workers as evidence of its commitment to advancing socioeconomic mobility.

Last May, the eatery chain increased the average wage for restaurant workers to $15 an hour, meaning workers earn between $11 and $18 an hour. Chipotle CFO Jack Hartung explained his rationale in a previous interview with Fortune: “If you’re competitive on the starting wage, you’ll get people in. If you’re not competitive on the opportunities going forward, you won’t keep them.”

Yet Chipotle’s pay increases, and expansion of other benefits, came amid a labor squeeze and as the company struggled to staff its restaurants. Still, Andrada believes that the company offers “the fastest path to the middle class.”

Rachel Carlson, CEO of Guild Education, says Chipotle’s interest in the education benefit provider was initially sparked by a need to attract, recruit, and retain entry-level workers.

That line of thinking has evolved, she notes, and the company now views the education benefit as a “tool for promotion, having people advance within the business, and then also their talent brand.” The platform features educational offerings from HBCUs and minority-serving institutions (MSIs).

When Chipotle announced no-cost degree programs in 2019, employees were able to choose from a range of business and technology programs such as accounting and computer programming. Chipotle has since added culinary, hospitality, agriculture, and supply-chain programs to increase the number of available degree programs to nearly 100.

“We focus specifically in the areas in which we knew we were growing the company and where we need to grow future leaders,” Andrada says.

Hartung has echoed similar sentiments, telling CNBC in 2021, “Every dime we spend on that labor line, whether wages or benefits or education, is an investment in the future.”

That future includes an aggressive goal to reach 7,000 restaurants in North America, up from around 3,000 currently. And to achieve it, “we need our team members of today to be our leaders of tomorrow,” he tells Fortune. “The health and stability of our restaurants are a measure of increased retention.”

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