uploads/2015/02/Accommodation-and-Food-Service-2015-02-071.jpg

How Chipotle’s hiring policies contribute to its success

By

Updated

 Chipotle’s hiring policies

Each quarter Chipotle Mexican Grill underlines how important its employees are to its successful operation, which has contributed to the success of Chipotle. In this part of the series, we’ll discuss some key issues related to Chipotle’s operational staff.

During the earnings call, Chipotle’s management explained that the type of employee the company tries to hire are ones who want to learn cooking skills along with the leadership skills it takes to run Chipotle restaurants. Every employee gets an opportunity to advance in the company. According to Chipotle, it hires 90% of the company’s general managers from the crew positions.

Article continues below advertisement

Chipotle’s co-CEO Montgomery Moran takes this further by saying “other restaurants rely heavily on automated systems to reduce the amount of training and skill that is necessary to do their work.”  The company believes that empowering employees not only lifts the moral, but it also translates into an “elevated” dining experience for the customers.

Restaurateur diagnostic tool

Chipotle has also made an investment in a “restaurateur diagnostic and plan tool,” which enables a field leader, who looks after eight Chipotle restaurants, to get the performance data of their restaurants.

It is common in the restaurant industry to have a high turnover rate, as the above graph shows. According to the Bureau of Labor Statistics, the total separations (turnover) rate for employees in the “accommodation and food service” was 62.6% in 2013 compared to 42% in the “private” sector. So restaurants try to make their cooking process as simple as possible, so that it doesn’t require a lot of training.

Several fast food restaurants like McDonald’s (MCD), Wendy’s (WEN), Starbucks (SBUX), and those included in the ETF Consumer Discretionary Select Sector SPDR Fund (XLY) can benefit from such a practice. XLY holds ~37% of retail portfolio.

Advertisement

More From Market Realist