NBC recently aired a show called America’s Next Great Restaurant. Contestants, each of whom hoped to open a restaurant chain, were put through a series of tests to see whose idea had the best chance for success. A panel of judges eliminated one person at the end of each program, until the last one standing was declared the winner and given money to open the chain. One of the judges was Steve Ells, CEO of Chipotle Mexican Grill, a large and rapidly growing chain of what the company says is a radically new kind of fast-food restaurant. The graphic on its website shows us the image Chipotle is trying to imprint on the public’s mind: “It’s Not Just a Burrito. It’s a foil-wrapped, hand-crafted, local farm supporting, food culture changing cylinder of deliciousness.”
Ells, the son of a drug company executive, earned a degree in Art History from the University of Colorado and then graduated from the Culinary Institute of America in 1990. After two years in a San Francisco restaurant, he founded Chipotle in 1993, helped by an $85,000 loan from his father, who later put another $1.5 million into the business.
There was something about Ells on the NBC show that caught our attention. While the head judge, Bobby Flay, is a consummate chef and had a ready empathy for the would-be food entrepreneurs, Ells appeared cold and more interested in hard, competitive business practices than food. As it turns out, his appearance was not deceiving.
Ells has built a fast-food dynamo. His chain has 1,084 restaurants, sales of $1.8 billion, and currently employs 27,000 workers. It plans to hire 100,000 workers over the next three years and open hundreds of new restaurants, in the United States and abroad. A chain of Asian-themed restaurants is scheduled to be opened in 2011. Ells has won many awards, including “Most Vegan-Friendly Restaurant Chain,” “100 Fastest Growing Companies,” and one of the “Healthiest Fast Food Restaurants.” Chipotle is a Wall Street favorite, its stock price rising tenfold since January 2006. Stockholders, including Ells, who owns a 1.25 percent share, are making money hand over fist.
Chipotle has positioned itself among a new breed of “green” companies, with Ells as a “green-preneur.” Boulder, where Ells grew up, is famous for its commitment to the environment and “healthy lifestyles.” It has more than its fair share of businessmen and women who have started new companies or retrofitted old ones to take advantage of this environment. South African capitalist Elon Musk and his brother Kimball are well-known examples, Elon with the Tesla electric car and Kimball with The Kitchen restaurant. There are condominium complexes billed as having zero carbon footprints. So, it might have been natural for Ells to see the possibilities in a “green” fast-food chain. The following quote from the Wikipedia entry on Chipotle Mexican Grill gives readers the gist of the marketing strategy and also puts the company’s best foot forward:
In 2001, Chipotle released a mission statement called Food With Integrity, which highlighted Chipotle’s efforts to increase their use of naturally raised meat, organic produce, and dairy without added hormones All of Chipotle’s pork is naturally raised defined by the company as open-range, antibiotic free, and with a vegetarian diet as well as 80% of its chicken and 85% of the beef (100% of the barbacoa served is from naturally-raised beef). The company formerly served 100% natural chicken, but demand exceeded supply. Approximately 40% of the beans are organically grown, and in 2011 approximately 5% of the beans will come from conservation tilling methods. In 2009, Chipotle planned to serve over 60 million pounds (27 million kilograms) of naturally raised meat, more than any other restaurant company, and plans to use 75 million pounds in 2010. The company pledges to use more local produce when possible, using “35 percent of at least one of its produce items for every restaurant sourced from small and midsize local farms throughout the growing season” in 2009, and increasing to 50% in 2010. Chipotle advertises its support of family farms, such as Niman Ranch, a California “natural” meat producer that contracts with farms in the Midwest to raise pork and other livestock. All of the cheese and sour cream comes from cows that do not receive recombinant bovine growth hormone (rBGH), and 30% of the dairy comes from open pasture cows. Founder Steve Ells has testified before Congress in support of the Preservation of Antibiotics for Medical Treatment Act, which aims to reduce the amount of antibiotics given to farm animals.
Like most fast-food outlets, Chipotle keeps its menu simple. There are a number of staple ingredients that can be combined in thousands of ways, mainly to fill burritos, which are the focus of the business. By most accounts, the burritos and the other menu items (tacos, salads, soups) are tasty, although connoisseurs of Mexican-American street food might find them pretty ordinary. In a taste test comparison of carne asada burritos by some noted San Francisco cooks, Chipotle’s ranked in “the middle of the pack.” One commentator noted, however, that none of the chefs were Latino, and another said that “including Chipotle is like slapping God in the face with a burrito.”
Eat fast, but eat right, and don’t pay a fortune for your meal. It’s proved to be a winning recipe.
Recently, however, some black clouds have appeared on the horizon. These have involved Chipotle and its workforce and the farm laborers at some of its food suppliers. The latter involved protests, including one at Ells’ commencement speech at the University of Colorado, against Chipotle’s refusal to sign onto the Campaign for Fair Foods, a national organization supportive of the rights and wages of farm workers. The Campaign, begun by the Coalition of Immokalee Workers (CIW) in Florida, pressures restaurant chains and grocery companies, mainly by sophisticated consumer boycotts, to pay more for crops harvested by CIW members and see to it that part of the money goes directly to the workers. To ensure that companies that have agreed to the wage pass-through actually comply, the CIW established the Campaign for Fair Foods, which sets up binding procedures for monitoring compliance and resolving disputes. Chipotle has refused to join the Campaign, arguing that it has its own methods for doing what the Campaign does.
A second problem is Chipotle’s treatment of its own workers, many of whom are immigrants, including some who are undocumented. The company has come under scrutiny by Immigration and Customs Enforcement (ICE), which has questioned the identification documents of hundreds of Chipotle employees. Restaurants in Minnesota and Virginia have responded with mass and sudden firings, possibly in violation of state laws and, according to the workers, without paying wages due to them. Workers, labor unions, and support groups have also said that Chipotle had often knowingly hired undocumented immigrants (even allowing them to change their social security numbers!), was using the ICE actions to get rid of senior and more highly paid employees (it takes three years of work to qualify for a one-week vacation), and had actually hired back some of the fired workers as new hires.
When I first learned of Chipotle’s problems, I posted a note on Facebook. Several people replied, one of them upset that Ells and his company were being abused by the government. This person said that she ate at Chipotle often, that it was an environment- and farmer-friendly restaurant serving healthy food, and that this small business was singled out by ICE because of Ells’ progressive politics. Before responding, I did some quick research. This, along with what I have found out since, calls into question her view of Chipotle. First, the healthfulness of at least some of Chipotle’s food is open to question:
A Center for Science in the Public Interest report stated that Chipotle’s burritos contain over 1,000 calories, which is nearly equivalent to two meals’ worth of food. MSNBC Health placed the burritos on their list of the “20 Worst Foods in America” because of their high caloric content and high sodium. When a burrito with carnitas, rice, vegetables, cheese, guacamole, and salsa was compared with a typical Big Mac, the burrito had more fat, cholesterol, carbohydrates, and sodium than the Big Mac, and the burrito had more protein and fiber.
Second, ICE has raided large meat-packing corporations, and these are among the least “green” businesses on the planet. Other big corporations looked into by ICE include McDonald’s. Third, Chipotle is, itself, a very big business. As noted above, it plans to hire 100,000 workers over the next three years. Because of a turnover rate of nearly 100 percent, this means that its projected workforce is 50,000 (it must hire 100,000 to keep half of them). All of the steel and iron mills in the United States employ a little less than twice as many workers. So, Chipotle, a single restaurant chain, is half as large as the U.S. steel and iron industry. It is worth noting that Ells was able to expand his enterprise not long after he began it because of an enormous investment by fast-food behemoth, McDonald’s, beginning in 1998. The $360 million McDonald’s put into the company allowed Ells to increase the number of stores from sixteen to more than 500. This is no “mom and pop” operation.
A fourth thing I discovered is that the financial markets have been most impressed with Chipotle’s “ability to hold down labor costs as sales soar.” Here we have the key to the company’s success. If the original idea was to attract consumers who wanted to participate in a greener lifestyle through the goods and services they purchase, then what would keep the profits growing would be control over what is called the “labor process,” that is, the way in which work is organized and controlled by management. Fast-food chains like McDonald’s and Taco Bell have pioneered the transference of labor process control techniques from the factory floors to the drive-through window. These techniques were first spelled out by Frederick Taylor, the father of “scientific management,” refined over many years by manufacturing corporations. They were further systematized and expanded by Toyota, which developed the most sophisticated methods of control, which can best be described as “management by stress.”
Taylor’s three great principles of labor process control are 1.) gather up all of the details of how the work is done. This is accomplished by observation using time and motion studies; 2.) employ industrial engineers to take the knowledge gained in step 1 and reconfigure the way the work is done so that as many tasks as possible are subdivided into unskilled details, with each detail given a maximum time for completion and mandatory employee motions. Machinery can greatly aid this step, ultimately allowing for another reconfiguration, this time as an interconnected machine system, as on an assembly line; 3.) demand, under penalty of discharge, that every worker perform each detail exactly as prescribed by management. All of the fast-food chains have been Taylorized, with nothing left to chance.
Toyota’s contributions to managerial control are worthy enhancements of and additions to Taylor’s three principles. They include:
*just-in-time inventory. Inventories are kept to a minimum; materials are delivered and used just as and only as needed. Complex logistical methods are used to track the use and movement of all materials. Labor is used just-in-time as well whenever this is possible. Workers must show up only as needed, willing to endure whatever employment flexibility the employer deems necessary. Fast-food managers seldom hire full-time workers and do not hesitate to advertise for certain days and shifts or for prospects willing to work whenever needed.
*systematic hiring. Employers make an effort to hire only those who appear to be most amenable to their control. This can involve elaborate testing and role-playing, or, as is probably true for fast-food restaurants like Chipotle, hiring people who are maximally vulnerable, such as recently-arrived immigrants, including those without documents. ‘”They know we’re hard workers and that we are going to do the job the way they want . . . ,’ said Jose, 45, an undocumented Minnesota worker who was fired after nearly five years at Chipotle.”
It is true that labor turnover is high in fast-food, but Taylorization makes this much less costly (training costs are small, since the work is unskilled, and turnover keeps workers from earning the seniority that would embolden demands for higher pay and some benefits) and a large pool of vulnerable job applicants makes it easy to replace those who quit. Fearful men and women would also be less likely to fight to force the employer to give them their unpaid wages.
*constant improvement. Here, the management continuously “stresses the system” to compel employees to work harder. Sometimes production is done by teams of workers, and each is collectively responsible for its individual members. One stress might be to reduce the number of team members and then insist that the team maintain production with fewer persons. Another would be to raise the speed of an assembly line and let the teams figure out how to keep output as high as before. A fast-food chain can lower the number of seconds a team has to get a particular item to the drive-through window. As the author of a recent Business Week article said, “The big brands spend hundreds of millions and devote as much time to finding ways to shave seconds in the kitchen and drive-thru as they do coming up with new menu items. . . . So much money and R&D go into perfecting the production system because there is so much money to be had.”
A former Chipotle employee tells us what this means in practice. “Alejandro Juarez said that in his five years working at Chipotle outlets around Minneapolis he always heard the phrase ‘m?s r?pido, m?s r?pido’?Spanish for ‘faster, faster.'”
In capitalist economies, the search for new ways to make money is relentless. The environmental difficulties that these economies engender have given rise to “green” entrepreneurs, capitalists who have used concern for Mother Nature to get rich. Chipotle has taken advantage of this concern, along with the well-warranted fear that the food we eat is making us fatter and less healthy, and built a business empire. However, underneath the green branding lies the root reason for Mr. Ells’ remarkable success: the ruthless obsession with control of the labor process.
When I pointed out on Facebook that Chipotle’s high turnover rate probably went hand-in-hand with employee disgust with the job, my critic said that when she ate there, the workers were always smiling and seemed to be having fun. A few days after she said this, we were in the parking lot of a Tucson mall, and we could see the back of a Chipotle Mexican Grill. There, standing in some shade were a group of brown-skinned employees. They weren’t smiling. They looked beat, like restaurant workers always do when they smoke in the alleys behind the kitchens. It struck me that the smiling faces customers see hide the worried minds and harried bodies of those who toil, those who hear “m?s r?pido, m?s r?pido” in their dreams.