In grad school I created a mock marketing plan for Chipotle. Through researching the company, I learned about the unique business practices that Chipotle used to make the restaurant chain so successful. I'm going through them in a weekly series of posts called Burrito Fridays. I'm in no way an expert on Chipotle, I simply see ways we can learn from the company.
Also, today is Boorito at Chipotle - $3 burritos, bowls, salads or tacos if you wear a costume in from 5pm to close. I'm not pushing it, I just thought you may like to know, especially because Chipotle rarely has deals.
For the last two parts in the Chipotle series, we’re going to talk about what I think is most interesting about Chipotle - its employee relations. For today's subject - turnover. Chipotle’s hiring practices and management system have been credited with creating one of the lowest employee turnover rates in the industry.1
Chipotle, unlike the majority of other major restaurant chains, avoids hiring part-time and college students and instead focuses on hiring full-time permanent employees.1 Instead of hiring employees it knows will be transient, Chipotle focuses on hiring people that it hopes will be there long-term. It sees hiring as a significant investment. Chipotle also has a system that creates a clear path for line workers to move up, in which managers receive a $10,000 bonus for each employee they develop into a manager.2 Since this incentive-based system is in place, managers have been known to fire their low or mediocre performing employees.2 For Chipotle, this accomplishes a high level of customer service in the restaurants as well as a flow of employees working their way up to manager.
To keep turnover low, as Chipotle does:
1. Hire with care and intention.
I know you want the best for your business. It’s really difficult to limit turnover because every person has different plans and goals for their lives. Spending time to figure out who is the best potential fit for your business has great value. As you know, your employees can help shoulder the business or they can create more work for you. Spending adequate time on hiring people that you expect to be there long-term is essential.
2. Create a clear path for employees to move up.
Chipotle also understands that if you want to retain employees, you have to give them hope of going somewhere in the business. Great employees usually have drive to be challenged, grow and achieve. You can’t retain excellent employees if it’s not evident to them that they can be challenged, grow and move up in your business. If you have potential for employees to move up in your business, create a clear pathway so that there is no doubt in their mind of that possibility. You don’t want to lose great people because they think your business is a dead end.
These aren’t especially creative ideas that Chipotle used to limit turnover. However, what is notable is that they actually sought to execute their ideas completely. I’m sure it’s incredibly hard to avoid hiring temporary employees and instead find people that are looking to work at Chipotle long-term. It’s also really hard to create a clear path for employees to move up, not to mention ponying up $10,000 as an incentive and sticking to it.
The good news is that you can work with what you have now. In hiring, be thoughtful and intentional with your interview questions. Don’t use stock questions just because you’ve seen them used. Creating a path for employees to move up could be as simple as an announcement for where you see the business going and how there will be areas of opportunity. Your small actions have a bigger impact than you may think.
1 Markels, A. (2008). Chipotle's Secret Salsa. U.S. News & World Report, 144(2), 41-44.
2 Stein, J. (2012). The Fast-Food Ethicist. (Cover story). Time, 180(4), 40-44.