As chief restaurant officer Scott Boatwright recently shared with QSR, Chipotle understands the value of retention all too well. Just last year alone, the company promoted 13,689 people at all levels. Its rate of internal promotion was 79 percent. Chipotle employed more than 73,000 people in 2018, including roughly 67,900 at the hourly level.
But even so, Chipotle, like restaurant peers across every sector, continues to grapple with turnover rates. Tack on a significant increase at the staff level due to its relocation from Denver to Newport Beach, California, and Columbus, Ohio, and keeping quality workers has never been more critical for the fast casual. Chipotle offered a relocation package or severance to those affected by the move, including a lump sum, prorated bonus, and accelerated equity vesting.
Here’s a glance at the turnover picture for Chipotle:
- Restaurant hourly (crew, kitchen manager service manager): 144.9 percent
- Restaurant salary (apprentice, general manager, restaurateur): 49.1 percent
- Restaurant field managers (field leaders, team directors, executive team directors): 26.3 percent
- Staff employees (support center workers and field support employees: 49.9 percent
- Restaurant hourly: 158 percent
- Restaurant salary: 37.1 percent
- Restaurant field managers: 18.7 percent
- Staff employees: 23.9 percent
Boatwright said one of the keys for Chipotle is to nurture an employee-value proposition that makes it a destination of choice. Given the tight labor market and choices available, Chipotle can’t simply let its brand equity get employees through the door—although it doesn’t hurt.
As you can see by the figures above, the crew level is one of the most challenged for Chipotle. That’s pretty much the case for all quick-serves, but it’s still one the chain has designs to improve. It announced Tuesday a new perk: A crew bonus program that gives hourly employees the opportunity to earn up to an extra month’s pay each year.
While the extra pay is a nice attractant, naturally, Chipotle hopes the platform can work from two sides. To qualify for the quarterly bonus program, restaurant teams must meet certain criteria, such as predetermined sales, as well as cashflow and throughput goals. Chipotle plans to offer the perk quarterly. It can result in a bonus worth one week’s pay, calculated as an individual’s average weekly pay per quarter. The restaurant on track to receive the first bonus of this kind will be notified following the close of Chipotle’s second quarter in July, the company said.
So the worker will have incentive to perform. And, ideally, Chipotle will get the benefit of more motivated and better-run locations.
"At Chipotle, we're not only looking to compete for the industry's best, we're looking to keep the industry's best," Marissa Andrada, chief people officer, said in a statement. "Chipotle is about Cultivating a Better World, building a real community that works together to win together, and this bonus program provides a strategic investment in the people who make up the brand."
The new quarterly bonus program joins Chipotle’s existing annual crew bonus that’s available for employees based on tenure and a minimum of one year with the brand.
Let’s take a look at some other ways Chipotle is working on retention.
Per TDn2K, nearly 20 percent of restaurant companies believe they are continuously understaffed for general managers. In regards to turnover, the company also noted that half or more of the positions available for counter-service brands, including fast casual, will be occupied by a new, untenured manager within the next 12 months. It added that, at any given time, about one in ever three quick-serves are not fully staffed.
Simply, GMs are the lifeblood of this turnover and retention equation. Among its goals for 2020, Chipotle said it hopes to realize less than 25 percent turnover at the position and implement a success profile. The chain also wants to establish a competency-based interview guide, which will be used to aid field leaders, which oversee GMs, to identify and hire candidates.
The company said there’s a 50 percent turnover rate when GMs are not onboarded properly.
Chipotle created what it calls “Success Profiles and Cultivate University 2.0.” The GM Success Profile identifies key competencies that, if demonstrated, would most likely lead to success within the position, Chipotle said. These link to the knowledge, skills, and abilities employees develop as part of the Cultivate U 2.0 leadership and management training program.
Cultivate U 2.0 aims to shift current mindsets from a “tribal knowledge,” mentality to an aligned approach within restaurants. Field leaders go through a series of workshops intended to build leadership skills and increase engagement.
According to Chipotle, here’s what GMs learn:
- Create a culture of accountability
- Lead effectively
- Develop situational leadership skills
- Understand the important of food safety
- Provide coaching and feedback
Cumulatively, shoulder-to-shoulder training, in-restaurant meetings and training, and vide training provide employees with the equivalent of 15 days of training each year at Chipotle. Kitchen managers and apprentices receive six weeks of training. Service managers get four.
One of the things Boatwright tapped as an important directive for Chipotle was providing employees with a clear development path. This way they could see, from day one, why working in the restaurant industry doesn’t need to simply be “a first job.”
At Chipotle, it goes as follows:
Crew—kitchen manager—service manager—apprentice—general manager—restaurateur—certified training manager—field leader—team director—executive team director.
Broken down by demographics, 37,550 of Chipotle’s 68,468 hourly employees were women in 2018. At the salary level, 1,967 of 4,301 were. In corporate, 318 of 874 employees.
This year, Chipotle had unconscious bias training planned for all field leaders, and expected to roll it out to the rest of its employees in future years. It will be incorporated into Chipotle’s new employee orientation as well.
Chipotle hopes to create at least three Employee Resource Groups throughout the organization in 2019 that will spark discussions and allow for employees to play an active role in shaping its culture and company practices.
Chipotle offers health insurance to employees, both part-time and full-time workers. Looking to bring that forward, the chain is introducing an all-inclusive application process this year so employees can receive support and a full concierge service enabled by technology.
Employees are eligible for coverage on the first of the month following 30 days of hire. Plans cover preventative care, office visits, urgent care, behavioral health care, and substance abuse care. By 2020, Chipotle expects to expand benefit coverage for both kitchen managers and service managers, giving them access to the same benefits as GMs and field leaders. It also wants to make its employee assistance program available to all employees so they have access to quality mental health care by 2020
Chipotle’s Tuition Assistance Plan provides up to $5,250 per year. Last year, more than 2,600 employees ranging from crewmembers to support center staff received over $10.5 million in tuition assistance. In addition, Chipotle provides access to a personal education coach, tuition discounts, college credits for on-the-job training, and access to exclusive degrees in business management and hospitality. It also offers family members of employees immediate assistant to complete English as a second language and general education classes.
By 2020, Chipotle said it would expand tuition assistance for all employees to cover the cost of their dependents for General Education Development and English as a second language classes.
In 2018, Chipotle made some changes. Previously, it offered an industry-standard three paid parental days to new parents. That’s upped to 12 parental days for all salaried employees at the management level and above. The chain also offers short-term disability insurance for mothers that cover 60 percent of an employee’s pay (up to $2,500 a week). When used in conjunction with the 12 parental days, mothers can receive up to six weeks of effectively fully paid maternity leave. Kitchen managers and service managers are eligible for five paid parental days and mothers can still use short-term disability insurance that covers up to $2,500 a week.
Chipotle partnered with The Mom Project, Inc. to help new moms adjust back to full-time corporate life.
This past January, Chipotle eliminated the requirement that crewmembers had to work 1,000 hours in a plan year before they could start contributing to their 401(k). Now, every employee is eligible to contribute to his or her retirement savings after 30 days of employment.
Chipotle’s 401(k) includes a company match of 100 percent on the first 3 percent of the compensation an employee contributes and 50 percent on the next 2 percent. The match is available once the employee hits 1,000 hours in a plan year.
Chipotle has an employee stock purchase program for workers who have clocked at least 12 months. They can contribute a percentage of their base pay through payroll deductions. At the end of each month, those contributions are used to purchase whole and fractional shares of Chipotle stock at a discounted price.
Chipotle holds semi-annual performance reviews. Crew, kitchen managers, and service managers are eligible to receive a merit increase after each review based on their performance and overall contribution to the restaurant.
Chipotle employees get a free meal during their shift, as well as a 50 percent discount when off. There are paid breaks ranging from 15–60 minutes depending on the length of their shift.
Salaried employees can take eight weeks of paid sabbatical in addition to their regular vacation after 10 years with the company. They’re also open to flexible spending accounts and a health savings account. Salaried employees get annual performance reviews, with merit increases, quarterly bonuses at the apprentice, GM, and restaurateur levels and annual bonuses for restaurant support center staff and field employees.
These employees also get $100 per month to spend in restaurants, life and disability insurance, up to $7,500 for adoption assistance, and even $10 contributed per month to pet insurance.