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Product, Service & Design Innovation
Chipotle Leads with Sustainability to Maintain Brand Sheen

While the fast-food business in the United States remains sluggish and roiled, eco-conscious burrito chain Chipotle has experienced rapid and relatively smooth growth through the recession and, especially, since then: Same-store sales rose by 20 percent last quarter. But lately the chain has demonstrated a few chinks in its tortilla wrap even while it also has stepped up its sustainability efforts.

Chipotle has been sued in courts in Colorado and Minnesota, for allegedly violating the Fair Labor Standards Act by cheating hourly employees out of pay by requiring them to work off the clock. The alleged means, one suit said, include “utilizing timekeeping devices that automatically punch employees off the clock, even if they are still working,” according to the Colorado suit. Such violations are alleged to amount to “general policies and practices to deprive [Chipotle’s] hourly paid restaurant employees of the compensation to which they are entitled.”

“If I complained about not being paid for all of the hours that I worked, Chipotle would threaten me with termination or would punish me by cutting hours,” Demarkus Hobbs, who worked at a Chipotle in Minnesota for about a year, claimed in one lawsuit, according to CNNMoney.com.

Chipotle denies the claims; worker exploitation is not an allegation welcomed by a brand that has established itself as enlightened and fair-minded through its establishment of, adherence to and effective communication behind its pioneering sustainability standards. McDonald’s and Burger King are the places at which workers are supposed to complain about their jobs, or at least their low wages — and they have, through numerous protests at those chains over the last couple of years.

Regardless of the veracity of the Chipotle workers’ complaints, co-CEO Steve Ells is feeling a little chippy these days. During a conference call with investors in late October, he went out of his way to take a shot at competitors in the traditional fast-food arena. They “have traded food quality and taste for low cost and ease of preparation,” Ells said, and such brands have “aggressively marketed low prices to entice customers to visit more often, which has resulted in the need to reduce costs by cheapening ingredients and by compromising the overall dining experience.”

But while Ells’ remarks perhaps were impolitic, it’s hard to argue with them. More importantly, consumers are siding with Ells; McDonald’s saw a decline in third-quarter sales. But the competitor is seeing the light, too: McDonald’s just launched a huge food-transparency marketing initiative as the company takes a new tack in trying to turn things around.

Yet nearly all of Chipotle’s quick-serve and fast-food rivals arguably have a long way to go if they’re attempting to catch up to its thoroughgoing devotion to sustainability. Caitlin Leibert, Chipotle’s director of sustainability, outlined some of the chain’s best practices during a recent conference in Colorado. She said that the company has further ratcheted up its attention to sustainability after many employees agitated to do more.

This new approach includes a three-part strategy: before, during and after a customer visits. New “before” measures, for instance, include making its straw one millimeter smaller, resulting in the use of six tons less of plastic each year. The company also trimmed its basket liners by an inch.

Some of Chipotle’s rivals are obviously catching on and trying to carve out some sustainability positioning of their own. But despite some potential missteps, it’ll be tough for them ever to match Chipotle — both for its pioneering efforts and for its continued attention to this crucial aspect of its brand personality.

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