Why did the chief financial officer of the 2,400-location Chipotle Mexican Grill chain speak at this spring’s “Repairer Roundtable”?
Aaron Schulenburg of the Society of Collision Repair Specialists (SCRS), which organizes the event, said he invited Chipotle CFO Jack Hartung to speak to help shops “think outside the box” about how companies differentiate themselves in terms of their commitment to---and investment in---quality.
“Communicating that message [to consumers] can be challenging,” Schulenburg said. “Creating sustainable business models that support that also can be really challenging.”
Hartung said that’s something his company has accomplished, paying more for humanely raised, hormone-free meat, for example, but not charging more than comparable “fast casual” restaurants.
“We find efficiencies throughout the rest of our P&L so we can invest more in the food,” Hartung said. “We looked at the restaurant: Can we make it smaller? We don’t spend much on advertising. Would your customers rather have you spend more money on advertising, or on the materials you use to repair their cars?”
Hartung said the company founder originally opened a Chipotle in 1993, hoping to generate enough cash-flow to eventually open a fine dining restaurant (which he never did, given Chipotle’s growth), so from the start he wanted to use the type of quality ingredients he planned to use at that higher-end restaurant. People told him at the time that few customers really thought or cared about where or how their food was sourced.
“He didn’t care. He had a vision,” Hartung said. “He wanted to elevate the food. He didn’t care if his customers noticed. He knew. And he knew he was going to serve them food that he was proud of. You have to start with what you stand for. Then make sure the business model supports that.”
Hartung discussed the importance of building trust with customers, something that he acknowledged had suffered at Chipotle following an E. coli outbreak in 2015. The company’s stock, trading at nearly $750 at the time, tumbled and was trading at half that when Hartung spoke at the event this spring. (In the weeks following, it rose by about $100 to above $400.)