Chipotle gave huge payouts to its CEO and shareholders, then blamed workers for price increases - here's what's really going on
insider@insider.com (Paul Constant) 

© Provided by Business Insider Photo by Joe Raedle/Getty Images

Paul Constant is a writer at Civic Ventures and cohost of the "Pitchfork Economics" podcast with Nick Hanauer and David Goldstein.

In the latest episode, they spoke about Chipotle's announcement to increase menu prices by about 4% to cover increased employee wages.

Constant points out, however, the price increase could be to cover the $24 million raise recently given to CEO Brian Niccol.

Last week, the "New York Times" ran a story about a small menu price increase at a fast-casual food chain. Written by Julie Creswell, the piece began, "Executives at Chipotle said on Tuesday that the fast-food chain had raised menu prices by about 4% to cover the cost of the increased employee wages."


Headlined "Chipotle will increase its menu prices as labor costs rise," this story is confusing for a few reasons.

Price increases and wages

Firstly, the New York Times is not traditionally in the business of reporting on price increases in restaurants. And a 4% increase doesn't seem newsworthy at all - Chipotle CEO Brian Niccol admits in the last paragraph of the piece that the increase amounts to "quarters and dimes that we're layering in" to existing prices.

So the only reason this story could possibly be considered worthy of the Times's world-famous "All the News That's Fit to Print" slogan is Chipotle's claim that the price increases were directly caused by increased worker pay. The chain recently raised its starting wages to an average of $15 per hour - but only in a fraction of its restaurants. Creswell writes that the "pay increases apply only to [Chipotle's] 650 company-owned restaurants; the vast majority of its nearly 14,000 restaurants in the United States are independently owned."

So with all that information in mind, the hook of this New York Times story seems to be that Chipotle's executives are blaming a tiny menu price-bump on a starting-wage increase that's been enacted in roughly one out of 20 of its restaurants.

Video: Why Chipotle raising prices may be a good thing for its stock (Yahoo! Finance)

What's disappointing is that Creswell seems to be repeating Niccol's claims without doing any investigation into Chipotle's finances. Chipotle never supports its claims that the price increase is due to wage increases, and Creswell never mentioned that Chipotle paid Niccol $38 million last year - an all-time high.

Joanna Fantozzi at Nation's Restaurant News reports that Niccol's 2020 salary was "set to be just $14.8 million but financial targets were waived in light of the company's stellar performance during the pandemic." So Chipotle's executives gave its CEO a $24 million dollar raise, which means that Niccol earned "2,898 times more than the median Chipotle worker's salary of $13,127."

Why didn't Chipotle's board mention Niccol's $24 million raise as a possible reason for its menu price increases? Creswell doesn't say. She also doesn't note that as of the first quarter of 2021, Chipotle was sitting on $1.2 billion in cash and equivalents.

The Times story also doesn't mention that the company is now in the middle of a huge stock buyback campaign. Sakshi Agarwalla writes at Seeking Alpha that "In an effort to enhance shareholders' value, [Chipotle] restarted its stock repurchase plans and have announced additional $100 million for stock buyback, bringing to a total $153.8 million repurchase plan. At the end of the first quarter, [Chipotle] repurchased 61.2 million shares worth $87.2 million."

Stock buybacks and wealth transfer

You can learn more about stock buybacks in this week's episode of "Pitchfork Economics" with special guest Senator Cory Booker, but the shorthand is this: Stock buybacks, which were illegal before 1982, have proven to be one of the most efficient mechanisms of wealth transferral from workers to the wealthy over the last 40 years.

The richest 10%of American households own 84% of the stock in this country, and the top 1% holds about 38%. So Chipotle takes profits that could go to keeping menu prices low and employee wages high and instead hands them off to wealthy shareholders, no strings attached.

Despite the fact that Chipotle has dedicated nearly $200 million to executive and shareholder payouts in the last few months, the New York Times credulously reprinted the company's claims that an average $15/hour starting wage in 650 restaurants is the reason why the company is increasing menu prices by 4%. To be clear, I'm only singling the Times out as an example here because they're the gold standard of journalism - the truth is that a number of outlets repeated Chipotle's claims without investigating the numbers.

The complete failure of many legitimate news sources to interrogate these claims should be a learning moment for business journalists. If you're simply repeating the information given to you in a press release from a corporation's PR department, you're not in the news business - you're volunteering for the company's marketing campaign.

 Business Insider

Chipotle has been sued by New York City over claims it violated scheduling sick leave laws, and now owes over $150 million to workers

mmeisenzahl@businessinsider.com (Mary Meisenzahl) 

© Kris Mirasola West 169th Street Chipotle. Kris Mirasola

New York City is suing Chipotle over accusations of violating labor laws.

The complaint says Chipotle owes workers more than $150 million.

Chipotle called the case a "dramatic overreach."

New York City has sued Chipotle, accusing the restaurant chain of labor law violations regarding workers' schedules at dozens of stores, the New York Times reported Wednesday.

The city is accusing Chipotle of hundreds of thousands of violations of the Fair Workweek Law, which mandates that workers must have 14 day advance notice of schedules or extra pay, and that workers must have a certain break period between shifts or receive an extra $100, Noam Scheiber at The New York Times first reported.

Chipotle failed to give New York City workers sufficient notice or extra pay, the Times said, citing the complaint. The Department of Consumer and Worker Protection at the Office of Administrative Trials and Hearing officially filed the suit.

Chipotle confirmed to Insider that the city had filed the suit.

"We make it a practice to not comment on litigation and will not do so in this case, except to say the proceeding filed today by DCWP is a dramatic overreach and Chipotle will vigorously defend itself. Chipotle remains committed to its employees and their right to a fair, just, and humane work environment that provides opportunities to all," Laurie Schalow, Chief Corporate Affairs Officer for the company, told Insider in a statement.

This complaint is the largest ever brought by New York City under the Fair Workweek law, according to the Times. Workers are owed more than $150 million for the violations, plus more in legal penalties, the Times reported.

The lawsuit is over labor practices between November 2017 and September 2019. It says that Chipotle has attempted to comply with the law since 2019 but violations are ongoing.

"Since we first filed our case against Chipotle, we have unfortunately learned that those initial charges were just the tip of the iceberg," department commissioner Lorelei Salas said in a statement.

The lawsuit also accuses Chipotle of illegally denying requests for time off or not paying them for time that they took, a violation of New York City's paid sick leave law, the Times reported. All of the 6,500 Chipotle employees in New York City were affected by scheduling and sick leave violations, according to the complaint.

Chipotle continues to expand even as COVID hit the restaurant industry hard. In the first quarter of 2021, the chain opened 35 net locations, and digital sales exploded with 133% growth. Chipotle attributed much of its growth to Chipotlanes, the fast casual chain's version of drive-thrus. More than half of the new Chipotle locations had drive-thrus this quarter, and the company says they "perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns."

Chipotle Is Raising Menu Prices & Blaming It On “Employee Costs”

AND REPUBLICANS BLAME DEMOCRATS 

FOR FIGHT FOR $15 MINIMUM WAGE

Lydia Wang 

REFINERY29

Next time you head to Chipotle, guac won’t be the only thing that costs a little extra. Your whole burrito bowl will, too. As of Tuesday, the burrito chain’s menu costs have risen by around 4%, following worker demands for increased wages and better labor conditions. At a virtual press conference on Tuesday, Chipotle CEO Brian Niccol said the company’s executives “really prefer not to” hike up prices, “but it made sense in this scenario to invest in our employees and get these restaurants staffed, and make sure we had the pipeline of people to support our growth.”

© Provided by Refinery29

Chipotle announced in May that workers would receive an average payment of $15 an hour by the end of June. In a statement to Refinery29, a spokesperson confirmed that the menu price increase would “help off-set the wage increase that Chipotle is now offering its employees.” In other words, the marginally higher menu prices — Niccol said the price increase is akin to “quarters and dimes that we’re layering in” — will go towards fairly compensating current and future employees.

Many outlets ran with this reasoning: Reuters reported that “Chipotle raises menu prices as employee costs increase,” and the New York Times cited “labor costs” as the reason for the spike. But this frames the updated menu costs as a sacrifice consumers will have to make so that the chain’s workers — whose employer makes tens of millions a year — can earn a living wage. In reality, Chipotle’s executives should have been paying their workers appropriately all along.

“Chipotle is a multibillion-dollar company with one of the highest-paid CEOs on the planet,” Kyle Bragg, President of a New York-based branch of the Service Employees International Union, told Jacobin in May. “But it still pays most of its workers across the country less than $15 an hour.”

Niccol’s salary has only continued to grow over time. In 2020, Niccol received the highest compensation he’s made since he took over the reins as CEO in 2018. Per Newsweek, he was paid $38 million — a sharp increase from the $14.8 million he would have made if not for the pandemic-related modifications Chipotle implemented. This means Niccol made 2,898 times more than the median Chipotle employee in 2020, and actually earned more money during the pandemic than he would have had it not happened. Other executives, including CFO Jack Hartung, CTO Curt Garner, and Chief Restaurant Officer Scott Boatwright, also received pay increases last year.

Employees, meanwhile, saw their salaries go down. Chipotle confirmed to Newsweek that the average worker took a pay decrease as a result of government-mandated shutdowns and COVID-19 safety measures. A representative clarified, though, that Chipotle workers still made more than their peers working for competitors. “Since all Chipotle restaurants are company-owned, our employee population and resulting pay ratio is higher compared to industry peers that operate under a franchise model,” the company said in a statement.

Like many other restaurant chains, Chipotle has faced criticism, lawsuits, and a sharp decrease in prospective employees for understaffing and underpaying its workers. On May 8, a photo of an unknown Chipotle location went viral on Twitter. “Ask our corporate offices why their employees are forced to work in borderline sweatshop conditions for 8+ hours without breaks,” read a sign taped to the restaurant’s door. “We are overworked, understaffed, underpaid, and underappreciated.” And while employees at Chipotle have been attempting to unionize for awhile, they’ve faced a lack of support.

The exploitation of fast food workers has been an ongoing problem across brands and across the country, but the pandemic showcased just how little companies value the employees working tireless days for under $15 an hour — the same employees often considered essential workers. As a result, fewer people are applying to work at fast food restaurants, and the workers already there are facing increased hours and a heavier workload as a result, reported Business Insider.

Make no mistake: This is why Chipotle finally decided to pay employees fairly. If anyone is to “blame” for the extra 50 cents or so your next Lifestyle Bowl may cost you, it’s not the workers, who should have been making more money years ago. It’s the executives, who underpaid them from the beginning, while their own wallets grew fatter.

Chipotle Fined For 13,253 Child Labor Violations

Companies like Chipotle are boosting prices, but CEOs multimillion dollar pay packages aren't getting any smaller

mmeisenzahl@businessinsider.com (Mary Meisenzahl) 

© Provided by Business Insider Photo by Joe Raedle/Getty Images

Chipotle recently raised prices about 4% across the board.

The company says price increases are due to increased employee wages.

CEO Brian Niccol made $38 million in 2020.

Chipotle raised prices across the menu by about 4% in June, a move the company says was prompted by increased wages for workers.

The average Chipotle meal will cost 30 to 40 cents more than it did before, and a spokesperson told Insider that the price hike will compensate for the recent wage increases for workers. In April, the fast casual chain said it would raise average hourly wages to $15 per hour by the end of June, an increase of $2 over the $13 an hour average pay.

While Chipotle attributes raising menu prices to the growing price of labor, some analysts point to high CEO compensation as another factor. In 2020 CEO Brian Niccol took home $38 million, $1.24 million of which was his base salary. The rest was made up of other incentives and an annual bonus.

"Brian Niccol 's annual compensation package is based on a competitive analysis of CEO pay levels within our peer group and is designed to pay for performance," a Chipotle spokesperson told Newsweek when the pay report was released.

Niccol 's compensation was 2,898 times more than the median Chipotle worker's $13,127 salary in 2020, based on an employee working 25 hours a week in Illinois. Companies are required to disclose the ratio of CEO pay to the pay of a median employee. At Chipotle, that ratio is 1,129 to one. Across the board, the pay ratio of CEOs to workers averaged 830 to 1 in 2020, according to the Institute for Policy Studies.

Higher labor costs do eventually lead to higher prices for customers, but experts say the difference isn't as stark as some might expect. A study from California State University San Bernardino found that for a minimum wage increase of 10%, food prices increase by just 0.36%.

According to Chipotle's proxy statement, executive compensation is aimed at maintaining "a level where we can successfully recruit and retain industry leading talent critical to shaping and executing our business strategy and creating long-term value for our shareholders."

Video: Why Chipotle raising prices may be a good thing for its stock (Yahoo! Finance)

"For 2020, Brian's compensation includes the value of a one-time modification that is not reflective of his ongoing pay package," a Chipotle spokesperson told Newsweek. Niccol made $33.5 million in 2019, an increase of about 13%.

Read more: Chipotle CEO Brian Niccol answers 9 questions about the chain's future including the fight for delivery profits, menu innovation, and franchising

In 2020, Chipotle's revenue grew 7.1% to $6 billion, with much of the growth attributed to an explosion in digital sales. In a year that was disastrous for many restaurants, Chipotle opened 161 new locations, expanded its Chipotlane drive-thru footprint, and stock prices increased 65.7%.

The distance between worker and CEO pay grew wider than ever during the pandemic of the past year, The New York Times reported. The largest CEO compensation packages are for tech company executives. Chipotle does stand out among fast food and fast casual restaurant compensation, though. Starbucks CEO Kevin Johnson took home $14.7 million. McDonald's CEO Chris Kempczinski received $10.8 million.

Critics of sky-high CEO pay, like the Economic Policy Institute, say the enormous compensation packages are "a major contributor to rising inequality that we could safely do away with."

"This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers, " EPI said in a report released last year.

Labor costs might have increased for restaurants over the last year, but so did the price of ingredients. Staple Chipotle items, like corn and avocados, grew more expensive this year as demand rose and shipping delays drove prices further up.

"Ingredient costs, there's talk about it. We'll see where that leads," Chipotle CFO Jack Hartung said at the Baird Global Consumer, Technology & Services Conference. The company says there are no plans to further increase prices right now.

Chipotle employees in New York are going on strike after expressing concerns over Halloween 'Boorito' promotion and poor working conditions

insider@insider.com (Bethany Biron) 

© Provided by Business Insider Chipotle employees in Houston, Texas. Brandon Bell/Getty Images

Chipotle employees in New York City are striking on Sunday to protest working conditions and its annual Halloween promotion.

The effort comes after staffers expressed concern about the holiday event following a chaotic BOGO deal day in July.

The strike is also part of a larger effort among staffers statewide calling for recognition of New York's Fair Workweek law.

Chipotle employees in New York City are joining the "Striketober" movement and fighting for better work conditions by protesting the company's annual Halloween "Boorito" promotion event.

Staffers in the Bronx are slated to walk off the job on Sunday afternoon and participate in a rally to protest the "company putting profits before people," according to a press release shared by Local 32BJ, a branch of Service Employees International Union. The strike comes amid an influx organized national protest efforts among frustrated workers in recent months at companies including McDonalds, John Deere, Netflix, and American Airlines.

"Chipotle continues to put workers' livelihoods in danger by cutting hours haphazardly, overworking staff members, and failing to pay their workers their premiums, which workers receive for working clopenings and having their schedules changed abruptly," Local 32BJ wrote in the release. "Their actions have made it difficult for many workers to sustain themselves, let alone their families, on these salaries."

The Halloween day strike comes after several Chipotle staffers expressed concern around this year's promotion, in which burritos purchased online are discounted to $5 and in some cases free to customers using codes obtained by visiting virtual restaurants on the online video game platform Roblox.

The promotion - which in the past typically involved giving discounts to customers visiting the fast-food chain dressed in costume - has long attracted large crowds since it started in October 2000. But employees said they are especially wary this year after a "buy-one-get-one" deal in July left many stores without ingredients, understaffed, and with throngs of angry customers as the event descended into "pure chaos."

"My crew is pretty scared," a manager in Illinois told Insider's Mary Meisenzahl earlier this week. "There's a lot of new employees since turnover is so high, and our customers have been extremely rude and impatient with our short staffing. I'm worried that if the night goes poorly, we'll find ourselves with employees walking out."

© Provided by Business Insider John Deere workers on strike on October 15, 2021 in Davenport, Iowa. Scott Olson/Getty Images

While Chipotle announced in May that it would increase average hourly wages to $15 an hour, Local 32BJ notes in the press release that CEO Brian Niccol did not take a wage cut in 2020, despite doubling his pay from the year prior to $38 million. The organization added that it believes that the $1 million in free burritos given to Robox users should instead be used to support employees.

"Chipotle workers, who are fighting for dignity and respect on the job, for fair raises, just working conditions, believe that if Chipotle can afford this give away, they can afford to follow New York's Fair Workweek Law and pay their workers withheld premiums and just wages," the release states.

Chipotle did not immediately respond to Insider's request to comment on the strike.

In New York, the Sunday strike is also part of a larger effort among Chipotle employees statewide who calling for recognition of the Fair Workweek law, a policy passed in 2017 to prevent abusive practices and unfair scheduling within the fast-food industry.

On Wednesday, staffers at a Chipotle restaurant in Manhattan's Washington Heights neighborhood also went on strike to protest claims of slashed hours that left many incapable of paying their bills.

"They have been subjected to things that are outside their job descriptions, who in the middle of the pandemic have been serving this community," New York Assemblywoman Carmen De La Rosa told NY1. "Chipotle is a corporation who has come into this community and has the audacity to mistreat their workers.

Chipotle's CEO says the chain isn't having a problem hiring after it raised prices to pay workers more

THEY RAISED PRICES BECAUSE THEY COULD 

WORKERS WAGES ARE IRRELVENT

mmeisenzahl@businessinsider.com (Mary Meisenzahl) - 

© Provided by Business Insider Hollis Johnson

CEO Brian Niccol says the great resignation movement isn't happening at Chipotle.

Chipotle raised wages in 2021 in a push to increase hiring.

Like other chains, Chipotle dealt with some staffing issues in the last year.

Chipotle isn't seeing the effects of the "Great Resignation" in its workforce, CEO Brian Niccol told investors on Tuesday in the fourth-quarter earnings call. The Mexican chain is staffed back up to pre-pandemic levels, with no signs of mass resignations among General Managers.

Chipotle, like many competitors, raised wages in June 2021 to an average hourly pay of $15 per hour. The raise, $2 above the chain's previous average wage, impacted thousands of employees, Chipotle told Insider last year. News of increased wages came out as Chipotle announced it was looking to hire an additional 20,000 employees to staff up 200 new restaurants.

Staffing needs continue to grow for Chipotle, which has booming sales. In the same earnings call, the fast-casual chain shared that sales were up 19.3% over the previous year. Nearly half of sales, 45.6% in 2021, were digital. The growth of digital sales means that Chipotle has to staff up two make lines at every restaurant, one for walk-in customers and one for digital orders.

Demand has come booming back in the restaurant industry from the earlier days of the pandemic, but the workforce hasn't returned at the same rate.

Turnover among restaurant workers is still elevated over pre-pandemic levels. In a Black Box Intelligence survey of 4,700 former and current restaurant workers from October, 15% said they'd left the industry in the previous year, and another 33% planned to leave.

Labor costs increased, and many business owners say that they've been unable to staff restaurants. In some cases, owners even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market.

Though Chipotle says staffing is no longer a major problem, the chain has had its share of struggles over the last few years. In November, five Texas Chipotle workers, including a general manager and kitchen manager, told Insider that they walked out over "impossible" conditions thanks to understaffing and constant digital orders. Workers in Kentucky made a similar move after the chain's Boorito promotion, which it said was the highest volume digital order day of the year.

Chipotle says it's looking to hire more workers ahead of its busy season, but fewer than 1% of stores have their digital make lines throttled due to low staff as of February 2022.

 

Paper: Multistate foodborne illness outbreaks impact restaurant stock price, public perception

The financial impact of foodborne illness outbreaks at restaurants: Chipotle Mexican Grill

Peer-Reviewed Publication

UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN, NEWS BUREAU

 

IMAGE: 

FOODBORNE ILLNESS OUTBREAKS SPANNING MULTIPLE STATES BRING SWIFT FINANCIAL LOSSES, INCREASED MEDIA ATTENTION AND A PUBLIC-RELATIONS HIT THAT MAKES SUBSEQUENT SMALLER OUTBREAKS MORE FINANCIALLY DAMAGING, SAYS MARIA KALAITZANDONAKES, A PROFESSOR OF AGRICULTURAL AND CONSUMER ECONOMICS AT ILLINOIS.

view more 

CREDIT: PHOTO BY FRED ZWICKY

CHAMPAIGN, Ill. — As demand for food from restaurants soars in the U.S., so does the importance in understanding the impacts of foodborne illness outbreaks. A new paper co-written by a University of Illinois Urbana-Champaign expert in food marketing and food policy finds that outbreaks spanning multiple states bring swift financial losses, increased media attention and a public-relations hit that makes smaller outbreaks more financially damaging. 

In the U.S., more than 60% of foodborne illness outbreaks occur at restaurants, and the vast majority of those outbreaks are confined to a single state. As these smaller food safety events are announced by local health agencies and media, their impact has been generally not well understood.

When restaurants experience multistate outbreaks – as did the fast-casual chain Chipotle Mexican Grill in 2015 – that can lead to a stock market penalty, substantial negative news media coverage and a discernible change for the worse in how investors and the public view the company’s smaller outbreaks, says Maria Kalaitzandonakes, a professor of agricultural and consumer economics at Illinois and lead author of the study.

“Foodborne illness outbreaks are somewhat common in the U.S. If you operate a restaurant, it’s difficult to get that risk down to zero. When a restaurant has a single-state outbreak, the public may not even hear about it,” she said. “But if you have what happened at Chipotle – where your brand becomes associated with foodborne illness after a multistate outbreak – that’s when you start to see responses to these single-state outbreaks. Investors start to get rattled, the media pays attention and we see clear impacts from those types of outbreaks.”

The paper, which was published by the journal Agribusiness, was co-written by Maria Teresa Serra Devesa, the T.A. Hieronymus Distinguished Chair in Futures Markets at Illinois, and Brenna Ellison of Purdue University.

To gauge the effect of foodborne illness outbreaks, the researchers studied eight such occurrences at the ubiquitous fast-casual chain to evaluate the media and stock market responses to both single and multistate outbreaks.

“We chose to study Chipotle because it’s publicly traded and not owned by a parent company, which means we can zero in on the financial impacts of the outbreaks through the change in its stock price,” Kalaitzandonakes said. “We were able to identify the first announcement for each outbreak and get stock price data down to the minute level.”

In their analysis, the researchers found “a fundamental shift” in news media coverage and stock market response to single‐state outbreaks before and after Chipotle’s multistate E. coli outbreaks, according to the paper.

Before Chipotle’s more well-known multistate outbreaks, the company’s single‐state outbreaks earned little public scrutiny and incurred no financial losses for the company – whereas after the multistate food safety events, subsequent single‐state outbreaks resulted in national media coverage and financial losses, Kalaitzandonakes said.

“We’d expect multistate outbreaks to be newsworthy nationally, so the fact that Chipotle’s multistate E. coli outbreaks were highly reported on is intuitive. It is less expected that single-state outbreaks would be of interest to national news,” she said. 

But the results show that media attention for single‐state outbreaks depended on whether they occurred before or after the multistate outbreaks, Kalaitzandonakes said.

“Before, media attention of single-state outbreaks was low, generating only a handful of news stories,” she said. “After, media attention was much higher, generating hundreds of news stories with national audiences.”

Similarly, the researchers found that Chipotle’s multistate outbreaks were associated with declines in stock price returns of more than 5%, resulting in a market capitalization decline of $1.75 million. But the impact of Chipotle’s single‐state outbreaks was more nuanced: Single‐state outbreaks that occurred before the multistate outbreak brought no losses, whereas single‐state outbreaks that occurred after resulted in a 4%-7% reduction in Chipotle’s stock price returns.

“This could be for a variety of reasons – increased media coverage, reduced faith in management, worry about consumers staying away and reducing revenues, and so on,” Kalaitzandonakes said.

The researchers found that the differences in both media coverage and stock market response to single‐state outbreaks before and after Chipotle’s multistate E. coli outbreaks were unrelated to their severity, suggesting that multistate outbreaks changed the calculus for both media and investor perceptions about foodborne illness risk at the chain.

“Before the multistate outbreaks, which generated significant negative national media attention, these single-state outbreaks didn’t really register,” she said. “But single-state outbreaks after the multistate outbreak – investors responded very quickly and negatively, indicating they thought these events were risky.”

The lessons from Chipotle’s case underscore the importance of restaurants investing in outbreak prevention, Kalaitzandonakes said.

“Foodborne illness outbreaks at restaurants are most frequently caused by sick workers or poor food handling practices,” she said. “So preventing foodborne illness through enhanced safety measures is a relatively straightforward fix that’s likely to have a high return on investment for both the company and public health.”

---

JOURNAL

Agribusiness

DOI

10.1002/agr.21898 

METHOD OF RESEARCH

Data/statistical analysis

SUBJECT OF RESEARCH

Not applicable

ARTICLE TITLE

The financial impact of foodborne illness outbreaks at restaurants: Chipotle Mexican Grill

Maine Chipotle Workers File to Form Company’s First-Ever Union

The exterior of a Chipotle Mexican Grill store is shown on June 9, 2021, in Houston, Texas.

BRANDON BELL / GETTY IMAGES

BY Sharon Zhang, Truthout

PUBLISHED June 23, 2022

Workers at a Chipotle in Augusta, Maine, filed to form a union on Wednesday, hoping to become the first unionized workers at the food chain’s nearly 3,000 locations in the country.

The workers, who have formed an independent union known as Workers United, turned in their union petition with union cards signed by a majority of the roughly 20 workers in the store, according to union organizers.

Workers say that they face long hours and understaffing, leading to safety concerns. The union staged a two-day walkout last week to protest against unsafe working conditions after repeatedly being forced to open the store without proper staffing, putting the employees and the customers at risk, they said.

When the store is understaffed — often with half of the amount of people that are required to meet demand — workers say that they’re unable to do things like food temperature checks or cleaning tables in the restaurant.

“I care about these people more than anybody else,” employee Laramie Rohr told the Kennebec Journal. “I hope to improve working conditions, not have to have five people working 50, 60, 70, 80 hours a week, to have the ability to close when you need to for safety reasons. Because we don’t want to serve bad food. We’re proud of our food, we’re proud of our workplace, we’re proud of our coworkers.”

Chipotle management says the fact that they responded with hiring initiatives after the walkout shows that the company is already capable of meeting employees’ concerns, but workers say that upper management has a pattern of not addressing workers’ needs, according to the Kennebec Journal.

The workers delivered a letter to management on Wednesday informing them of their intent to unionize. “We’re hoping that by forming this union we can work with Chipotle to achieve the goals we have in common, such as safe and healthy food, and good atmosphere, and safe and happy crew members, and all of the other things that make Chipotle different,” workers said in a statement.

“We are here to make things better by ensuring we have the tools and the support to meet Chipotle’s high standards while caring for ourselves, the crew that will come after us, and other food service workers who may see our efforts and feel empowered to stand up against the industry’s toxic culture,” they said.

The independent nature of Chipotle United echoes the union campaign waged by Amazon workers, who have been organizing under the independent Amazon Labor Union. Although Chipotle workers have sought help from established unions like Workers United, an affiliate of the Service Employees International Union (SEIU), and the Maine American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), they are forming a union independently.

Chipotle workers in New York City have also been organizing a union effort, though they haven’t filed for a union petition yet. New York workers, organizing with SEIU Local 32 BJ, filed a labor complaint against the company earlier this year alleging that the company illegally retaliated against Brenda Garcia for her role as a union leader. The union also filed a complaint that the company has been surveilling and intimidating employees over the union.

If Chipotle workers successfully unionize, their victory could spark a wave of unionizations in stores across the country — much like Starbucks workers, who have unionized over 160 locations just in the past roughly eight months.

Chipotle will air its first Super Bowl ad touting the farmers who supply its food

Chipotle will air its first Super Bowl ad this year to highlight the practices of its supply chain.

The hefty price tag of the airtime and the difficulty in striking the right tone in advertising has led many big brands to sit out the game this year.

But Chipotle is one of the rare winners of the coronavirus pandemic, thanks to its strong digital sales.

© Provided by CNBC A still from Chipotle's

Chipotle Mexican Grill will run its first-ever Super Bowl ad this year to highlight the farming practices of its suppliers.

Big brands like Coca-Cola and Budweiser are sitting out the game this year, freeing up airtime for newcomers like Chipotle. A 30-second commercial during the football game will set companies back about $5.5 million this year, slightly less than 2020′s rate of roughly $5.6 million.

Chipotle is one of the rare winners of the coronavirus pandemic from the restaurant industry. The burrito chain has seen its digital sales more than triple in its last two quarters, and its stock has soared 72% in the last year, raising its market value to $41.9 billion.

However, the pandemic also presents new difficulties to advertisers, who will have to worry about striking the right tone when the football game's commercials typically skew toward comedic and star studded.

Chipotle's ad aims to keep customers coming back to its restaurants by focusing on its "food with integrity" pledge and how it sources its ingredients. In the commercial, a boy asks if a burrito can change the world, from emitting less carbon to making farmers happier, while showing images of peppers and tomatoes being grown, picked and transported.

In a release announcing the news, Chipotle said that it believes that the pandemic has shifted consumers toward a "community-focused society," making them more aware of the impact of where and how they spend their dollars.

"We want to use this massive platform to help shift attention toward creating positive change for the challenges our food system faces and educate consumers on how they can make a difference," Chief Marketing Officer Chris Brandt said in a statement.

On Super Bowl Sunday, Chipotle will donate a dollar from every order to the National Young Farmers Coalition, an advocacy group for young farmers, and customers who order from the chain's website or app won't have to pay a delivery fee.

For years, the company and its foundation have contributed millions of dollars to support U.S. farmers. Chipotle donates 5% of the profits from the Tractor Beverages drinks sold at its locations to causes that benefit farmers.

WILDCAT! WORKERS DIRECT ACTION 

A Chipotle general manager and 4 of his employees FELLOW WORKERS quit after a surge of to-go orders drove them to their breaking points

At least 5 workers at a Chipotle in Austin, Texas told Insider they quit on November 14.

The location's former general manager said the store was too understaffed to meet the demand for food orders.

Chipotle said the Austin location was closed November 15 "due to available labor," but reopened the following day.

A group of five Chipotle employees, including a general manager and kitchen manager, quit their jobs at the end of their shifts on November 14 after working under "impossible" conditions, they told Insider.

Hollis Johnson/Business Insider

Mary Meisenzahl
Mon, November 22, 2021

Peter Guerra, a Chipotle veteran of five years and general manager for six months, worked at the Scofield Farms Chipotle location in Austin, Texas.

"My store was severely understaffed, we struggled just to keep our heads above water," with less and less support from management, Guerra said. He said he was regularly scheduled to work 80 hours a week, but often had to work additional hours to cover for employees who quit and left gaps in staffing.

Chipotle stores operate with two food prep lines: one for customers who order on-site and another for digital orders. Some Chipotle workers have previously told Insider that it's hard to keep up with the rapid rate at which digital orders stack up.

Guerra said the constant pressure to serve so many customers at once made it seem like he was being set up by the company's leadership to fail.

He said he started to hit his breaking point on Saturday, November 13, when digital orders were piling up while a line of customers stretched to the door. He said he didn't have enough workers to meet demand, so he closed the dining room to focus only on digital orders.

He was "in tears" at the thought of facing the same pressure the next day when only one other person was scheduled to work, he said. He had to close the dining room that day, as well.

At the end of his shift on Sunday, November 14, Guerra said he quit.

"I thought, 'this is literally going to kill me if I keep it up,'" Guerra said.

Kitchen manager James Williams also quit that Sunday after working 16 hours on his last day, he told Insider. Trying to manage both the dining room and kitchen, "I was stretched infinitely too thin," he said. When he and Guerra made the decision to close the dining room, both said customers were sympathetic.

"They could see the burnout on our faces," Guerra said of customers who were in line when the store closed. Digital orders continued to come in, and DoorDash drivers were also understanding and told workers to take their time, Williams said. Both told Insider that they finished their shifts and cleaned up the store, before leaving around 1 a.m.

Mary Meisenzahl/Insider

"Everyone that didn't clock in the next day was assumed to have quit," Williams told Insider. "It was a ghosting process."

A total of five employees of the Austin location confirmed to Insider that they quit on November 14. Chipotle declined to comment on staffing at the store but said that the location is now open.

"The Parmer Lane location was temporarily closed on Monday due to available labor, but reopened Tuesday with normal business hours," a spokesperson told Insider. As of Thursday, November 18, the restaurant still did not appear to be accepting online orders.

"In a few minor instances, there have been challenges with available labor so we made adjustments in these restaurants to temporarily accommodate the needs of the business," the spokesperson said.

Chipotle, like the broader restaurant industry, has seen instances recently of workers walking out and quitting as a symptom of what's referred to as a labor shortage. Business owners say they're unable to find staff and cases even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market. This mismatch has led to restaurants decreasing hours and closing dining rooms.

Many workers have said they feel they have no choice but to leave these demanding service jobs.

Hold the meat: Burger King, Chipotle, Starbucks top fast-food rankings on World Vegan Day 2021

Steve Kiggins, USA TODAY

Mon, November 1, 2021

Sofritas at Chipotle. The Impossible Whopper at Burger King. Fresco style at Taco Bell.

Plant-based eaters, once limited to wimpy salads minus cheese and often without dressings that contained dairy, have increasingly more options at some of the most recognizable U.S. fast-food restaurants amid growing company commitments to diversify protein offerings and cut greenhouse gas emissions created by animal farming.

But for every Starbucks, which introduced its Impossible Breakfast Sandwich in 2020, and Pizza Hut, which is testing a plant-based pepperoni topping, are “Dining Dawdlers” like McDonald’s, Subway and Chick-fil-A, according to a first-of-its-kind report to be released Monday on World Vegan Day by World Animal Protection.

Keep the climate on your mind: Subscribe to USA TODAY's free weekly Climate Point newsletter

Cameron Harsh, programs director for the nonprofit animal welfare organization, described the 24-page report as a guide to help “individual consumers align with the restaurants that share their values,” but stressed that “a lot more progress” is needed to reduce the production and consumption of animal proteins for the sake of the climate and general health.

“What the ‘Menu Movers’ in this report have done is not just added plant-based alternatives to their menus and called it good, they’ve actually talked publicly … about the benefits of these products,” Harsh told USA TODAY.

In its “Moving the Menu” report, shared first with USA TODAY, World Animal Protection graded the country’s 50 largest fast-food chains on their efforts to vary protein offerings, highlight the benefits of plant-based eating in their corporate social responsibility reporting and make public commitments to reduce the use of meat and increase vegan and vegetarian menu options.

A Chipotle burrito bowl including sofritas, a shredded firm tofu flavored with chipotle chiles, poblano peppers and a blend of spices.

Only seven chains were designated as “Menu Movers,” the report card’s top ranking: Burger King, Chipotle, Starbucks, KFC, Panera Bread, Pizza Hut and Taco Bell.

World Animal Protection, while not a vegan or vegetarian organization, advocates eating less meat as part of its mission to “change animals’ lives for the better,” according to its website. One of the group’s primary initiatives is Meating Halfway, a 21-day custom plan designed to give individuals and families accessible tools to reduce meat and increase plant-based foods in their diets.

An early trendsetter with sofritas, a menu staple since 2014, Chipotle remains focused on pushing more vegetables and plant-based products to the “center of plate,” said Stephanie Perdue, the company’s vice president of marketing. The Mexican grill is now testing a meatless chorizo – free of gluten, soy, nuts and grains – at its Denver and Indianapolis locations.

What is COP26? Your quick guide to United Nations climate change summit in Glasgow

The popularity of sofritas, made from shredded tofu flavored with chipotle chiles, poblano peppers and a blend of spices, has only reinforced Chipotle’s thinking. The company expects to source 4.9 million pounds of organic tofu this year from Hodo Soy Beanery in California, up from 4.2 million pounds in 2020.

“We knew that if it’s craveable, you wouldn’t miss the meat,” Perdue told USA TODAY. “You still get all those layers of flavors.”

Taco Bell, which already offers more than 15 items on its “Veggie Cravings” menu, is also testing additional plant-based options – including its Cravetarian meatless protein made from a seasoned blend of chickpeas and peas.

“With more than 7,000 restaurants nationwide and consumers’ growing sustainability concerns, we see the opportunity – and responsibility – to make a positive environmental impact,” said Missy Schaaphok, Taco Bell's director of global nutrition and sustainability, adding that consumers shouldn’t have to “choose between crave-ability and responsible dining.”

Starbucks and Panera, meanwhile, have highlighted their respective commitments in recent sustainability reports noted by World Animal Protection.

In its 2020 Global Environmental and Social Impact Report, Starbucks said, “To meet our 2030 goals, we set five key strategies, rooted in science, grounded in Starbucks Mission and Values, and informed by comprehensive market research and trials: Expand plant-based menu options.”

While the COVID-19 pandemic delayed plans to test several plant-based dishes, Panera said its “long-term aspiration is to have a menu where half of our entrees are plant-based,” according to its most recent sustainability report.

Thirty-nine of the top 50 fast-food restaurants, however, aren’t taking meaningful steps to provide vegans and vegetarians with much more than the ketchup packets next to the napkin dispensers, according to the World Animal Protection report.

• While McDonald’s began testing its McPlant vegan burger at eight U.S. locations across four states this month, the American fast-food icon has lagged behind Burger King, long its primary rival. BK launched the Impossible Whopper at its 7,000-plus locations more than two years ago, and the company has reported U.S. guests who chose the meatless burger in 2020 “avoided the equivalent greenhouse gas emissions of driving about 520 million miles in an average passenger vehicle.”

• Subway, with nearly 24,000 locations – the most of any chain – has yet to provide a plant-based meat option nationally and failed to make a public commitment to expand its menu or reduce meat consumption.

• Unlike KFC, which has carried out plant-based chicken trials, Chick-fil-A hasn’t featured a plant-based alternative on its menu, publicly detailed any such plans or recognized the benefits of reducing animal proteins.

The World Animal Protection list of “Dining Dawdlers” also includes Arby’s, Dairy Queen, Domino’s, Dunkin’, Panda Express and Wendy’s.

The message for those straggling chains, Harsh said, is to recognize the plant-based movement as an “important and necessary direction” for the sustainability of the planet – and for their bottom line.

“To not catch up,” he said, “is going to be detrimental to their business.”

This article originally appeared on USA TODAY: Burger King, Chipotle, Starbucks get top marks at World Vegan Day 2021

US Federal agency sues Chipotle after a Kansas manager allegedly ripped off an employee's hijab

CLAIRE RUSH
Updated Sat, September 30, 2023

 On Wednesday, Sept. 27, 2023, a federal agency sued the restaurant chain Chipotle, accusing it of religious harassment and retaliation after a manager at a Kansas location forcibly removed an employee's hijab, a headscarf worn by some Muslim women. 

(AP Photo/Steven Senne, File)

A federal agency has sued the restaurant chain Chipotle, accusing it of religious harassment and retaliation after a manager at a Kansas location forcibly removed an employee's hijab, a headscarf worn by some Muslim women.

In a lawsuit filed Wednesday, the Equal Employment Opportunity Commission alleged that in 2021, an assistant manager at a Chipotle in Lenexa, Kansas, repeatedly harassed the employee by asking her to show him her hair, despite her refusal. After several weeks, the harassment culminated in him grabbing and partially removing her hijab, according to the complaint.

The manager's “offensive and incessant requests” that she remove her hijab, and his attempt to physically take it off, were “unwelcome, intentional, severe, based on religion, and created a hostile working environment based on religion," the complaint alleged.

Chipotle's chief corporate affairs officer, Laurie Schalow, said the company encourages employees to report concerns, including through an anonymous hotline.

"We have a zero tolerance policy for discrimination of any kind and we have terminated the employee in question,” she said in an emailed statement.

The harassment began in July 2021, when the manager began asking the employee, who was 19 at the time, to remove her hijab because he wanted to see her hair. According to the complaint, he demanded to see her hair at least 10 times over the course of one month. She refused on every occasion, saying she wore it because of her religious beliefs.

The employee complained to another supervisor that the incidents made her uncomfortable, but no further action was taken against the manager, the complaint said. One night during closing in August 2021, the manager allegedly reached out and pulled her hijab partially off her head.

The following day, the employee gave her two weeks' notice. Chipotle didn't schedule her for any shifts during those two weeks even though other non-Muslim employees who submitted their notice continued to be scheduled for work during that time, the complaint alleged.

The lawsuit claims that Chipotle violated federal civil rights law protecting employees and job applicants from discrimination based on religion, race, ethnicity, sex and national origin.

In its suit, the Equal Employment Opportunity Commission said it wants Chipotle to institute policies that provide equal employment opportunities for employees of all religions and pay damages to the employee.


‘This Is Trump Country’: Black Former Employee at Florida Waste Management Company Alleges Co-Workers Taunted Him with Stuffed Monkey, Used Racial Slur

Taylor Ardrey
Fri, September 29, 2023 

The US Equal Employment Opportunity Commission sued a waste management company after Black and Haitian American employees alleged they were subjected to a hostile work environment.

The EEOC filed the lawsuit on behalf of the employees of Waste Pro of Florida. It was filed on Tuesday, Sept. 26.

EEOC filed a lawsuit against Water Pro of Florid after Black employees alleged that they were exposed to a hostile work environment discrimination. (EEOC Lawsuit)

Fednol Pierre, who served as a welder and worked at the Jacksonville location, said he was continuously harassed by his colleagues, according to the lawsuit. His co-worker, identified as William Watts, allegedly called him the N-word, said to go back to Haiti, adding that “there is no need for you here.” He was also told to “go back on the banana boat” and “this is Trump country,” according to the claim obtained by Atlanta Black Star.

Pierre expressed his concerns to his supervisor, but the lawsuit alleged no disciplinary action was taken. In March 2022, less than a year after working at the location, he was approached by a supervisor who told him Watts and another co-worker named Mr. Shuman used racially offensive language when talking about him. He reported the harassment again, which was sent through human resources and prompted an investigation.

Pierre continued to report his experience and expressed that he feared retaliation from his co-workers amid the probe into his claims. The lawsuit stated that when the company didn’t take action, he requested to work at a later time. However, he “still had to work with Mr. Watts and Mr. Shuman for an hour each day.”

According to court records, he also requested that it is not disclosed that he reported the racial discrimination claims, but Watts was informed anyway by regional HRM Risner. Risner also announced that there would be a staff meeting to address Pierre’s concerns after the investigation was concluded.

“Before the staff meeting, [Pierre] and another Black employee discovered a stuffed monkey carrying an American flag in Mr. Pierre’s work area. Mr. Pierre immediately reported the monkey incident to management and demanded the stuffed monkey be removed and that management review video footage and conduct an investigation into the matter; however, no corrective action was taken before the staff meeting,” the filing said.

The harassment from Watts and Shuman continued, the lawsuit alleged. Pierre felt like he was slighted, ignored, and given the most challenging tasks. He decided to quit about two weeks later.

The lawsuit is seeking, in part, punitive damages for Black and Haitian American employees due to the “malicious and reckless conduct” of the company.

Robot cooks are rapidly making their way into restaurant kitchens


Todd Wasserman@TODDWASSERMAN

WED, AUG 3 2022

KEY POINTS

Robots have been making their way into kitchens nationwide as the technology becomes cheaper and finding workers becomes harder.

Chipotle, Wing Zone, and White Castle are just some of the restaurant chains investing in robotics.

Stellar Pizza, founded by former SpaceX engineers, built a touchless machine that fits in the back of a truck that can make pizzas in under a minute.



A White Castle team member next to Miso Robotics’ Flippy.
Courtesy: Miso Robotics


Before the end of this year, a brand-new pizza purveyor plans to hit the Los Angeles area. But this isn’t just another pizza place.

This company plans to serve pizza from trucks and the pies themselves are put together not by humans but by robotics developed by former engineers from SpaceX. The machine can produce a pizza every 45 seconds.

Benson Tsai, who founded Stellar Pizza in 2019 along with fellow SpaceX engineers Brian Langone and James Wahawisan, got about two dozen former SpaceX employees to build a touchless pizza-making machine that fits in the back of a truck.

Stellar isn’t the first company to conceive of robot-made pizza, and the early track record for the business model includes one notable failure. Softbank-backed Zume Pizza, which was once valued at $4 billion, shuttered its robot pizza delivery business in January 2020 and has since pivoted to making compostable packaging.


VIDEO13:19
These robots turn waste into compostable packaging


Entrepreneurs are not giving up on the robot pizza concept. Chef Anthony Carron’s 800 Degrees Go of Cleveland, which specializes in wood-fired cooking, and robot-based artisanal pizza maker Piestro of Santa Monica, Calif., have a venture to use robotic pizza machines at bricks-and-mortar and ghost kitchen locations in what they say will be a lower cost restaurant model. They plan to have 3,600 machines deployed in the next five years.

The trend has moved far beyond pizza as well, with Miso Robotics, the maker of the Flippy 2 — a robot arm that works the fryer at fast-food restaurants — already deployed at Chipotle, White Castle and Wing Zone. It’s being introduced to the Middle East market as well through a partnership with Americana, a franchisor and franchisee with over 2,000 restaurants in the region including KFC, Hardees and Pizza Hut.
Robot chefs becoming “commonplace”

Jake Brewer, Miso Robotics’ chief strategy officer, said such machinery will soon be commonplace in restaurants.

“I believe that if anyone wanted to, they could go see a robot working in a restaurant in 2024, 2025,” Brewer said. “You can go see robots cooking right now and that’s only going to grow week over week.”

Chipotle Mexican Grill worked with Miso Robotics to customize the “Chippy” robot, which cooks and seasons Chipotle’s chips with salt and fresh lime juice. The robot is trained to recreate the exact recipe using artificial intelligence.

As of March, Chipotle was testing the robot at its innovation hub in Irvine, California, the Chipotle Cultivate Center. The company plans to use it in a restaurant in Southern California later this year and will determine if it will roll it out nationally.

“Right now, the general sense is that there’s going to be a lot more robots,” said Dina Zemke, assistant professor at Ball State University. She said in the past adding robotics to the staff was prohibitively expensive, but now there are more companies making kitchen-ready robots, which is helping to drive prices down.

A finished pepperoni pizza exiting a machine made by Stellar Pizza, a robotics-powered mobile pizza restaurant created by a team of former SpaceX engineers
Medianews Group/long Beach Press-telegram | Medianews Group | Getty Images

Fast-food preparation is made for robotics. “The recipes are highly standardized. And really, it’s mostly heating an assembly,” Zemke said. “No one’s creating just the right secret sauce in the back of the house; all of that is provided through a commissary system.”

Wing Zone, a 61-unit chain, is perhaps the most robotics-friendly fast-food restaurant right now. In May, the chain expanded its relationship with Miso Robotics. Wing Zone has been testing Flippy 2 in the last step of the wing-frying process and is using its Wing Zone Labs arm to develop fully automated Wing Zones.

Lack of restaurant staff aids robotics push

Part of the adoption is driven by an inability to find workers. The National Restaurant Association reported last year that 4 in 5 operators are understaffed, and overall employment in the leisure and hospitality category that includes restaurant staffing has been the most challenged since the pandemic, according to data from the Bureau of Labor Statistics.

A recent report from Lightspeed found that 50% of restaurant owners plan to install automation technology within the next two or three years.

For Chipotle, it’s not about replacing workers but allowing them to complete more impactful tasks than repetitive things like making chips.

“It started with, ‘How do we remove some of the dreariness of a worker standing at the fryer and frying chip basket after chip basket?’” Chipotle chief technology officer Curt Garner told CNBC earlier this summer. “It allows our crew to spend more time doing culinary tests, serving guests,” he said.

Clemson University professor Richard Pak, an expert on the use of autonomous technology, said automation works better for food that is cheap. “When you’re paying for it, when you’re paying more, you’re paying for experience and artistry and experience,” he said. “And so I don’t know if these kinds of robots would be acceptable in higher-end restaurants. People would wonder what they’re paying for.”

Yet there is some trepidation in the broader restaurant market as well. A recent poll by Big Red Rooster found that a third of diners don’t want to see robots preparing their food.

For Stellar founder Tsai, the robotics are a means to an end: making sure that the company can deliver an affordable pizza pie that customers like. While pricing has not been finalized, he said the target price is “definitely sub-$10.” A 12-inch pie of cheese pizza will run about $7, Tsai said.

The plan for Stellar, which has raised $9 million in funding, includes national expansion.

“The pizza market is a big, big market and as we sort of establish a foothold here in Los Angeles we will start to grow and expand outwards towards Las Vegas, towards Phoenix, towards Texas,” Tsai said.