Tag Archives: Chipotle

SURPRISE! Raising Wages = Higher Prices.

Chipotle just raised its prices in San Francisco 14%, exactly the same % as the raise in wages with the new minimum wage in the city. A popular chain like Chipotle has the option to do this, while most Mom and Pop restaurants and less trendy chains typically cannot raise prices.   They (we) just have to take a 14% hit.

There is no willingness of consumers to pay a little more so their fellow citizens who work in food service can make a living wage. Instead, “the dollar store mentality” rules with most customers. The lowest prices for the fattest burritos and self-throat-cutting “deals” drive sales. Thus, small businesses seem likely to lose out and possibly go out of business under the new inflationary scenario where operating costs rise but prices mostly cannot.

One lesson to be learned from Chipotle is great branding and marketing can help a business weather the storm.  Every business needs to give customers a compelling reason to look beyond the lowest prices.   Great marketing and branding can attract a high number of less price sensitive customers.  Volume plus profit margins equals survival in a time of rising costs!  This is something we are happy to say we’ve been able to help with for more than 40 hospitality locations.  Shoot us a note at A-List Marketing for a free consultation on how to beat rising costs and cheap customers.  It’s the only way to cover the ever rising costs in our businesses!

I liked this “Take Part” article about the Chipotle price hikes, as the writer seems shocked at basic economics.

Have a great day and enjoy every burrito! — TTBG

PS – I just want to add since I saw this – if you don’t tip because the minimum wage went up, you are a cheap ass.  You are not doing it on principle, you are a cheap ass.

http://wp.me/p2g9q8-CS

 

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Why Chipotle’s hiring process is best, but most restaurants won’t use it.

Chipotle does a LOT of things right.  Beyond the obvious ways they are grabbing the market from millennials on up (high quality, natural ingredients, great marketing etc) they innovate with their music, something most restaurants blow off.  And as explained on LinkedIn Pulse, Chipotle innovates and excels in their recruiting, hiring, promotion and retention processes.  Staff is the foundation of every hospitality concept and reading how they do it can help every operator.  Here’s the problem:

It is easy to make the knee jerk conclusion that Chipotle succeeds by “treating employees well” but that’s missing the reason they succeed. It is not being nice to employees, it is excellent screening, hiring criteria, and training policies.

Most operators will read how Chipotle does it, and say “great ideas.”  And they are.  The meat of this article, “The Actual Hiring and Promoting Process,” is true genius. But most operators will balk at implementing it as it means extra time, training, money and profound changes in attitude.  Obviously it pays off, but sadly most  companies will talk the talk only, where Chipotle walks the walk and gets a good return on the investment most are unwilling to make.

The Actual Hiring And Promoting Process

Because Chipotle is looking to turn its $9-an-hour crew members into employees that garner six-figure compensation packages, they have a more rigorous hiring process for its crew members than the typical fast food place. When people apply, they are told to read the career site, and then when they come in for an interview they are asked about what they read.

Those interviews are often team interviews, where each member of the crew talks with the candidate, and they look for people who enjoy the food at Chipotle and actually did the reading they were assigned. This is smart, because now the candidate fully understands that Chipotle is looking to promote from within, and they’ll be properly motivated.

Along those lines, Chipotle cares little about experience and requires just a high school degree (after all, it is just a $9-an-hour job). Instead, they search for people who have the 13 characteristics they are looking for (which includes everything from “presentable” to “infectiously enthusiastic”), assuming that superiors will give new employees the training they need to move up.

Once hired, crew members do all the jobs at the restaurant, from washing dishes to the cashier to making the food. Again, since both the employee and the manager are incentivized if the employee is promoted, training in all these areas happens organically.

For a supervisor to get promoted to a higher-paying job, the employees who work underneath them are interviewed. If the employees speak poorly about the manager, the manager will not be promoted.