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Case Study: Chipotle Mexican Grill
Chipotle Mexican Grill is a renowned fast-food business in the U.S., although it has outlets in the UK, Canada, and France among other overseas countries. This enterprise has a good reputation that revolves around its high-quality food that is offered to customers and an effective employee career development program. Chipotle Mexican Grill has been recording remarkable growth since its inception in 1993.
For instance, according to Qumer and Purkayastha (2015), in 2014, it reported revenue growth of close to 32%, which represented 1.08 billion USD. During the same year, its net profits rose by approximately 57% to stand at 130 million USD (Qumer & Purkayastha, 2015).
Employing a unique business culture has helped Chipotle to resonate well with customers. However, as revealed in this paper, Chipotle’s vast expansion has resulted in challenges pertaining to the sustainability of its operations and the control of the prevailing business culture. In addition, its employee assessment initiative is presented as another challenge that has hindered the development of team spirit in the workforce, thus limiting the company’s productivity levels. Strategies such as the adoption of a system that builds synergy in the workplace and limiting expansion plans among others are recommended.
Main Problems and Issues at Chipotles
The most significant challenge facing Chipotle emanates from the management team’s inefficient control of the company’s growth, a situation that has made it impossible for it to maintain its exceptional employee culture (Qumer & Purkayastha, 2015). The increasing number of outlets has ended up compromising the organization’s quality of food and the earlier established working culture. For instance, 5 years after its inception, Chipotle had opened more than 16 branches in Colorado (Qumer & Purkayastha, 2015).
As a result, the compromised reputation has led to challenges associated with hiring the right candidates to meet the demand for labor in the company’s outlets. Chipotle’s diverse operations subject it to the risk of violating its key recruitment principles. According to Ismail and Rishani (2018), shifting away from the core values of a business makes it vulnerable to competition, which, in turn, reduces its market share.
According to Ismail and Rishani (2018), the HR department has three core values, all of which enhance the company’s employee culture. These principles include hiring, rewarding, and empowering top performers (Ismail & Rishani, 2018). After selecting and employing ideal workers, an organization’s human resource unit embarks on improving their skills to enable all new entrants to adapt to multitasking through on-job training programs.
However, Chipotle has been criticized for hiring people based on the quality of their personalities. As Walker and Merkley (2017) reveal, the company’s hiring policy limits the qualifications of candidates to specific core traits. According to Qumer and Purkayastha (2015), these characteristics include workers’ perfection, esteem, sociability, enthusiasm, happiness, presentation, and motivation levels. Although Chipotle’s HR follows newly hired employees closely to ensure that they get acquainted to the business culture, it fails to acknowledge the difficulty associated with getting a candidate who can demonstrate all of the above personality traits.
According to Walker and Merkley (2017), the focus on personality traits is based on the company’s culture of promoting staff from within. Chipotle has a tendency of nurturing employees’ talents and awarding promotions to the most suitable individuals.
Its challenge of poor performance may be linked to its lack of embracing diversity in the workplace (Mangan, 2017). For instance, it does not hire managers from outside of the business, regardless of their unique talents and leadership skills, which can be tapped to boost the company’s productivity. Lifestyle diseases and work-life imbalances in many fast-food organizations such as Chipotle pose significant health challenges, including obesity and stress.
Chipotle’s culture of sustainability, reverence, and growth has compelled the management to begin a wellness program for its employees (Qumer & Purkayastha, 2015). This corporation has to ensure that workers’ welfare does not limit its growth and profitability. As a result, it has awarded insurance covers to all employees to guarantee their continued commitment to ensuring business success, regardless of health problems that affect them or their close family members. Since this worker-centered initiative is expensive, Chipotle awards it on merit. According to Walker and Merkley (2017), those who are found eligible motivate their fellow employees to focus on attaining a remarkable performance track record in the company.
Chipotle’s rapid growth poses significant financial risks for this business. Expanding a company’s operations is costly. Chipotle’s insufficient funds informed its move to seek financial aid from companies such as McDonald’s. This particular shareholder invested close to 40 million USD in Chipotle (Qumer & Purkayastha, 2015). However, maintaining the business culture is tedious for large companies, which have many outlets such as Chipotle.
According to Windapo (2018), an uncontrolled expansion plan that characterizes Chipotle increases the chances of having its reputation damaged because one outlet’s mistake may affect the image of the entire business. It has also been a challenge for this organization’s management to ensure that all branches operate within the specified rules and regulations. Some of them are prone to violating the laid-down policies, a situation that may interfere with the quality of food served to clients. Consequently, Chipotle has had a challenging process of ensuring that its employee culture is unified across all outlets due to cultural differences and other external factors.
Evaluation of the Identified Issues and Problems
Chipotle reported a tremendous growth rate at a time when economic factors destabilized the performance and expansion plans of its rivals in the food industry. According to Qumer and Purkayastha (2015), its rapid growth is associated with the prevailing business culture, quality food products, and outstanding services to customers.
The business has built a good image, which has been helping it to expand to many regions in the U.S., Germany, and the UK. However, based on the writer’s point of view, although a high-performance rate is a notable business achievement, sustaining such growth is the most challenging task for the management team. According to Walker and Merkley (2017), the desire to establish new outlets without licensing franchises has been the norm for Chipotle since its inception. Its executive team has not been in control of business activities in the company’s outlets, hence compromising the established core values.
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The company’s many outlets imply a large labor force that is often difficult to manage and control using a centralized management structure. Hence, maintaining Chipotle’s employee culture is problematic because a centralized HR executive system may not be sufficient to handle it effectively. For instance, according to Walker and Merkley (2017), restaurateurs are in charge of several outlets, a situation that makes it hard for them to remain focused on the required employee culture. Differences associated with the company’s large workforce contribute to the difficulties reported when building a rapport with the majority of workers.
Some of Chipotle’s managers are given excess duties to accomplish, for instance, by being in charge of all business activities in outlets that do not have restaurateurs (Walker & Merkley, 2017). Huge workloads compromise executives’ capacity to offer quality services as required. As a result, some employees take a long period before they are promoted because of managers’ failure to nurture their talents and report their contribution to the company’s success. In some cases, personal differences between employees and managers develop. Consequently, overloading Chipotle’s administrators is the root of frustrations reported among human resources who feel that the company has been violating the laid-down principles of employee culture.
According to Calderon-Monge, Pastor-Sanz, and Huerta-Zavala (2017), the rapid expansion of a business exposes the administration to the risk of losing control of the quality of products supplied. In most cases, outlet managers determine the superiority of food items and services.
Chipotle has entrusted these administrators with responsibilities that put the company’s public image at risk. The idea of allowing administrators to serve the role of restaurateurs is against its culture of sustainability, value, and expansion due to the underlying negative impacts it has had on the company’s performance, including cases of employee-employee and manager-employee conflicts and turnover issues (Qumer & Purkayastha, 2015). Customers deserve constant high-quality foods and services. Therefore, according to the writer’s point of view, the company’s management should monitor the operations of all outlets to ensure that they do not interfere with the company’s goal of quality foods and services.
Swift expansion results in increased costs of running a business. Chipotle’s founder, Steve Ells, believed that allowing franchising would interfere with the established business culture (Walker & Merkley, 2017). Therefore, the company’s idea of having the full ownership of all speedily increasing number of outlets instead of franchising has been associated with elevated marketing and advertising expenses in the effort to ensure that each branch has a sufficient pool of customers.
However, this model has helped Chipotle to build an outstanding image in America and the European market due to its strong connection with clients (Qumer & Purkayastha, 2015). Nonetheless, according to Navarro Sanfelix and Puig (2018), the sustainability of expansion plans for fully-owned outlets depends on the management’s level of control over all business activities.
The agency theory presented in the above article acknowledges the difficulties linked to the supervision of multiple business outlets across different regions and cultures (Navarro Sanfelix & Puig, 2018). As a result, failing to recognize each outlet as a unique entity leads to conflicts of interest, especially when performance among all branches is expected to be uniform. It is illogical to expect outlets that operate in different environments, cultures, and governmental policies to record analogous results that reflect the prevailing business culture and values.
Organizations that encourage team spirit in the labor force have a remarkable working atmosphere that is characterized by committed employees and minimal disagreements among stakeholders. According to Poon, Briscoe, Abdul-Ghani, and Jones (2015), human resources feel motivated when they work as a team. Akter (2016) presents solidarity as a factor that fosters career growth and development because it encourages knowledge sharing among individual members.
Chipotle has been experiencing difficulties when trying to establish a culture of collaboration because employees in various outlets seek recognition as individuals, a situation that leads to demotivation and, consequently, poor performance among those who fail to be recognized.
Chipotle’s culture demands new entrants to begin their career as hourly crew members. This company provides them with the opportunity to prove that they can become leaders before they are promoted. However, as Hirschi, Lee, Porfeli, and Vondracek (2013) argue, the majority of young people prefer doing less work for a huge amount of money and getting promoted within the shortest time possible instead of being subjected to excessive workloads and minimal returns. Many of Chipotle’s employees lack the patience and ability to persevere difficulties, a situation that has contributed to the high rate of quitting soon after their employment. Hence, it is crucial to recommend various strategies that Chipotle can implement to deal with the above problems and issues.
Chipotle may need to focus on a system that builds synergy in its diverse workstations. According to Poon et al. (2015), personal growth and development thrive in environments where employees interact constructively. This company can eliminate the current performance-based system that encourages competition among workers. Antagonism results in demotivation, especially among individuals who fail to be acknowledged. Chipotle needs to encourage team spirit.
This strategy will help to identify workers with leadership qualities easily compared to an individualized environment. The management needs to devise unique strategies for handling internal matters that define every outlet. According to Navarro Sanfelix and Puig (2018), this approach often works well in franchises, which Chipotle needs to embrace instead of managing the outlets as separate business entities where it incurs increased supervision and labor expenses.
Chipotle should ensure that each branch generates income that is sufficient to meet all its financial obligations and profit targets based on the prevailing market conditions. Forcing all subsidiaries to record similar profitability rates may be impossible because location-specific factors and fluctuating governmental regulations lead to diverse performance levels. The promotion-from-within strategy follows a performance-based system of identifying potential leaders.
According to Coetzee (2018), this performance-focused approach creates internal competition in the company. Employees need to portray exceptional leadership qualities, including proactive personalities, to qualify for a promotion, regardless of whether they come from within or outside of the company (Turba, Moake, Wu, & Cheung, 2017). In addition, restaurateurs at Chipotle should acquire some leadership qualities through training for them to serve effectively as managers.
This company also needs to limit expansion plans to make its growth sustainable. According to Windapo (2018), Chipotle can reduce or control the number of outlets through three effective ways. First, it can sell those that are deemed incompetent in relation to others. Giving them away would help to relieve pressure exerted on the management team. Secondly, Chipotle may choose to break down its business into two brands.
This strategy helps not only to retain the long-established culture but also to pave way for growth opportunities (Windapo, 2018). Thirdly, as earlier mentioned, this organization can adopt the franchising strategy on condition that the move retains its employee-based culture and quality standards.
Moreover, challenges in finding qualified candidates during the hiring process need to be addressed. The current social environment, which has led to the majority of people not being patient and capable of persevering can be resolved by transforming the hiring culture. In this case, Chipotle may focus on qualifications, experiences, and proactive personalities, as opposed to the Big Five traits, to identify ideal candidates (Smith, 2017).
Although the Big Five characteristics, for instance, candidness to experience, extraversion, and meticulousness, are important, employees with proactive personality traits demonstrate “behaviors that are aimed at improving overall lifetime individual and organizational outcomes” (Smith, 2017, p. 5). It should also embrace diversity during the employee selection procedure by allowing candidates from outside of this company to apply for any vacant positions, as opposed to its current strategy that focuses on internal promotion.
Based on the expositions made in this paper, Chipotle is a successful fast-food business that has built a reputation through a culture of quality services, employee welfare, and growth. The business has never drifted from the value of developing employees’ skill set and offering high-quality services to clients since its inception. In addition, Chipotle Mexican Grill has been holding on to the principles of transparency and human resources’ growth and development. The strong culture of career advancement has played a significant role in helping the company’s management to run its outlets everywhere across the world.
However, Chipotle’s enormous growth attributed to its business culture has resulted in significant challenges. The company has failed to embrace franchising due to the fear of losing control over its deep-rooted product quality and employee-centered cultures. This paper has recommended the need for this organization to change the current system of hiring, which focuses on personalities, as opposed to qualifications. In addition, the management team needs to foster team spirit by eliminating the existing performance-based recognition system.
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