Chipotle's CSR: Mission or Marketing?
Megan Rehkemper
Webster

Abstract
Companies with CSR stated standards tend to make the headlines when their actual business practices are contrary to those standards. Chipotle, one of the fastest growing chain restaurants, is no stranger to this controversy. The company has made great strides in offering “Food with Integrity” yet it still lacks in credibility. This paper will analyze Chipotle’s CSR and how its standards have led many to question the company’s core values.

Chipotle's CSR: Mission or Marketing?
The heightened media attention on CSR is at least partially in response to society’s interest in socially conscious businesses. Consumers are willing to pay a premium price for environmentally-friendly brands. At the same time, there is much skepticism as to whether companies are intentionally or accidently misleading consumers. Chipotle, one of the fastest growing fast-casual restaurant chains in the world, declares it serves “Food with Integrity”. What does that mean? The company’s reputation has taken some hits in recent years due to lack of transparency. Lessons have been learned along the way yet there is still a credibility gap. Many wonder if Chipotle is telling the public a feel-good story or the truth. This paper will take a look at the company’s CSR: intent vs. execution vs. depiction.
Genetically Modified Organisms GMO’s are plants or animals who have been inserted with a gene from an unrelated species in order to take on specific characteristics (Lee, 2014, p. 1). The push to label GMOs in ingredients has become an escalating, passionate national movement. In 2013, Chipotle was one of first U.S. companies to announce that it would disclose which menu items contained GMOs with the ultimate goal of becoming free of all GMs by the end of 2014. That goal was achieved in 2015 when the restaurant completed phasing out genetically modified ingredients from its food. Chipotle has experienced strong growth sales in recent years in part by defining itself as the healthy alternative to other fast-food chains.
There has been a backlash concerning the true intent of Chipotle’s removal of all GMOs. A criticism that came to light is that GMO science is based on fears, not actual science. One statistic shows that sixty percent of the general public believes that GMO’s are unsafe (Ferdman, 2015, p. 1). Millennials make up a huge portion of Chipotle’s consumer base. This generation, arguably more than others, care more about where their food comes from. Due to extensive research through technology and food movements like “anti-gluten”, natural food sellers were able to advertise their products by inducing people’s fears about various food issues. Most consumers will not buy a product with a GMO label even though they have zero to little knowledge about it. “Scientists are in agreement that GMO crops are no more harmful than traditional crops” (Ferdman, 2015, p. 3). As of now, there is no scientific evidence of the dangers of GMOs yet there is overwhelming scientific evidence that they are safe to eat.
Could it be that Chipotle’s removal of GMO ingredients misdirects the public from a serious issue such as the obesity epidemic? There are many items on the Chipotle menu that can cause ill effects on a person’s health. The restaurant offers soda that contains genetically modified ingredients like corn syrup and large amounts of sugar. Sugar-sweetened beverages are linked to an increased risk of obesity. The New York Times did an expose on the number of calories in a typical order at Chipotle (Quely, Cox, & Katz, 2015). On average, there are around 1,070 calories in one order. That is more than half of the calories most adults should consume in an entire day. The study also reveals the amount of salt and saturated fat in the food. “Most orders give you close to a full day’s worth of salt at 2,400 milligrams and seventy-five percent of a full day’s worth of saturated fat” (Quely et al., 2015, p. 6). Chris Arnold, Chipotle’s communications director, states that the company is aware of the nutrition on their menu but does not track information on each order. There are meals that contain around 545 calories. Low calorie items make up about 5 percent of the menu. However, many Americans are uninformed and undisciplined when it comes to making better food choices. It is a false assumption that since Chipotle is the “healthy” alternative there must not be any negative consequences in consuming anything on the menu.
Chipotle’s execution of its CSR mission of “Food with Integrity” is a bit murky. Back in 2013, the company declared that it will label all GMO ingredients and intended to remove all GMOs by 2014. In April 2015, Chipotle made good on their promise but not without controversy. The main items that contained GMO were the flour tortillas and cooking oil. The restaurant still uses meat from animals that may ingest GMO feed. Chipotle’s website states “The meat and dairy products we buy come from animals that are not genetically modified. But it is important to note that most animal feed in the U.S. is genetically modified, which means that the meat and dairy served at Chipotle are likely to come from animals given at least some GMO feed” ("Beverages and animal feed," n.d.). Chipotle’s CSR is also in question when looking at calorie/sodium and price point comparison. According to www.calorieking.com, Chipotle’s steak burrito contains 689 calories, 2207 milligrams of sodium and 73 grams of carbohydrates. This does not include added toppings like cheese, sour cream and guacamole. Moe’s Southwest Grill’s biggest burrito, the Homewrecker ground beef burrito, contains 629 calories, 1493 milligrams of sodium and 56 grams of carbohydrates. Again, additional toppings have been left out of the calculation. Prices for those exact burritos, the Homewrecker is $7.48 (Moe’s Southwest Grill website, n.d.) compared to $10.65 for the steak burrito (Chipotle’s website, n.d.). According to Moe’s website, the restaurant offers more than 20 fresh ingredients and all-natural, growth hormone-free meat. Are Chipotle customers really getting a better deal on health and price?

Figure 1. Chipotle calories. www.nytimes.com/interactive/2015/02/17/upshot/what-do-people-actually-order-at-chipotle

Panera, one of Chipotle’s biggest competitors, is more resolute in the removal of unacceptable ingredients. Panera is the first national restaurant chain to comprise a list of all 150 artificial additives that it has removed or plans on removing by 2016. The “No-No List” tackles ingredients that have been scientifically proven to harm a person’s health. The list includes items such as aspartame, hydrogenated oils, and high-fructose corn syrup. Panera will also stop serving soda that includes high-fructose corn syrup and is hoping its supplier of soda, PepsiCo, will follow suit (Gelles, 2015). Panera has taken the time to organize a definitive timeline for the removal of the “No-No list” as opposed to Chipotle, who jumped the gun in stating GMOs would be removed sometime in 2014. Only time will tell if Panera follows through.
Whole Foods Market is committed to fresh foods that are free of artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats. They have strict farm animal and meat quality standards that each meat producer must abide by before selling to the company. The standards include basic principles of production, annual verification statements from each supplier and third party animal welfare and food safety good manufacturing practices audits (Whole Foods Market website, n.d.). Whole Foods website provides a plethora of information regarding their core values and who the suppliers are. It is an organization that is truly committed to an ongoing sustainable lifestyle.
The depiction of Chipotle’s CSR is not always clear and consistent with the culture of the brand, its leaders, and its employees. Chipotle has an aggressive promise of corporate responsibility that is demonstrated in their use of marketing. The company’s advertisements paint a picture of peaceful farms and happy workers. However, Chipotle has been known to use less sustainable purveyors. This became evident when it broke its strict no-antibiotics policy by using a Great Britain pork supplier that treats meat with antibiotics ("Chipotle hypocrisy," 2015). The portrayal of being a local farmer’s market food stand has upset many U.S. farmers. When it was announced that Chipotle would be sourcing its beef from Australia, the Texas Department of Agriculture had much to say about the irresponsibility to discredit the nation’s largest cattle herd (Radke, 2014). Chipotle claimed that there was not enough responsibly raised beef and were forced to look elsewhere. Many U.S. ranchers feel the real reason is the company is not willing to pay a higher price for U.S. beef. Chipotle’s labor practices were scrutinized when it fired hundreds of illegal immigrants in Minneapolis after an I-9 audit (Alexander, 2011). Protests were held about inhumane treatment of firing workers without pay and right before Christmas. Figure 2. How to Speak Chipotle. www.consumerfreedom.com/2015/07/chipotle-defends-animal-welfare-by-betraying-its-principles/

Another disappointing fact that does not fit with the brand’s social responsibility is the compensation disparity of the CEOs and its employees. “Steve Ells and Monty Moran made $28.9 million and $28.2 million respectively in 2014. That is ten times the median pay for CEOs at peer companies” (Peterson, 2015, para. 2). Meanwhile, its front-line employees are being paid an average of $8.57 an hour totaling around $21,000 annually. The large pay was over 1,000 times more than the employee. CEO’s who oversee much larger and more profitable companies make less than Ells and Moran. Exorbitant CEO compensation can negatively affect employee’s morale and turnover rate especially if the company is outsourcing, underperforming or cost cutting. CEO wage greed contributes to an unethical culture. Much of Ells and Moran’s wealth comes from stock appreciation rights. Both have received over $100 million in Chipotle stock since 2011. This type of pay philosophy is frowned upon due to executives being allowed to cash out at any time while not being required to invest any of their own funds. Stock appreciation rights are not a preferred business practice. Shareholders took notice. “At the company’s annual meeting last year, the CEO’s compensation packages were rejected by 77% in a non-binding proxy vote” (Peterson, 2015, p. 1). Inflated CEO pay also affects society as it gives the next generation distorted view of reality by glorifying excessive wealth
Chipotle must become more diligent in ensuring its behavior supports their commitments. Credibility comes into question when their business practices deviate from their mission statements. It appears as though Chipotle changes their message to fit the situation. The company could learn a few lessons from the “CVS effect”. In 2014, CVS stopped the sale of tobacco products because it was inconsistent with its purpose. It was a bold decision as tobacco was $2 billion in annual sales for the company. Since then, “the company has entered partnerships with more than forty health systems, opening thirty-two clinics last quarter and is on track to open at least hundred fifty more this year” (Tabuchi, 2015, p. 1) It was a testament to corporate character and the right choice for society.
On the other end of the spectrum, the Volkswagen scandal was an absolute failure in terms of CSR policies (Dans, 2015). Volkswagen has always positioned itself as an environmental leader among automobile manufacturers. Its focus was on environmentally sound vehicles that people could feel good about driving. That image came to a screeching halt when the company announced that they had rigged up to 11 million of their vehicles to pass the emissions test. The cars were equipped with software that sensed when the car was being tested and reduce emissions only for testing. The software turned the equipment off during regular driving time. The company cheated its consumers, its employees, the climate, and the government. “Volkswagen decided that it didn’t matter if its cars poisoned the planet by emitting 40 times the legal limit of nitrogen oxide, as long as doing so allowed it to become the world’s leading car maker” (Dans, 2015, p. 1). Will Chipotle follow the lead of straightforward CSR like CVS Health or eventually lose the illusion of its policies like Volkswagen. Companies can do well by doing good but in many cases doing what is best for society means sacrificing profits. CSR is not about making things look good; it should be strategic, authentic and coincide with the company’s mission and values.
Chipotle should not lose sight of its key stakeholders. One of the greatest costs in any business is employee turnover. It has been duly noted on several occasions that Chipotle generates unhappy workers. Along with the firing of undocumented workers and CEO compensation disparity, there has been incidences when employees claimed working conditions are unfair. A Chipotle in Pennsylvania shut its doors after employee complaints of brutal work hours and understaffing. It was described as “borderline sweatshop conditions” (Kaufman, 2014, p. 1). Further occurrences like this could damage the company’s bottom line. Another stakeholder with great power is its customers who appreciate the local food credibility and hormone-free meat. Outsourcing beef from overseas leaves quite a negative global footprint. The fast-casual restaurant industry is an ever increasing competitive market. Consumers will have options to eat at places that have achieved their goal of serving all non-GMO ingredients and hormone-free meat. Chipotle only sources organic produce and local meat when it is practical. A culture that fails to achieve the standards it sets for itself is bound to cause unease for its stakeholders.
A company must ensure its mission statement and core values align with behavior practices as it is vital to the success of the brand. Chipotle has had measurable success even though it sometimes fails to deliver on their promised integrity. Skepticism may be reduced if the company was more general and modest in its marketing strategies. Most consumers expect honesty, not perfection. Gaining the courage to be transparent will increase the company’s credibility. Chipotle may not be the restaurant industry leader in the next five years if it does not up its game in food integrity.

References
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