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Chipotle just admitted that a 'cornerstone' of its business has become one of its greatest weaknesses

Kate Taylor
chipotle worker

(Bloomberg/Inside Chipotle documentary )
As Chipotle struggles to regain customers, it's overhauling its training and management system, which was once crucial in setting the company apart from its competition.

CEO Steve Ells slammed Chipotle's restaurateur program as "highly inefficient" on Tuesday at the ICR Conference in Orlando, Florida, as he revealed plans to remake the system to be focused more on the customer.

"A few years ago, we began to add what we now know was unnecessary complexity to our business," Ells said. "We put in place a set of tools designed to strengthen our already special people culture. These tools and subsequent, multiple revisions caused our teams to focus too much on abstract and esoteric concepts."

Chipotle's restaurateur program was designed to create a path for internal mobility at the company and was hailed as transformative and crucial to the chain's success. The program meant an hourly crew member rolling burritos could rise through the ranks and become a senior manager making a six-figure salary. The system was pretty radical for an industry that is notorious for jobs with low pay and little, if any, upward mobility.

"The program is ultimately about much more than just prestige," former Chipotle co-CEO Monty Moran said in an earnings call in 2013. "Restaurateurs and the restaurateur culture that they are building allow us to deliver consistently better results."

But in the past year, following a food safety crisis that decimated sales, the chain's struggle to win back customers has been complicated by customer service issues. Now, Ells has decided that the restaurateur program is at least partially to blame for Chipotle's difficulties.

Chipotle

(Business Insider/Hayley Peterson)

The restaurateur program became Moran's special focus soon after he joined Chipotle in 2005. With Moran's exit from the company in December, the program — which the company calls a "cornerstone of Chipotle's field operations" — will be revamped.

"Since restaurateur was the holy grail, and these tools were the only way to be a restaurateur, all of our teams' energy was focused on these tools," said Ells. "This left our teams with little or no time for the basic things like training and customer service. Up until the food safety crisis, this problem was largely masked by our extraordinary momentum."

Going forward, Chipotle will simplify the hiring, training, and promotion processes. The company is ending the practice of encouraging all crew members to interview with any new job candidate, in favor of a more streamlined process.

Promotion within the restaurateur program was once based on 27 measures, most of which, according to Ells, had no relationship to the customer or restaurant operations. Now there will be five measures, three of which will be customer-related.

According to Ells, these changes — which have already been put in place — are improving restaurant operations.

"In the coming months, you will see the return to the kind of restaurant operations Chipotle was known for from the very beginning," Ells said.

In recent months, Chipotle restaurants have been plagued by operational difficulties, like longer lines, food shortages, and messy restaurants. In December, Ells said the company gave half of its roughly 2,100 locations a C grade for service because of flaws like messy soda stations, dirty tables, and slow-moving lines.

On Tuesday, Chipotle said that comparable-store sales at restaurants open for at least one year are estimated to fall 4.8% in the fourth quarter, missing the 3.7% decline predicted by analysts.

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