[Ed note: this article has been updated since it was published]
The following article is part of our lessons in sustainable business series by students at the Presidio Graduate School.
By Bettina Baylis
In 2010, Chipotle, under criticism for some of its sourcing policies, was looking for a way to maintain its growth rate and also strengthen their “food with integrity” values.
Chipotle Mexican Grill, founded in 1993 by CEO Steve Ells, is based on the idea that the quality of their ingredients matters. As they grew into a national chain, their core mission was refined and named “Food with Integrity,” and they increasingly became public champions of the benefits of eating sustainable food. Embracing this strategy created a competitive advantage and helped drive phenomenal growth; by December 2010, they had 1080 restaurants and $1.8 billion in sales.
While they had sometimes failed to deliver on their promised integrity, they had measurable successes. The percentage of food sourced from sustainable suppliers grew enough for them to claim by the end of 2010 that the majority of their meat was “naturally raised” (their term for animals raised without hormone injections and antibiotics). Forty percent of the beans they served in 2010 were organic, and all the cheese was from milk produced without rBHT. In 2010, at least 35 percent of one of produce items were sourced from smaller local farms (defined as within a 350 mile radius of the restaurant).
But meanwhile, the company’s reputation for having a responsible supply chain took some hits. Since 2006, Chipotle has been accused of lack of transparency on their “Food with Integrity” mission. Despite new environmental commitments, the company dragged it’s feet on signing on to an agreement in support the Coalition of Immokalee Workers, an NGO founded by Florida tomato farmworkers, the company signed on October 4th, two days after a protest outside Chipotle’s headquarters.
Strategy and outcome
By 2010, Chipotle realized their reputation was at risk. In order to meet their growth targets, they needed to reconnect with their existing customers and attract new ones. They needed to find a way to rebuild consumer faith in their mission of ‘Food with Integrity.’
The strategy Chipotle decided to implement was to promote its increasingly green farm-to-table-to-consumer supply chain. It launched a multi-pronged initiative to “change the way people think about what they eat,” building on their original “Food with Integrity” vision. Their new 2011 “Cultivate a Better World” campaign focuses on connecting with consumers emotionally, and telling the story of why Chipotle sources sustainable foods, beginning with a fun consumer website and social media presence.
• Chipotle created the Chipotle Cultivate Foundation, a non-profit focused on three food issues: supporting family farms; increasing animal welfare and pasturing; and increasing nutrition and reducing obesity in children. To date, they have donated almost $1.5M to these causes. Donations include sales from in-store “Boorito” events (first begun on Halloween 2010), where customers who came dressed up in Family Farm-themed costumes on Halloween received a burrito for $2.
• Chipotle hired the Creative Artists Agency (CAA) to produce “Back to the Start,” an emotionally powerful animated short on the importance of raising pigs sustainably. It went viral on YouTube (viewed more than 6.8M times as of September 2012), and the campaign and film have won many awards, including for Best Integrated Campaign and Best Film for Branded Content at Cannes (June 2012). In addition, 60 cents of each download of the movie’s theme song, Coldplay’s “The Scientist” sung by Willie Nelson, is donated to the Cultivate Foundation.
• Chipotle organized the first “Cultivate” festival in Chicago to help build community in a target market, and to bring together “food, farmers, chefs, artisans, thought leaders and musicians” according to their website. There are similar festivals planned for 2012.
• Chipotle expanded their Farm Team invitation-only loyalty program. Customers build points not by purchasing food, but by playing games online that educate about food supply and production. The awards points are then redeemable for discounts in the restaurants.
The ‘Cultivate a Better World’ integrated marketing campaign continues to be wildly successful. It creates strong awareness and connection with consumers, and reinforces Chipotle as a very public leader on important food issues. The downside of the campaign is that it can feel slick and packaged, especially once you notice how very few numbers are supplied to support their claims. This feeling increases as you hear more about Chipotle’s lack of transparency. One example is their policy of avoiding third party-verified standards. Chipotle is more likely to craft its own definitions and follow them without independent oversight. This leads to a credibility gap: one wonders if they are telling us a feel-good story, or the truth? After reading their 2011 annual report, it is hard not to wonder how often to they have had to substitute in conventionally-raised meat for their much promoted humanely raised, and whether they are vigilant in alerting their customers when they do?
Chipotle has potential to do so much good in the humane and sustainable food movements. They need to address their lack of transparency not only for their own strategic benefit, but also for the credibility of the movement itself. It is time for Chipotle to take the lead and start disclosing more clear and detailed information about their food and how it is sourced. They could use existing best practices, such as the Global Reporting Initiative, to guide them. With their ability to connect with consumers, they should find their credibility grow even stronger if they disclosed some of their failures along with their hard-earned successes.