Tag: Chipotle

OM in the News: Holy Guacamole!

Few companies can match Chipotle Mexican Grill’s avocado appetite. The California-based restaurant chain bought around 5% of all the avocados consumed in the U.S. last year. Since domestic production is limited, most of the roughly 132 million pounds of avocados Chipotle used across its 3,700 locations last year were imported.

Many guacamole lovers flinched when the U.S. threatened a trade fight with Mexico, which accounts for roughly 90% ($3.4 billion worth) of U.S. avocado imports. But Chipotle was ready. For the past 7 years, the chain has been scouring the Americas and the Caribbean, seeking out farms and suppliers that can satisfy its immense demand. In the past, Mexico had supplied 85% of Chipotle’s avocados, leaving the chain at the mercy of the country’s weather and other factors, such as cross-border trade, reports The Wall Street Journal (April 1, 2025). 

Food-industry supply chains can take years to build. Many companies are deciding whether to redraw trade lines to avoid the levies, absorb rising costs or pass them along to customers. Chipotle’s globe-spanning hunt for avocados reflects how firms navigate rapid changes in trade policies. It expanded its supply-chain team, directing the group to find new avocado sources. The team identified half a dozen countries, concentrated in locales near the equator, that could support the sun-hungry plants.

So Chipotle broadened its avocado sourcing to Columbia, Peru, the Dominican Republic, Brazil and Guatemala–and plans to develop new suppliers in El Salvador and Honduras. But diversifying avocado sources creates challenges in Chipotle’s kitchens, too. Chipotle has given restaurant crews leeway to add more lime or lemon juice and salt, depending on the results of guacamole taste tests.

Even with a more dispersed supply chain, about half of Chipotle’s avocados still come from Mexico. It is supporting research on ways to cultivate more avocados in the U.S., including in Florida, where I live. (We have 3 avocado trees in our yard and have such a crop that we give it to all our neighbors).  Company executives said they will continue to scour the world to find more readily available sources to protect its guacamole stocks.

Classroom discussion questions:

  1. Why is Chipotle expanding its supply chain?
  2. What are the operations management complications of sourcing from so many different countries?

OM in the News: Chipotle Rolls Out RFID for Food Traceability

We note the increasing role of RFID (Radio Frequency ID) tags, which are smart bar codes that can automatically identify and track inventory, in our Process Strategy and Inventory chapters (Ch. 7, 12). This blog has addressed RFID in retailing, warehousing, the drug industry, hospitals, at Disney, and in luggage control at airports. (Type RFID in the search box on the right, below, to read about these applications).

Now, Chipotle Mexican Grill is translating the technology to the food industry. Chipotle has scaled up its use of RFID to trace ingredients from suppliers to restaurants in real-time, writes Supply Chain Dive  (May 23, 2023).

The restaurant chain has asked all of its suppliers to tag products with RFID. Chipotle is doing final testing use of the technology on a regional basis, and plans to roll it out nationally in the coming months.

“There’s no restaurant company in the U.S. that has this visibility into inventory on the national level,” says the company’s VP-Supply Chains. “Not one.”

The use of RFID is part of Chipotle’s herculean effort over the past few years to better trace its ingredients following a headline-grabbing E. coli outbreak in 2015 that sickened over 1,000 customers and took a bite out of profits.

Using RFID gives Chipotle a real-time snapshot of its inventory across distribution centers and restaurants, but the technology also benefits the company’s suppliers. Vendors can use Chipotle’s RFID system to improve their own inventory management processes and cut down on repetitive tasks.

Poor inventory management can lead to more food waste, as was the case in 2018 when the FDA ordered the destruction of all romaine lettuce due to limited visibility into suppliers.

“It is imperative to know where your products come from and where they are at all times,” the firm’s VP added. “You have to have very, very good visibility of that supply chain and the value chain so that if something were to happen, you can address it right away.”

The cost to integrate the technology is also minimal since RFID readers already complement existing scanners in Chipotle restaurants.

Classroom discussion questions:

  1. Reviewing past blog posts, summarize the use of RFID in three other industries.
  2. Why is Chipotle implementing this system?

OM in the News: Chipotle’s Battle for Quality Control

At lunchtime, people peered into a Chipotle in Washington, one of the stores that closed on Monday.
At lunchtime Monday, people peered into a closed Chipotle

Chipotle Mexican Grill closed its more than 2,000 restaurants for 4 hours this past Monday to hold a “virtual” town hall meeting with its employees about steps it said it was taking to improve food safety and regain consumers’ trust. The firm also announced a $10 million program to help small farmers who are Chipotle suppliers shoulder the costs of putting in place the company’s new food safety system, which will require them to do more rigorous testing.

Chipotle has experienced 6 food safety failures involving norovirus, salmonella and E. coli since July, with more than 500 customers reporting that they fell ill afterward, reports The New York Times (Feb. 9, 2016). But “it’s going to take significant meaningful action that goes beyond telling employees to be more careful and, unfortunately, some time before consumers start to believe it,” says an industry expert. The best example of a company regaining consumer trust was of Tylenol in 1982 when 7 people died after taking medicine that had been tampered with. Johnson & Johnson moved quickly to recall the product and establish ties with the police and the FDA. Tylenol’s market share crashed, but J&J introduced new tamper-proof packaging and heavily promoted the brand. Today, Tylenol is a best-selling over-the-counter analgesic.

The norovirus contaminations that caused the greatest number of illnesses were introduced to the restaurants by sick employees. Since the outbreaks, the company has instituted paid sick leave for employees in an effort to encourage them to stay home. A salmonella outbreak that sickened more than 60 people was linked to chopped tomatoes. The company now washes, dices and tests tomatoes in its central kitchens and then ships them in sealed bags to restaurants. As for the most serious contamination, 2 different types of E. coli that sickened 60 people after they ate in Chipotle restaurants in 14 states, neither Chipotle nor the C.D.C. had been able to determine the exact cause.

Classroom discussion questions:

  1. Why is Chipotle’s supply chain a major issue here?
  2. What other firms faced similar problems and what did they do to win back market share?

OM in the News: Chipotle’s Toxic Supply Chain

chipotleMy family is the perfect customer unit for Chipotle Mexican Grill. We eat organic, prefer range fed animals, and select local fresh vegetables and fruit. For a long time, the chain of 1,900+ locations has reminded customers that its fresh ingredients and naturally raised meat are better than rivals’ and better for the world. The implication: If you eat Chipotle, you’re doing the right thing, and maybe you’re better, too. But fewer people associate Chipotle with “healthy” today, reports BusinessWeek (Dec. 28, 2015-Jan.10, 2016). Almost 500 people around the country have become sick from their food since July. And food-safety experts say they believe the total number affected is at least 10 times the reported number.

The company has always urged customers to think about its supply chain. Now they are. And so is Chipotle, which has blamed the outbreak on its supply chain’s use of local farmers and growers. To respond to the crisis, it will shift more food preparation out of restaurants and into centralized kitchens–doing things more like the McDonalds type of chains it’s long mocked.

Chipotle has about 100 major suppliers for its 64 ingredients–plus many more local farms, which supply 10% of its produce. More food will be prepared ahead of time, out of sight at commissaries, and transported to 19 distribution centers and then to restaurants. “They’re sort of in a bind,” says a Boston U. prof. “They want to have this local, fresh image, and making food in a commissary and shipping it all over the country takes away from that.”

Before it’s harvested, produce will be screened for pathogens using DNA-based tests. Meeting these higher standards will be expensive for smaller farms: There’s the cost of the testing itself and of discarding rejected vegetables and herbs. From there, it will be sent to the commissaries, to be washed, sanitized, and retested. The commissaries, rather than the restaurants, will be responsible for cleaning and packaging the cilantro, shredding the lettuce, and dicing the tomatoes.

Classroom discussion questions:

  1. Compare Chipotle’s supply chain to that of Darden’s, described in the Global Company Profile in Chapter 11.
  2. What are the advantages and disadvantages of using locally grown supplies?

OM in the News: Chipotle’s Burrito Velocity

chipotle-service“Another year, another breakthrough in Chipotle’s blinding burrito-making speed,” writes Quartz (April 21, 2014). Over the first 3 months of 2014, the US Mexican-food chain saw an average increase of 7 transactions per hour at both peak lunch and dinner hours—12 to 1pm and 6 to 7pm. On Fridays, one of its busiest days of the week, Chipotle fielded 11 more customers per hour at lunchtime on average across its stores, a 10% increase.

“One important element of delivering great customer service is you’ve heard us say over and over is faster throughput,” says the CEO. “We’re excited that our teams are ready to break new throughput records.”  Another way to think about throughput is to think about it as burrito-velocity—that is, the speed it can funnel a customer and the burrito being made for them from the beginning of its line to its end. The chain puts every part of its assembly line under a microscope to make sure it functions as efficiently as possible.
As far as the company is concerned, faster service is the same thing as better service. For that reason, the chain is finicky about things Chipotle-lovers likely hardly even notice. Credit cards, for instance, are better than cash, because they’re faster. And that person who wanders around cleaning off counters and re-filling empty meat, vegetable, rice, and bean containers is crucial. In fact, she even has a title: linebacker. Linebackers, who patrol countertops, replace serving-ware, and refill bins of food, are one of Chipotle’s four, Maoist-sounding pillars of effective lightning-speed service. The others, which together make up what the chain refers to as its “four pillars of great throughput,” include the extra person between the one who rolls your burrito and the one who rings up your order, a commitment to having every ingredient and utensil in its place, and finally, making sure its best servers are always working at peak hours.  Some of Chipotle’s fastest restaurants currently run more than 350 transactions per hour at lunchtime, which equates to  nearly 6 transactions per minute!
Classroom discussion questions:
1. Why is throughput such an important OM measure at Chipotle?
2. What are the four pillars of great throughput?

OM in the News: Chipotle’s Operations Strategy for Faster Service

chipotle-serviceLines snaking out the door at lunchtime have long been a bottleneck to growth at Chipotle, the burrito chain, writes Quartz.com (Jan. 31, 2014).But the fast-food firm managed to speed up service by 6 transactions per hour at peak times this past quarter by implementing what it calls the “four pillars of great throughput.” Here they are:

+“Expediters.” That would be the extra person between the one who rolls your burrito and the one who rings up your order. Her job? Getting your drink, asking whether your order is for here or to go, and bagging your food.
+“Linebackers.” The people who patrol the countertops, serving-ware, and bins of food, so the ones who are actually serving customers never turn their backs on them.
+“Mise en place.” What in a regular restaurant means setting out ingredients and utensils ready for use means, in Chipotle’s case, zero tolerance for not having absolutely everything in place ahead of lunch and dinner rush hours.
+“Aces in their places.” A commitment to having what each branch considers its top servers in the most important positions at peak times, so there are no trainees working at burrito rush hour.
Chipotle is also mulling incorporating a Starbucks-style mobile payment system (the chain already accepts online orders for pick-up), which the company is hopeful will help funnel customers in and out of its lines a bit faster. But the company is open to a number of other options, too, so long as they help speed up service.
Classroom discussion questions:
1. Which of the techniques for improving service productivity in Chapter 7’s Table 7.3 is Chipotle using?
2. Which Process-Chain-Network (PCN) Analysis domain (see Figure 5.12 in Chapter 5) best describes Chipotle?