Rohan Verma Final Paper

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1 Chipotle, a managerial analysis. Rohan Verma Keiser University MAN1021 Principles of Management 01/24/2024

2 Brian Niccol, the current CEO of Chipotle, was not always in the position he is currently in. Niccol began his business journey by acquiring an undergraduate degree from Miami University (OH) he then went on to earn an MBA from the University of Chicago Booth School of Business. Soon after he began his career at Procter & Gamble where he held various brand management positions. Following his stint there he held multiple leadership roles within Pizza Hut, including chief marketing officer, general manager, and vice president of strategy where his incredible mind led the brand strategy that achieved record transactions and market share. Niccol joined another prominent food-service company in Taco Bell, here he was president from 2013- 2014. He became Taco Bell CEO in January of 2015 and immediately repositioned Taco Bell as a social media leader and revolutionized the industry with his digital approach to ordering and payment at Taco Bell’s 7,000 restaurants. In 2018, Niccol was named CEO of Chipotle Mexican Grill and since then has driven the overall brand strategy and performance of over 2,400 worldwide restaurants. He is a passionate and empowering leader who has seen Chipotle Mexican Grill grow very well under his leadership. Brian Niccol and Chipotle Mexican Grill take an accommodating approach to social responsibility. Though they display this approach in numerous ways, the most obvious way they show this is in the food they serve. Niccol and his company claim that they take pride in offering their customers extraordinary ingredients, that not only are fresh, but are raised responsibly, respecting the animals, people, and land that produced them. This is supported by the statistics as well, just in the year of 2022 Chipotle Mexican Grill purchased 36 million pounds of local produce as well as 22 million pounds of organic and transitional ingredients, with $35 million invested into local food systems. Niccol and Chipotle also pledged to give $5 million to young farmers by the end of 2025, with over $1 million already being raised. Regarding the land and

3 environment, Niccol displays social responsibility through the fact that 40% of the electricity used by Chipotle Mexican Grill was sourced from renewable sources, as well as a 13% reduction in direct greenhouse gas emissions for the entire organization. Chipotle Mexican Grill also hopes to convert 400 acres of conventional farmland to organic farmland by 2025, they have already converted over 214 acres. Another example of social responsibility at Chipotle Mexican Grill is that all the protein used is humanely sourced, with 232 million pounds of animal welfare certified pork, beef, and chicken. Not only is the organization a rather socially responsible one, but they also spearhead diversity as one of their main goals. In 2022 they had set out to increase diversity to 60% within their internal pipeline of candidates, they outdid their goal by raising diversity amongst candidates to 63%. They also measure diversity within their promotion pipeline to make sure no one group is favored. With such a huge organization such as Chipotle Mexican Grill, seeing the exact business level strategies can be challenging. Luckily, Niccol and Chipotle make their choice clear, they utilize a differentiation business-level strategy. With a differentiation strategy, managers try to gain a competitive advantage by distinguishing the organization’s products from those of competitors and establishing their own product as being a better one or suiting consumers’ needs better. Chipotle employs this strategy by displaying and advertising the freshness and sustainability of their food to consumers. Whether it’s the fact that the produce is locally sourced, all of the protein is animal welfare certified, or that their slogan is “food with integrity” Niccol and his team drive the point home that their food is healthy and sustainable compared to competitors. Though many consumers have doubts about restaurants claims, at Chipotle skeptics can watch their worries get grilled away as their food is cooked right in front of them.

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4 Another strategy put in place by Chipotle Mexican Grill is their corporate level-strategy. The corporate-level strategy Brian Niccol and his company currently adhere to is international expansion. Chipotle Mexican Grill has already solidified itself as a staple in the United States, Niccol is shifting his focus to the international market. Chipotle Mexican Grill already has an existing international portfolio of restaurants featuring 34 locations in Canada, 15 in the United Kingdom with three more opening soon, six locations in France; and two in Germany. Recently in July of 2023, Chipotle Mexican Grill announced its first-ever development agreement to open locations in the Middle East. Niccol and his company are pursuing international expansion as having a foothold in international markets would ensure them additional cash flow. Establishing an organizational structure of a business is essential for all managers to increase efficiency or effectiveness. Most managers of larger organizations within uncertain and constantly changing organizational environments choose to operate under a matrix structure, and Chipotle Mexican Grill is no different. Within the matrix structure of Chipotle Mexican Grill, the average worker reports to a manager at the store, they also however report to someone at the corporate level if they have a complaint. Brian Niccol has multiple different teams working under him, and these teams all have separate teams within their own. Reporting to multiple leaders establishes this as a matrix structure. One key component of effective leadership in a company is the power that a manager holds, power affects employee behavior and how seriously a manager is taken. There are normally five potential sources of power a manager could have: Expert power, referent power, reward power, coercive power, and legitimate power. Brian Niccol as a manager seems to draw the majority of power from the source of legitimacy. Legitimate power is the power that Niccol and other managers have by virtue of their position in the hierarchal structure of the organization.

5 Another source of power utilized by Niccol and Chipotle Mexican Grill is reward power. This is the ability of a manager to give or withhold rewards from employees, these can include tangible and intangible rewards as both play a part in employee mentality. To effectively use this power Niccol and his organization frequently reward hard workers with pay raises and promotions. Another source of Niccol’s power over employees is coercive power. This is the ability of a manager to punish employees. Punishments can be anything from verbal warnings to termination of employment. With potential punishments in mind an employee will be motivated to work well. Both reward and coercive power play a large role in the motivation of chipotle employees. For an organization and its employees to do well, there must be valid sources of motivation for said employees. At Chipotle Mexican Grill, workers are mainly motivated by external sources, this is called extrinsically motivated behavior. The main sources of extrinsic motivation for Chipotle Mexican Grill employees are their pay and the many benefits offered by the organization. These benefits include but are not limited to insurance plans, help paying off student-debt, retirement planning, building up credit, and mental health resources. Intrinsically, their employees are motivated by the work they do and how good of a job they’ve done. There is also a bit of prosocial motivation for a Chipotle Mexican Grill worker as they know the efforts the organization has put in to be a sustainably sourced fast-casual restaurant. With all that said, as a CEO Brian Niccol is an exceptionally effective manager. Niccol has solidified Chipotle Mexican Grill as a sustainable and healthy alternative to fast-food, displaying social responsibility through the process. Niccol was able to sustain and grow an effective organizational structure that is beneficial to everyone that is a part of it. Employees working under Niccol are happy as he provides them with excellent sources of motivation. As a

6 manager he knows how to market and promote the right culture and values for his team to thrive. Overall, Brian Niccol is an amazing manager and CEO.

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7 References Jones, G and George, J (202). Contemporary Management: (12th ed.) McGraw Hill LLC DeMicco, F., Parsa, H. G., Gao, J., & Narapareddy, V. “. (2018). Chipotle Mexican Grill: A sustainability champion going global with China. https://doi.org/10.4135/9781529717617 Khan, M., & Khan, M. (2018). Fresh ingredients haunt Chipotle, the Mexican grill chain. https://doi.org/10.4135/9781529716795 Walker, R., & Merkley, G. (2017). Chipotle Mexican Grill: Food with integrity? https://doi.org/10.4135/9781526430663 Brian Niccol . (2023, December 8). Phi Delta Theta. https://phideltatheta.org/news-stories/famous-phis/brian-niccol/ Sustainability at Chipotle - Chipotle Mexican Grill . (n.d.). Chipotle. https://www.chipotle.com/sustainability Chipotle accelerates international expansion through first-ever development agreement with ALSHAYA group in Middle East - JUL 18, 2023 . (n.d.). Chipotle InvestorRoom. https://ir.chipotle.com/2023-07-18-CHIPOTLE-ACCELERATES- INTERNATIONAL-EXPANSION-THROUGH-FIRST-EVER-DEVELOPMENT- AGREEMENT-WITH-ALSHAYA-GROUP-IN-MIDDLE-EAST Chipotle introduces new benefits to help attract and support its growing Gen Z workforce - Jan 24, 2024 . (n.d.). MediaRoom. https://newsroom.chipotle.com/2024-01-24-CHIPOTLE

8 INTRODUCES-NEW-BENEFITS-TO-HELP-ATTRACT-AND-SUPPORT-ITS- GROWING-GEN-Z-WORKFORCE

Rohan Verma Final Paper

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