Taking a strong stance on social responsibility can be a powerful driver of growth, but what do you do when that growth begins to outpace your ability to live up to your promise? Chipotle is dancing around this very issue and we should all be watching how they do it.
Chipotle has managed to fuel tremendous sales growth, in part based on a pledge to serve “Food with Integrity”. This socially responsible stance was put front and center in a fantastically poignant video released in 2011 (featuring Willie Nelson covering Coldplay) that shows a farmer lamenting the transformation of his farm into a factory where animals are pumped full of pills and substances before being “cubed” for shipment (see below).
One of the core pieces of this philosophy is a buying protocol that only allows the use of antibiotics on sick animals, which then must be removed from the supply.
Here’s where Chipotle has hit a snag. The emphasis on this rigorous protocol, as well as increased demand that they have contributed to by raising awareness, has outpaced the supply of cows that meet their criteria.
Can a public company that has a fiduciary responsibility to shareholders allow itself to simply run out of inventory of a key ingredient? Can they hang out signs that say “Sorry, all sold out of beef today”?
Apparently they are struggling with this very question, and are working hard to spin their position so that they can get a little more breathing room. USA Today reports that Chipotle is reviewing its “never ever” policy on antibiotics and “may” relax that standard to allow farmers to sell animals that received antibiotics “when necessary”. The article also points out that the company already has to source 10-15% of its beef from “conventionally raised”, but still antibiotic-free cattle. In other words, Chipotle has already had to relax its standard to meet demand, and now has to consider further relaxing it.
The company is choosing its words very carefully, reiterating a “commitment to eliminating the use of antibiotics used to promote growth in livestock”, and “we are continuing to evaluate what's best for our customers, our suppliers and the animals.”
As Chipotle tiptoes around the struggle between company growth and “sticking to its guns”, how do you feel about the choices it is making?
Is it okay for the company to flex its standards a bit while it waits for the industry to catch up on supply, or do you think it should take a harder stand and simply raise the price of its “responsible” beef-based items until supply and demand balance out?
Chipotle - Back to the Start