Chatting With Chipotle || FREE eBook

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©2015 SARAHMCDUGAL.COM
Sarah McDugal
AN INTERVIEW WITH MONTY MORAN
Chatting w/ Chipotle

PART 1: Empowerment 3
PART 2: Character 6
PART 3: Engaging Millennials 9
PART 4: Think Long-Term 11
SARAH MCDUGAL + MONTY MORAN

SARAH: Thanks for meeting with me, Monty! I’m excited to feature
you and Chipotle in my book. My premise is that whether you are a
celebrity, an individual leader, or a corporation managing your brand
reputation – if your internal reality and your external marketing is not
governed by the same set of core values, then one of your faces is
lying.
MONTY: Yes, exactly, I couldn’t agree more.
SARAH: In the short term it might feel like a good idea to present
something that is not real to the world in order to make a quick buck,
but in the long-term that will backfire big time.
MONTY: Yeah, I agree.
SARAHMCDUGAL.COM 3
SARAH: I get a lot of people who say, “Wow, this is amazing, more
people need to be thinking this way, but it’s hard to figure out how to
follow through.” Other people say, “Yeah, you can’t do that, you can’t
be wildly successful in business without cutting corners.”
MONTY: That’s absolute unmitigated horse manure. I don’t know how
you can succeed without living the same face both directions. I sup-
pose it might be possible, but I don’t believe it really happens. Not in
the long haul. It can’t create a sustainable culture.
SARAH: I’m aware that in 2013 Chipotle outstripped Starbucks and
McDonald’s by 9-10%. I know that you and Steve Ells were co-spots
on number four of Fortune Magazine’s 2014 Business Person of
the Year list. I watched one of your Mad Money interviews when Jim
Cramer asked you, “How do you achieve a values-driven corporate
culture throughout a large chain with so many locations when you’ve
had such explosive rapid growth?” And you said that your employees
are taught to look at people and know them. Tell me more about that.
EMPOWERMENT – PART 1 OF 4

MONTY: We start out by trying to hire the right kind of people for
Chipotle, hiring is very important. We hire an extraordinary number
of employees – 50, 60, 70 thousand people a year.
SARAH: That’s a big job.
MONTY: Yeah, when we hire we don’t care about experience at all.
We’ve always insisted on hiring people with what we call the 13 char-
acteristics, which I came up with, that I do not believe can be taught.
By the time you are 10 or 12 years old you either have them or you
don’t.
SARAH: Wow!
MONTY: I don’t want to hire people who lack those characteristics
and then try to teach them, because it’s an exercise in futility. Once
you hire people for character, you have a better chance of getting
people who can be sensitive and open and understanding, and car-
ing about the people around them. Before I came, Chipotle hired for
experience, which was as often a disadvantage as it was an advantage.
It was very hard to break employees of terrible “fast food industry”
habits.
Once we hire people, our foundational principle is that each person
will be judged and rewarded based on their effectiveness in making
the people around themselves better. And that foundational principle
drives everything we do in regards to how we compensate, how we
promote, who becomes our future leaders, who we exalt, who we
hold up as examples of great leaders.
4 SARAHMCDUGAL.COM
When we hire we
don’t care about
experience at all.

When I started, only 18% to 20% made it from crew to manager. Now,
all of our GMs come from crew except for a scarce few. First you hire
people who are fantastic, then you operate on this foundational prin-
ciple, then you start rewarding people based on their effectiveness in
making others better. Then you see your younger leaders in the com-
pany start trying to help the people around them.
And when they do, you make heroes out of them, you announce it,
you promote them. Every single promotion we make in the company
of any consequence, we share why they got the promotion. And the
reason is always: “this guy makes others better, this lady makes others
better, look at what she’s done. She’s took this many crew and turned
them into managers. She took that one and turned him into a restau-
rateur, etc.”
We celebrate the successes of making others better. Once people
start to see, “Oh my God, they really do reward you when you make
others better… “ what happens is a multifold win.
First, you get lots of people who are being developed. Second, you get
people who start to love each other and realize what it means to care
about someone, to devote themselves to someone, to commit and
empower somebody.
SARAHMCDUGAL.COM 5

SARAH: Tell me more about your Restaurateur Culture.
MONTY: I believe the general manager position is the most important
position in Chipotle, period. Because GMs hire 99.9% of our people.
They decide who comes in the door and who doesn’t. They’re either
effective at developing people into future leaders, or not. They have
complete ownership over our customer experience, which is what
drives our success.
So the manager is the most important position in the company, but
when I came on board we didn’t treat them that way. Most of our
managers wanted to move up to an area manager position, where
they leave the restaurant and oversee half a dozen restaurants. This
promoted the very best managers, who were the most effective in
creating a great restaurant experience and hiring people, right out of
the restaurant.
SARAH: Hmm.
MONTY: So I said, “Look, I want the gravity in this company, the job
everyone wants, to be the general manager level, not greater. I want
them to be the heroes; I want everyone to want to be a great general
manager.”
But in order to promote that content, I had to create a new name
for the general managers who manage in an enlightened way. I called
them restaurateurs. As the most important position in the whole com-
pany, I personally interview every single one of them for this job. Every
manager of the company who becomes a restaurateur gets it because
one of the CEOs gave it to him. People thought I was crazy. But we
did it.
Iwaslookingforspecificthingsineachcandidate.TobeaChipotlerestau-
rateur, this elite general manager position, you must have a team of top
performers who are empowered to achieve high standards. So, there’s
three criteria: top performers, empowerment, and high standards.
SARAH: Right.
6 SARAHMCDUGAL.COM
CHARACTER – PART 2 OF 4

MONTY: So at Chipotle, doing a great job doesn’t make you a top per-
former, that’s not enough. You have to do a good job and make others
better, and do it all of the time.
SARAH: So it can’t be just you, it has to be you and the people around
you.
MONTY: Empowerment is a feeling when you are confident in your
ability and encouraged by your circumstances so that you feel moti-
vated and at liberty to fully devote your talent to a purpose.
That’s a lot of words, but it is simple:
A) Confident in your ability,
B) Encouraged by your circumstances.
Confident in your ability just means you know how to do your job, and
you’ve been trained properly.
The harder part of empowerment is: how do you create encourag-
ing circumstances for people? You feel encouraged by your circum-
stances when you have a vision you believe in. In other words, when
you know where you want to go.
MONTY: High standards are a throwaway because if you have top
performers who are empowered with the right kind of knowledge,
high standards are gonna fall out the bottom like a vending machine.
So the real focus is on building a crew of all top performers. How do
you do that? First, you hire crew with the 13 characteristics. Second,
you teach them to believe that the path to success is to make the
people around them better. A top performer is someone who has the
desire and ability to perform excellent work and through their constant
effort to do so, elevates themselves, the people around themselves, and
Chipotle.
SARAH: Hmm.
MONTY: So there are kind of two pieces to the definition. Number
one, you do a great job. Number two, you make others better. That’s
to break it down. Do great work and make others better.
SARAH: Right.
Doing a great job doesn’t
make you a top performer,
that’s not enough.
SARAHMCDUGAL.COM 7

SARAH: You have to have a deeper why.
MONTY: Yeah, and a great leader cares about you, challenges you,
believes in you, trusts you, wants you to do better, loves you, and is
committed to making you the very best you can be.
SARAH: Being at your best is a key part of that -- because allowing
mediocrity and complacency is not consistent with helping you gain
confidence. Increased confidence comes from conquering new things
that you didn’t think you could do but now you can.
MONTY: Absolutely! You feel at liberty to fully devote your talents to
a purpose.
SARAH: Do you share those 13 core characteristics or is that
proprietary?
MONTY: I don’t keep it a great secret. They include being: smart, infec-
tiously enthusiastic, polite, hospitable, respectful, happy, motivated,
ambitious, presentable, curious, honest, let’s see…hospitable, maybe
I already said that. These are communicable characteristics you can
instantly identify in a two-minute interview with someone.
SARAH: And those are things people either have or they don’t.
8 SARAHMCDUGAL.COM

SARAH: Let’s talk about this phenomenon of how Chipotle has
managed to connect strongly with millennials. Everybody everywhere
is trying to crack the formula to engage millennials, and you’ve pulled
it off. How?
MONTY: Millennials are highly ambitious, sometimes almost utopian in
their ambition. They want what they want now, they want it fast.
SARAH: A little bit narcissistic.
MONTY: Yeah, they think they’re great, but they also insist on being
associated with things that are genuine. They have a great bullshit
detector. They think everything is bullshit, unless it’s truly genuine. At
Chipotle what we’re doing is truly genuine.
If you heard the way we talk in the boardroom, it’s the same as how we
talk in analyst meetings, the same as I talk in the restaurants. No one
is inspired at the crew level, to hear set goals like, “Let’s drive the stock
price up, or let’s make more money.” That’s just not a worthy goal.
But it is a worthy goal to bring people in and say, “Hey, I want you to be
part of a team of all top performers who are empowered to achieve
high standards. I want you to be part of the restaurateur culture of
excellence. Where everyone one on your team is totally committed to
making you better while you are simultaneously committed to making
them better. Where all of you are working to change the way peo-
ple think about being transferred in this restaurant by being a great
restaurant experience and in creating a team that you’re super proud
of and feels like a family.” A family by choice, not by birth, you know?
SARAH: It’s like the show Friends, in real life.
SARAHMCDUGAL.COM 9
ENGAGING MILLENNIALS – PART 3 OF 4

Many times I’ve promoted
someone to restaurateur
without ever meeting them.
MONTY: Yea! When I do a restaurateur interview, I go into the restau-
rant and meet with the entire team one by one, we sit at a table and
talk. The least important person I meet with is the manager who is up
for restaurateur.
In fact, many times I’ve promoted someone to restaurateur without
ever meeting them. I go unannounced to the restaurant and it may be
the manager’s day off or they may be on vacation, so I interview the
whole team and make the decision based on the empowerment of
the team and whether they’re all top performers. Meeting the man-
ager is absolutely optional.
SARAH: Because you can see their effectiveness without even see-
ing them.
MONTY: Absolutely, and that’s actually a great message. When I make
the promotion announcement, I always write something like, “Hey, I
promoted Sarah to restaurateur today and she wasn’t even there! Let
me tell you why…”
SARAH: Right.
MONTY: And that proves my thesis, that each person will be rewarded
based on their effectiveness in making the people around them better.
If you’ve built an unbelievable restaurant team who is empowered, fired
up, optimistic, excited, visionary, loving, caring, genuine -- who cares
how you did it. You couldn’t have done it in any way but a good way.
You can’t buy that, you can’t threaten it, you can’t over manage it, you
can’t yell at people loud enough. You can’t empower people in any way
except to make them feel confident in their ability and encouraged by
their circumstances. That’s the only way to empower, end of story.
SARAH: I sense an incredible amount of personal passion as you’ve
talked about implementing and applying values. Are they your per-
sonal values as well or are they specifically for the company?
MONTY: Oh, absolutely they are my values; it is what I believe to be
correct in the world. I believe that these values work anywhere, any-
time, anyplace. I believe if you teach people to have these values and
to live according to these values, then success will follow.
10 SARAHMCDUGAL.COM

SARAH: How did the slogan “Food with Integrity” come about? It’s so
clean and concise, and it says everything it needs to say. Those are the
hardest slogans to develop!
MONTY: Yes, isn’t it beautiful? I love it.
SARAH: It’s a terrific descriptor and tagline, and I know those don’t
come easy.
MONTY: I would credit my co-CEO Steve Ells with “Food with Integ-
rity”. It didn’t come across as a slogan at first, it was just sort of like, “Hey
man, we want all of our food and all of our ingredients to be great. We
want this food to be based on integrity, you know, it’s like food with
integrity.” We just started saying it and I was like, “Dude, that’s good!
We’re gonna trademark that.”
SARAH: That was a good call.
MONTY: But I would also credit Steve with the “Food with Integrity”
philosophy. It’s this idea that we don’t want what we do to be the result
of exploitation at any level, Sarah.
We don’t want to exploit human beings, or exploit animals; we don’t
want to exploit farmers, or the environment. That’s why we love the
people we hire, people who work hard, try hard, and care. They rise up
meteorically at Chipotle. We’ve got people in executive team director
positions who extraordinary, who are in their early or mid-20s, who
started as crew making $8 an hour and are now overseeing 10,000
people.
SARAH: Right.
SARAHMCDUGAL.COM 11
THINK LONG-TERM – PART 4 OF 4

We don’t want to
exploit human beings,
or exploit animals;
we don’t want to
exploit farmers, or the
environment.
MONTY: In fact, I just had a meeting with one today who is a team
director named Pedro, who came up from within the ranks, from the
crew, and he is absolutely one of the top leaders in the company. He
is marvelous, and brilliant, and just came from an hourly position. And
now he is running Arizona, half of California, Washington, Oregon.
Hundreds of stores.
SARAH: My goodness, that’s like the whole western seaboard there.
MONTY: Yeah, everything except Southern California.
SARAH: Has there been fallout from your willingness to suspend
profit in order to do the right thing? You’ve said you see it as a strat-
egy for long-term profit even if it creates shortfall in the short term,
but how do you manage when that doesn’t go your way in the short
term?
MONTY: Well, it’s difficult. You just do what you have to do. Yes, it has
hurt us in the short term to suspend the sale of pork because one
of our suppliers wasn’t living up to our protocols and we immediately
removed the supplier. Just to give you an idea of how empowered
our team is, the decision to eliminate the supplier (which caused us
to be short on pork throughout the country), was made without even
getting Steve and I involved.
The auditor found it, went to the purchasing guy and said, “We’ve
gotta terminate him.” Period, end of story.
12 SARAHMCDUGAL.COM

SARAH: Their empowerment is so strong, that they know they can
make a huge call like that?
MONTY: They know it’s absolutely choiceless. They simply must make
the integrity-based call. Did it hurt us? Yes, short-term. But we’re
working very hard and we think that in a couple of quarters we’ll be
back up to full production with farmers we’re tremendously proud of.
It was a nonnegotiable.
Another time, we had some pork already in our distribution centers, a
lot of pork, and we found that some of the supplying farms were not
adhering to our protocols. This decision came to Steve and me, and
we had to decide what to do. Serve it and have signs in our restaurant
saying “Sorry today’s pork wasn’t up to our specs”? Sell it to other ven-
dors? Throw it away?
It was still great pork, all antibiotics-free. The protocols violated were
nothing that we advertised. There was no legal issue if we wanted to
sell it. But was that the best thing to do?
We decided to donate all of it, millions of dollars of pork, to a charitable
organization that could use it well.
We didn’t do anything to market that decision but it leaked out and
became a very positive marketing story for us, folks writing, “Oh my
God, Chipotle really does stand by their values!” It was sort of nice to
be caught doing good, if you want to call it that. I think when you’re
committed to doing good, decisions are easier to make even though in
the short-term they are choices you’d never catch another company
making since they cost millions.
SARAH: Chipotle obviously has a massive platform; tens of thousands
of employees.
MONTY: We have 1850 restaurants right now, and about 56,000
employees.
SARAH: Do you have plans to branch out into complementary areas of
social responsibility in addition to environmental stewardship? I would
love to see a company of Chipotle’s size, do socially responsible mes-
sage campaigns to increase the platform of giving back and doing right.
Especially aimed at that millennial generation you’ve already tapped
into, to use your platform to push that against human exploitation?
MONTY: We have something
called the Chipotle Cultivate
Foundation. It’s a foundation
to which we donate millions of
dollars from fundraisers, and
we give that money to causes…
Sometimes it’s farmers who
are doing the right thing, or
teaching kids about food, or
helping inner city schools grow
gardens. I think one of our
best charities is being successful at what we do: bringing high-quality
ingredients to a huge amount of people in an accessible, genuine way,
where just by spending money at Chipotle people are literally doing
good for animal husbandry, environmental stewardship, family farms,
local and organic movements. Eating at Chipotle results in a reduction
of pesticides, herbicides, and pollution in our environment, plus greater
health for humans, because our food is so straightforward. I think that’s
absolutely how we’re gonna change the world.
SARAH: Final question: What advice would you give to leaders and
entrepreneurs who may not be on a national CEO level (yet!), but
they’re rising in that direction, committed to integrity, but they’re
unsure about the risks associated with follow-through. What would
you say to them?
SARAHMCDUGAL.COM 13

Those who do something
genuine, something
valuable, will be
rewarded for it.
MONTY: I would say to really trust that if you provide genuine value
to somebody, that you try to give as much as you can through your
service or product in a genuine way – trust that sales will come, trust
that people will join your cause, trust that the people who join your
cause will make your cause powerful, and trust that profits will fol-
low. So many folks think that by cutting corners, dumbing down their
product or service, doing things in any way except what truly helps the
customer – they think it will get them ahead in the short-run.
I would say take a long-term view and understand that those who give
the most will be rewarded for it. Giving doesn’t mean not charging,
okay? When you get a Chipotle burrito for $6.95 you’re getting a lot
of thought, quality, and nourishment for a low price. And even though
it’s for a low price we still profit from it, while giving a great experience.
It’s all about taking that long-term view.
ABOUT SARAH
Sarah McDugal is a brand strategist, leadership speaker, and
author of One Face: Shed the Mask, Own Your Values, and Lead
Wisely.
She directs & produces Hollywood-quality brand campaigns
for companies who value their social impact alongside their
bottom line.
Her work in media production launched 25 years ago as the
teen TV host of a Christian youth program. She directs brand
strategy and visual asset development for clients across the
USA, UK, and Europe — both corporate and non-profit. As
a speaker, Sarah presents on leadership, branding, and core
values.
She has produced & directed more than 150 story videos
from city-wide message campaigns to global satellite
TV network shows, including a music video nominated for
Video of the Year at the 2014 Canadian Gospel Music
Awards.
An avid writer and globetrotter, her passport has stamps from
more than 40 countries but still gets itchy feet.
14 SARAHMCDUGAL.COM

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