Chipotle CEO: Rise in demand continues to cause challenges for hiring

Brian Niccol, Chipotle CEO & Chairman, joins Yahoo Finance Live to break down how business is faring amid the pandemic, the future of work and what's next for the Mexican restaurant chain.

Video Transcript

BRIAN SOZZI: Chipotle landed on the closely followed Fortune 500 list today for the first time in its history. It sure didn't come as a total shock to longtime Chipotle investors, however. Since Brian Niccol was named as Chipotle CEO on February 13, 2018, Chipotle's stock has surged 345% thanks to more frequent menu innovation and a push digitally. The company's market cap now stands at $38.3 billion.

Joining us is Chipotle's Chairman and CEO Brian Niccol. Brian, good to speak with you. And congrats on joining the Fortune 500. So true story, I was in my local Chipotle over the past week. And the line in the store was out the door, and people were actually back in the restaurant sitting down. So my question to you is, is that infamous Chipotle line-- is that now back in your restaurants across the country? Are you seeing that?

BRIAN NICCOL: Yeah, we are. We are seeing people coming back to the dining rooms. And obviously, our front line is getting busy again. We're working hard to make that experience best and give you exactly what you want. But yeah, it's great to see the lines back. It's great to see people back in our restaurants.

BRIAN SOZZI: And if that line is back, what have you seen on the digital side of your business? Digital sales have really taken off during the pandemic. Have you been able to keep those digital customers?

BRIAN NICCOL: Yeah. What we've seen, Brian, is the digital gains have proven to be very sticky for our business. People love that access [AUDIO OUT] today. So [AUDIO OUT] will continue to be present and continue to be a driver of growth, as will the dining room be a driver of growth.

MYLES UDLAND: And Brian, it's Myles here. You know, it's interesting-- a year ago we would have been talking about, you know, how we're going to generate growth at your restaurant and others. And now the question is how you're going to staff those restaurants as demand continues to surge. I'd love to just start with an overview of what your challenges have been at Chipotle, and then we can maybe get into some of the things you guys are doing to recruit and retain team members.

BRIAN NICCOL: Yeah, sure. So you're exactly right. I mean, one of the things that's been terrific to see is that the consumer is back. You know, they're out and about. And our customers are back at Chipotle. The rise and demand has been quick, and as a result has put pressure on us to hire more people to run our restaurants. And then obviously, we're going to continue building restaurants. So we need great people in our restaurants to grow, not just for today's growth but our future growth.

So you probably saw we raised our wages now on average to $15 an hour. In about three years, you can find yourself being a restaurant general manager making well over $100,000. So there's a tremendous opportunity for financial growth with us, and then combining that with the great benefits, the great culture, and the great purpose of our company. And we're seeing a huge uptick in applicants. And really importantly, keeping and retaining [AUDIO OUT].

MYLES UDLAND: You know, Brian, just an anecdote here, at my local Chipotle the hours have been cut down a little bit, I'm presuming because they don't have staff. And granted, this is Northern New Jersey-- very competitive hiring market for service workers. But in that kind of environment, how aggressive do you guys think you might need to be to get staffing to where you'd like it to be having a restaurant open all the hours that you'd like?

BRIAN NICCOL: Yeah, look, that breaks my heart to hear that. We're working hard to make sure that our Chipotles are open for the full hours of operation. But that's a great example of a place where we are, I'm sure, aggressively putting the word out that we are hiring. We're staffing up. And hopefully, the purpose of our company, the culture of our company, the growth opportunities with our company attract people, as well as the near-term wage, the opportunity for that wage to grow into a six-figure salary. So I believe we are uniquely positioned in the restaurant industry to offer one of the best opportunities for a career and for a job here in the near-term.

So we're going to get that restaurant staffed. We're going to get you those full hours, because you know, that's our commitment to our customers. And frankly, it's a commitment to our employees too. They succeed when our restaurants are fully open, fully staffed, fully run. So we've got to make that happen.

JULIE HYMAN: Hey Brian, it's Julie here. On the staffing front, of course, pay is part of it. A path to be promoted is part of it. And consistency is part of it. And on that last point, I do want to ask you about the New York City lawsuit, because the city is suing Chipotle over its relatively new fair scheduling law and what it says of the company's violations of the law. I just wanted to see if you could respond to that and talk about offering consistent schedules to your employees.

BRIAN NICCOL: You know, so obviously we don't discuss any litigation that we've got going on. But what I can tell you is when I talk to our employees in New York, they see the opportunities at Chipotle. They're excited about our growth. And we work to create a schedule that delivers hours for employees, and then delivers the customer experience for our customers.

And you know, the combination of having the right staff, trained correctly, scheduled correctly results in a great work environment for our employees, and then ultimately a great experience for our customers. So that's what we work towards every day. That's what our teams are after. That's what our general managers want to lead, is a great culture with a great employee experience so that ultimately, we can provide a great customer experience.

JULIE HYMAN: Brian, my team's going to laugh at me, because I always bring this up. But years ago, I went and visited a Niman Ranch farm, which I know you had a partnership with to supply your meat. And it was a really interesting experience. You guys have always been known for having fairly stringent requirements for your suppliers. Right now, is that an advantage or a disadvantage when it comes to all of the supply chain issues that have been ongoing? And how are you guys doing in terms of getting the stuff you need into the stores?

BRIAN NICCOL: Yeah, look, I think it's a advantage, because we have a commitment to our farmers, our suppliers on the food that we want to see raised, and then ultimately that we source for our company. We put in these long-term contracts. [AUDIO OUT] commodity for conventional produce. And fortunately for us, I have [AUDIO OUT], our partners in the supply chain [? for tomatoes, ?] [AUDIO OUT] chicken, steak. [AUDIO OUT] They have done a [AUDIO OUT] supply chain teams working with our partners has not missed a beat for us. We've been very fortunate to be able to have a very stable supply chain through a very unstable environment.

So I really am very fortunate for the partnerships that we have. And I'm thankful that we can take a different approach to food, because we take a different approach to our supply chain accordingly.

BRIAN SOZZI: Brian, that digitally only quesadilla has quickly ramped to, what, I believe 10% of your sales. How do you plan to capitalize on that?

BRIAN NICCOL: Yeah, well, look, it's a great product. And it's offered through the digital channel. And it's been exciting to see the response. It's been a growth engine for our digital business.

But more importantly, our customer feedback on it has been just tremendous. They love the whole experience of having Chipotle done in a quesadilla made fresh to order for them. So it's been a real driver for our business. We're excited about it not just for today, but what it provides to the future. And you'll see us continue to figure out how we use the new ovens that we put into place, as well as how we continue to leverage that new quesadilla platform.

BRIAN SOZZI: And Brian, lastly, I've asked you consistently-- I think literally since day one that you have become Chipotle's CEO-- is this here for breakfast? The way I see it, there is a huge opportunity where people are going to be going back out. They are going to be mobile again, going to new jobs for the first time, going back to the office. Do you see it as an opportunity, and do you want to finally start testing breakfast?

BRIAN NICCOL: You know, I appreciate your passion. I agree with you, a Chipotle breakfast burrito would be outstanding. It's not something we're focused on right now, Brian. We've got tremendous growth [AUDIO OUT] And now we're going to get there [? and go. ?] So there is such a growth business without having [AUDIO OUT] our business without adding the complexity of breakfast right now, whether that's building these Chipotlanes, driving our digital business further, getting our dining rooms back to great throughput that they used to provide. So I see us just having tremendous growth in front of us. And when the time comes, like you, I'm sure I'll enjoy a Chipotle breakfast burrito. But now is not the time.

BRIAN SOZZI: All right. Well, I will continue to beat that drum. Maybe in a year or two we'll have something to talk about. Chipotle Chairman and CEO Brian Niccol, always good to see you. Have a great rest of the week.

BRIAN NICCOL: Yeah, thanks, Brian. Take care, guys.