Is Chipotle Cultivating a Better World?
There's no doubt about it. Chipotle is primarily targeting millennials. And it is doing so with non-traditional marketing.
Mark Crumpacker: Brand GeniusWhen Crumpacker (Chief Marketing Officer, Chipotle) released Back to the Start to YouTube in 2011, he never anticipated the reaction: 8.7 million views. “We didn’t think it would be quite the sensation that it was,” he stated. “It was a film. It didn’t have any promotional element built into it.” Propelled by this success, Crumpacker created a second YouTube video, The Scarecrow, renowned for its message: "Cultivate a Better World."For those of you who missed The Scarecrow (view here!), the video begins with mournful music and a saddened scarecrow walking through a smoke-spewing factory named Crow Foods, Inc. The scarecrow observes a robotic crow inject and massively inflate a chicken, a cow tremble inside of a metal cage, and a machine stamp "100% Beef-ish" labels on boxes. The depressed scarecrow returns home to his farm. All of a sudden he sees a red pepper. The lighting brightens. The music turns joyful. The scarecrow harvests the vegetables, opens a burrito stand (but of course!), and a banner drops reading: "Cultivate a Better World."YouTube viewers flocked. Today, The Scarecrow has 13.82 million hits.But not everyone was impressed with The Scarecrow. In fact, some had the exact opposite reaction. "Funny or Die" released a parody on Youtube called Honest Scarecrow (view here!) which essentially accused Chipotle for being an evil corporation and manipulating the consumer mind.That's not all. Agricultural producers from around the world responded furiously, contending that Chipotle hyped deceptive representations of traditional agriculture. Moreover, that no farmer would ever keep a cow in a metal cage or inject a chicken with green slime."We've never professed to being perfect. The commitment we've made is to constant improvement. The film is clearly a fictitious portrayal...meant to highlight issues like the overuse of antibiotics, harsh confinement of animals, and the extent to which food is processed." - Chris Arnold, Communications Director, ChipotleYet, despite the naysayers, Chipotle sales have more than doubled in the past four years, hitting $3.21 billion in 2013 and rounding out 2014 with an estimated $4.11 billion.What is Chipotle actually doing to Cultivate a Better World?Introducing Food With Integrity."Food With Integrity is our commitment to always look closer, dig deeper, and work harder to ensure that our actions are making things better, not worse. It's our promise to run our business in a way that doesn't exploit animals, people or the environment. It is the philosophy that guides every decision we make at Chipotle." - Steve Ells, Founder and CEO, ChipotleEfforts include:
- Purchasing "naturally-raised" pigs and chickens (those which are raised outside or in bedded pens, never given antibiotics, and are fed a vegetarian diet).
- Sourcing beef from ranches that "meet or exceed our naturally raised standards".
- Seeking to increase the use of organically grown beans.
- Purchasing dairy from pasture-raised cows (cows which have daily access to outdoor pastures, are never given added hormones, and are fed a vegetarian diet).
- Committing to empower, educate, and train employees from all over the world in attempts to increase cultural sensitivity and communication.
In February of 2014, Crumpacker was back at it. Chipotle released yet another video effort: "Farmed and Dangerous", a dark comedy about - you guessed it - the evils of industrial agriculture.But in May of last year, Chipotle shareholders demanded more.Proposal: "Shareholders request Chipotle issue an annual sustainability report describing the company's short and long-term responses to ESG-related issues. The report should include objective quantitative indicators and goals relating to each issue where feasible, be prepared at a reasonable cost, omit proprietary information, and be made available to shareholders by October 2014."Chris Arnold stated in an email: "We have never done formal sustainability reporting quite simply because we have finite resources. We'd rather invest those resources in doing things that actually drive change, then in talking about that change." Quite the excuse. Why not do both?On May 15th, the proposal received a 31.3% vote.My first reaction was disappointment. Why didn't more shareholders demand transparency!? My second reaction was optimism. Might Chipotle have recognized the importance of transparency and reported anyway? Surfing the web resulted in zilch. Perhaps I missed it. I emailed Chipotle Investor Relations, just to be sure.
The Sustainable Investor: "Did Chipotle issue a sustainable report as of October 2014? If so, where might that be available? Thanks."Investor Relations: "Thank you for the email. Chipotle did not issue a sustainability report this fall."
So there you have it.We live in a world where the most meaningful ESG Vigilante may very well be the shareholder.A note to shareholders: Get Louder.