Chipotle Mexican Grill Inc. plans to hire 4,000 employees in a
single day next month, seeking to counter a tightening market for
restaurant labor by dangling the possibility that high-performing
recruits could someday earn six-figure salaries and stock in the
burrito chain.
The planned Sept. 9 hiring binge—which would expand Chipotle's
59,000-member workforce by nearly 7%—is one of the starkest
examples yet of restaurant chains stepping up recruitment efforts
as the industry struggles to attract and retain employees. A
stronger economy, rising demand for restaurant meals and a string
of minimum-wage increases imposed by cities and states have shrunk
the pool of available workers.
"The economy has been thawing, more restaurants are opening, and
there are fewer job applicants than there were several years ago,"
said Monty Moran, co-chief executive of Chipotle.
Some competitors have responded by boosting wages and offering
more perks to employees, part of what Wendy's Co. Chief Financial
Officer Todd Penegor earlier this month called an industry "war on
talent."
McDonald's Corp. and Cheesecake Factory Inc. recently raised
employee wages. Starbucks Corp. is providing tuition reimbursement
and financial aid to employees who enroll in an online bachelor's
degree program, and McDonald's said it would help pay for employees
to earn their high-school equivalency degree and take college
classes.
Chipotle, too, has beefed up benefits. It has expanded
college-tuition reimbursement to all hourly workers, added paid
sick days and increased the amount of paid vacation it offers.
Average U.S. hourly wages for production and nonsupervisory
employees in limited-service restaurants rose 3.3% to $9.62 an hour
in June, compared with a year earlier, according to Labor
Department data. That exceeded the 2% growth for the same period in
wages for similar jobs in the private sector overall, including
restaurants. The number of employees in limited-service restaurant
jobs rose 3.7% in June from a year earlier, outpacing the 2.5%
growth in total private-sector jobs.
Chipotle plans to promote next month's career day with an
advertising campaign starting Monday on social-media websites and
music-streaming service Pandora. It plans to open its nearly 1,900
restaurants three hours earlier than usual on Sept. 9, interviewing
candidates until customers start walking in at 11 a.m. in each time
zone. Some of the new workers will be hired to staff the about 200
new restaurants Chipotle plans to open this year, but the majority
will fill openings at existing restaurants.
Chipotle typically pays starting employees just over $10 an
hour. But its hiring push comes as the chain faces at least nine
lawsuits in state and federal courts from workers who claim that it
failed to pay them for working overtime, something the company
denies.
Lawyers say overtime lawsuits like the ones against Chipotle are
common in the restaurant industry, but they are a relatively new
development at the company. Most of the suits were filed last
year.
In another case, pending in U.S. District Court for the Southern
District of New York, two former employees who were considered
"apprentices" are challenging their exemption from earning overtime
pay. They allege that because they performed duties similar to
hourly crew members, they shouldn't have been classified as
salaried employees. The plaintiffs claim they and other apprentices
routinely worked more than 40 hours a week. Classified as salaried
employees, they weren't entitled to overtime pay.
Chipotle denies that the plaintiffs were misclassified or are
due overtime pay.
Mr. Moran said the lawsuits are baseless and Chipotle is
contesting them. "We care deeply about our people and try to do the
right thing," he said. "If we do something wrong, we fix it."
To attract employees, the company this spring posted videos on
its website explaining how hourly workers can rise to become
"apprentices" earning $53,000 a year and "restaurateurs," an elite
level of management earning $133,000 annually. Restaurateurs are
rare in the Chipotle system, with only about 400 now working in its
restaurants. Their duties are the same as those of other general
managers, but company officers bestow the title on those who
oversee top-performing teams of workers.
A footnote on Chipotle's website says that the compensation
figures are for "illustrative purposes only," but Mr. Moran said
those are the average salaries.
Data published on career site Glassdoor.com, which relies on
salary information supplied anonymously by employees, suggests
wages at Chipotle are lower than the company claims and in line
with McDonald's wages. But Mr. Moran says the Glassdoor data is
inaccurate.
The Denver-based company has long touted its "people culture,"
and says 95% of its managers are promoted from its ranks of hourly
workers.
It still faces difficulty recruiting workers, however.
Chipotle's Mr. Moran said that's partly because it is more
selective than other employers, limiting its hiring to people who
demonstrate 13 traits, including curiosity, ambition and
honesty.
The tight labor market hasn't had a significant impact on
customer service at the fast-growing chain, according to company
and independent data. Although wait times tend to be longer at
Chipotle than at competitors, customers rate their overall
experience at Chipotle higher, according to consulting firm
Technomic Inc.
Over the past three years, on average, 50% of Chipotle customers
have rated its speed of service on their most recent visit as "very
good." That compares with 53% for the overall fast-casual
restaurant category that includes Chipotle and 52% for fast-food
outlets, Technomic said.
Write to Julie Jargon at julie.jargon@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 23, 2015 21:45 ET (01:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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