Monday, September 8, 2014

Chipotle, Waiting Times and Regional Variability

When it comes to improving operational processes, Chipotle has consistently been one high-profile company consistently dedicated to improving customer service, and for this Mexican fast food chain, that means reducing its long wait times. In a 2011 interview with CNBC host Jim Cramer, Chipotle CFO Jack Hartung summarizes Chipotle’s approach when he says, “We pride ourselves on having great customer service and that includes great through put and we can serve a lot of customers…but we can serve them in a friendly and a fast way, but we think we can be even faster.”[i]

By 2014, Chipotle stock continued to soar even as other fast food chains floundered. Business Insider lists Chipotle’s aggressive approach to reducing wait times as one of the four reasons for the company’s continued success.[ii] However, it’s important to note that, as Chipotle is a national chain with hundreds of locations throughout the United States, a one-size fits all approach to improving operational process will not work.

Take the following two examples: The Chipotle outside of Eastern Market station in Washington D.C. versus the Chipotle in Columbus, Ohio on 2260 S National Rd. I was a customer at the D.C. location every day from May 26th, 2014 to August 20th, 2014 between the hours of 6:00 – 7:00 pm, and it did not take a scientific study to identify the bottleneck at this location: The cash register. Everyday, customers would line to the entrance, and wait times took between 20 – 30 minutes. The cash register would usually have numerous orders queued up, while workers sat idle at the food making stations. Customers would often leave the store after opening the door.

The Columbus Chipotle profiled in the article “Chipotle-Queuing System” has a very different problem. There are five stations in Chipotle’s single queue system: The burrito making station, the rice & meat station, the salsa & toppings station, the wrapping & pricing station and the cash register. At this particular Chipotle, the capacity utilization of the cash register was 33%. The bottleneck at this location was at the salsa & salad station. According to this case study, adding an additional worker to the salsa & salad would double register utilization to 66%, but the bottleneck would still persist.[iii]
                
Given the variation between different locations performing literally the exact same job, how best can regional and national managers improve operational processes in a way that actually increases customer satisfaction? While it seems that Chipotle could benefit from improvement to conformance quality, given the high turnover rate of the fast food business, variation is likely to persist. Perhaps by training all of their local managers to be “scientists” dedicated to process improvements through the scientific method a la Toyota, Chipotle could further reduce wait times even given the immense regional variability in bottlenecks. Ultimately, the questions a corporation should ask itself are, “How much control is headquarters comfortable with giving up to local managers, and through what methods and practices can HQ best ensure that that trust is not misplaced?”  



References

[i] Sandholm, Drew. “Chipotle Seeks to Reduce Long Lines.” CNBC.  July 20, 2011. Retrieved from: http://www.cnbc.com/id/43825771#.

[ii] Lutz, Ashley. “4 Reasons Chipotle is Destroying Fast Food.” Business Insider. September 4, 2014. Retrieved from: http://www.businessinsider.com/chipotle-threatens-fast-food-chains-2014-9

[iii] Sahni, Rahul. “Chipotle-Queuing System.” Academia.edu. Retrieved from:           http://www.academia.edu/5191558/Chipotle-Queuing_System

1 comment:

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