Can burritos change the world?
Chipotle thinks so—check out the company’s recent brand campaign—but only if a burrito is made with real ingredients by motivated people. The company is betting its brand on a blend of authentic food and a set of social values that guides more than 3,000 restaurants.
You’ll find only real ingredients in Chipotle’s bowls, burritos, tacos, salads, and quesadillas—no artificial colors, flavors, or preservatives. Everything’s cooked and served by employees who earn as much as $18.50 an hour to start. The company offers a three-year path to six-figure management positions. Sixty-seven percent of employees are Black or Indigenous people of color, and 55% are women. Employees help sustain the planet by recycling or composting 51% of restaurant waste.
To deliver on its brand promises while driving rocketing growth, Chipotle needed a new approach to the information systems it used to track company financials. “Instead of leveraging new technologies, we were buying solutions and bolting them onto our on-premises environment,” says David Phillips, director of information systems. “Because we customized so much, the money we spent on upgrades didn’t buy new functionality.”
The upshot: less agility and scalability, hampered global expansion, and mounting costs. To better forecast demand, plan inventory, and manage supply chains, Chipotle needed more visibility across the entire business.
Pivoting during disruption
Working closely with longtime collaborator PwC, Chipotle moved its financial systems to Oracle Fusion Cloud ERP, a suite including financial forecasting, procurement, performance management, and supply chain management.
“We needed a solution that kept pace with industry best practices and supported growth,” Phillips says. “We viewed Oracle as core technology.”
Chipotle and PwC were tracking how the pandemic greatly accelerated the move to digital business, as many new customers ordered for the first time via Chipotle.com, the Chipotle app, or online delivery services. “Chipotle needed a platform that could scale to handle that,” says Dino Orfanos, a partner at PwC. “Oracle Cloud enables a much higher volume of sales through online food ordering platforms.”
Digital sales tripled during the pandemic. In November of 2020 Chipotle opened its first Digital Kitchen, in Highland Falls, New York, catering entirely to online orders, with a pickup lobby replacing the dining room.
Better views, better forecasts
With clearer views across financial and operational systems, Chipotle has sharpened its planning and become more responsive to changing conditions. “Using automation to generate forecasts is a huge time-saver,” says Carlos Londono, vice president, supply chain. Before, his team could produce only a couple of forecasts a week for suppliers. Now they knock out forecasts for all suppliers in a day.
When COVID-19 first hit, Chipotle used Oracle Cloud ERP to forecast a 30% reduction in supplies, not a complete shutdown. Surprised suppliers went along and were gratefully prepared when business soon picked up thanks to surging online orders.
Because Chipotle’s suppliers also know what to expect over the next three to five years, they can make the right capital investments and build the right infrastructure. “We can get everyone—our team and all our suppliers—on the same page,” Londono says.
In years past, Chipotle’s rate of service to restaurants—the measure of whether a store has all its required inventory—was around 90%. Thanks to Oracle Cloud SCM, it’s now over 99%, a win for a brand that depends on steady supplies in order to have fresh and wholesome ingredients. As Chipotle adds more Oracle modules, restaurants will finish inventory reports in only a couple of minutes versus 30 or 40.
Chipotle’s insistence on fresh ingredients requires a responsive supply chain. “For something like cilantro, we might have to shuffle things around all the way down to the farm level,” Londono says. “With Oracle, we can see everything throughout the chain, from farms to distribution centers and restaurants all over the world.”
Chipotle has also lowered its cost of doing business by tracking transactions more precisely. When the takeout and delivery business shot up in 2020, Oracle Cloud EPM let the chain automatically reconcile every online transaction, down to the penny. Chipotle can also track discrepancies from delivery partners and reclaim the difference, saving millions of dollars a year.
Cloud-based financial and supply chain forecasting yields a competitive edge. “We have a better idea of what’s coming, both in the long and short term,” Londono says. “We’re doing things that no one else in the industry is trying.”
Like building a business, and creating a future, on the shared belief that “real and responsible” matter. One burrito at a time.
