Thursday, October 8, 2009

Operational improvements that have a BIG impact

I LOVE hearing about operational improvements that have a big impact on customers and profitability.

Monty Moran, Co-CEO of Chipotle, gave me a couple GREAT examples of this at breakfast a couple weeks ago. Since he joined the company five years ago, he has created not only phenomenal growth in their number of stores but, more significantly, unheard of per store revenue AND profit growth.

1. Standing outside one of his locations, he saw people turning away from going inside because the line was too long. He thought, if we could shorten the line or make it faster, less people would turn away which = more revenue and happier customers. He looked at his highest volume store in NYC (doing DOUBLE the throughput at lunch), video taped how they handled things at that store, and then replayed that video for the managers of all his other stores and had them replicate the process. Turns out, having eight people touching the burrito is a LOT more efficient than only having three.

2. Monty then paid attention to the possibility that customers may feel man-handled as their burritos were getting handed off a eight times. So what did he do? He insisted on training employees to look customers directly in the eyes and smile. So now customers can get a feel-good hit eight times with each burrito for no extra charge!

3. Since Chipotle has been growing so fast, one of their challenges has been finding good managers. Monty found that store mangers hired from outside the organization were more expensive and poorer performers overall when compared with the managers who were promoted from within. He flipped the company model to have 75% of all managers be promoted FROM WITHIN (vs. 25% before) and watched his store growth and performance improve dramatically.

Where can we turn our operational models upside down to make improvements that will attract more customers and better profitability?

Thanks for the great inspiration Monty (and for the great breakfast)!