Chipotle drives measurable and repeatable profits using Envysion
Case Study: Chipotle Deep Dive
With more than 1,350 locations, more than 30,000 employees and a loss prevention team of just 5 people, it may be surprising that Chipotle Mexican Grill’s restaurant level margins are among the highest in the industry at 26%. However, Chipotle has built its position as one of the most successful restaurant brands in the country by doing things differently.
Through the company’s vision of food with integrity, Chipotle is seeking better food not only from using fresh ingredients, but ingredients that are sustainably grown and naturally raised with respect for the animals, land and farmers who produce the food. A similarly focused people culture enables Chipotle to identify and empower top performing employees and develop future leaders from within.
With this company mission, it’s no surprise that Tim Spong, Chipotle’s director of safety, security and risk, took a different path when implementing a video surveillance system in 2007. Not following the crowd has paid off for Spong, who has successfully leveraged Envysion’s video-driven business intelligence™ to establish a culture in which honest people are kept honest and theft has been dramatically reduced from average to industry-leading at Chipotle over the last five years.
“When we started working with Envysion we had VCR systems in about half of our 600 restaurants, but only a couple of people could log in to the system,” explains Spong. “We were covered if a robbery or slip and fall occurred, but otherwise we couldn’t use video for much else since it was so difficult to access. In fact during the year and a half before we installed Envysion, we had only reviewed video nine times.”
Realizing the company’s aggressive growth plan would only exasperate the headache of managing video in their locations, Chipotle began exploring alternatives to their video system. At that time, DVRs were the de facto upgrade for VCR systems, but Spong realized they needed something more.
“I didn’t want to just swap in a DVR and end up with the same hassles as before. I needed a solution that would let me remotely access video from all of our restaurants, and I had to be able to centrally manage the whole system too. I wanted to be able to quickly see the health of all of my cameras and DVRs in a glance and to add users with appropriate permissions in a few minutes,” says Spong.
So in 2007 Chipotle deployed Envysion’s highly scalable, centrally managed and bandwidth-intelligent solution to all of its locations and gained the ability to grant and control access to video “game film” to hundreds of users throughout the company. Shortly thereafter, Chipotle worked with Envysion to expand the value even further by integrating its point of sale (POS) data enabling every transaction and sale to “come to life” with targeted exception reports.
Video-Driven Business Intelligence Drives Profit Improvement
Today, this video-driven business intelligence is an integral part of how Chipotle manages its day-to-day business and protects restaurant profitability. The company has incorporated the solution into its online audit program to prevent, identify and eliminate theft in the restaurant environment. Envysion’s reporting enables Chipotle’s loss prevention team to increase the efficiency and effectiveness of these audits by flagging high risk transactions. For example, Chipotle has custom reports that look for a high volume of small cash transaction, voids, refunds, discounts, no sales or comps. Envysion’s reporting automatically reveals exceptions at predetermined thresholds – employees who are ringing more of these transaction types than Chipotle would expect in the normal course of business – in a selected time frame with links to the associated game film for quick validation of each transaction.
Another helpful feature is the ability to stack rank employees nationally or drill down into specific territories. This helps focus the loss prevention team’s attention on the most risky behavior across the network of stores.
Since the solution is centrally managed, Spong can grant access to the same (or certain) reports and game film to general managers and operational area managers allowing them to understand where profit erosion is occurring in their restaurants, while also bolstering Spong’s loss prevention efforts.
“The more people we have reviewing game film, the more likely we are to catch theft early on. But we only allow managers to see the video and data for the locations they manage,” explains Spong.
In fact, managers are required to log into Envysion every week, review a certain number of exceptions from a rotating schedule of reports and report back to the loss prevention team with their findings. This strategy has been particularly successful in making everyone aware that Chipotle does not tolerate internal theft.
Chipotle Sees Sustained Results
To further drive their industry leading loss prevention results, Chipotle utilizes Envysion’s Audit Services group to perform even more loss prevention audits on the company’s behalf. Envysion’s team of auditors review Chipotle’s transactions and game film to identify instances of theft. This partnership has enabled Chipotle to eliminate even more internal theft and provided valuable scalability of the metrics Chipotle wants to measure daily. More importantly, it’s provided an economic means to drive even more profit to their bottom line.
“We estimate that every theft case we identify is worth $15,000 to $20,000, but the process from identifying suspicious behavior and validating the theft to corrective action takes a lot of time and resources. We’ve been able to take advantage of Envysion’s team to free up our internal resources from the routine aspects of reviewing transactional game film to focus on strategic areas where we can add more value. Besides, Envysion can review a much larger volume of events than my team can internally.”
Envysion’s loss prevention audits are just one of the ways Chipotle has realized sustained profit impact from the Envysion solution. A big advantage of having a scalable solution like Envysion’s is the accessibility of game film to any approved user within the organization. Chipotle’s marketing, research and development, facilities and HR teams all take advantage of the Envysion platform to gain relevant insights across their restaurants around the planet.
“We’ve realized a sustained and predictable profit impact from Envysion over the last seven years, both from maintaining and building upon the initial reduction in shrink we realized after first installing the system and from continually finding new ways to use video to improve our restaurants performance,” says Spong. “We’ve got every team from R&D to marketing to facilities using Envysion to understand what’s going on in the restaurant. Even our CEO uses Envysion.”