Chipotle Ventures into Burgers as Labor Woes Draw Fire

It is easy for a firm to claim that it is sustainable, responsible and conscientious. But those statements become more difficult and nuanced when one factors in a company’s supply chain. Chipotle is finding that out now. An ongoing labor dispute with one of its produce suppliers threatens to harm Chipotle’s reputation with a consumer base that's becoming increasingly jaded about the company.

For the past year, Chipotle struggled with food contamination at some of its outlets, which resulted in poor earnings as its stock price fell precipitously after hitting a record high last fall. Just when it appeared that the company had turned a corner, one of Chipotle’s executives made headlines after being arrested on cocaine possession charges last month.

Concerns over food safety and what some critics call excessive executive pay have continued to plague the company with public relations headaches. Meanwhile Chipotle is trying to diversify its business by rolling out a new burger chain. But according to some organized labor groups, the treatment of workers within one of Chipotle’s key suppliers should give its customers and stakeholders pause for thought.

Earlier this year, a coalition led by the Teamsters and International Labor Rights Forum (ILRF) urged Chipotle to join its fight against what they say are numerous abuses at Taylor Farms in Tracy, California. Teamsters representatives claim Taylor Farms’ employees have suffered a wide range of abuses at the Tracy location. The charges include intimidation tactics to prevent organizing into a union, harassment, poor working conditions and unfair pay.

In order to raise awareness of what they say are the indignities that the 900 workers at this Tracy plant have endured since 2013, organized labor activists held protests at various Chipotle locations across the U.S. Among the most critical point they tried to broadcast to the chain’s customers is that Taylor Farms has been cited for at least 75 health and safety violations over the past year.

Accusing Taylor Farms of having 150,000 food items recalled over the past year, the ILRF’s Liana Foxvog suggested that Chipotle use its leverage to convince Taylor Farms to clean up its business practices. “Chipotle must live up to its proclaimed values and tell Taylor Farms there can be no food safety when workers are mistreated,” Foxvog wrote in an emailed statement to TriplePundit. “Chipotle should tell Taylor Farms to clean up its act or that it will drop Taylor Farms as a supplier.”

According to the ILRF, however, Chipotle has not responded to these labor groups’ concerns. And in April the company said it did not wish to become involved in the ongoing dispute between Taylor Farms and its employees.

Instead, Chipotle has become more involved with its foray into the burger business. The company recently made headlines with its July 28 announcement that it would launch Tasty Made. The burger, fries and shake chain will open later this year in Lancaster, Ohio. Across newspapers and on blogs alike, the news was greeted with skepticism as analysts suggested the company should focus on its core business. After all, the market is already saturated with hamburger chain upstarts, from California’s Habit Grill to New York’s Shake Shack.

If Chipotle goes all-in on this Tasty Made venture, that would mean more produce from suppliers like Taylor Farms. But as the ILRF and Teamsters insist, consumers should push Chipotle to take action if it will continue to serve “food with integrity.” And Foxvog told us the problem is only getting worse. The past spring alone, Taylor Farms was cited over 30 times by Cal/OSHA for workplace safety violations and has paid almost $100,000 in fines. In June, the company also fired 192 workers, and they have little recourse to save their jobs. “Many of them are long-time Taylor Farms workers who perform the same duties as Taylor Farms’ direct employees,” Foxvog said.

The old saying “a fish rots from the head down” applies to Chipotle. Just as fashion companies cannot absolve themselves of responsibility when abuses occur at the garment factories supplying them with garments, the same lesson applies to restaurant companies. Tackling the Taylor Farms controversy head-on would help Chipotle repair a reputation that has nosedived over the past year.

Image credit: Teamsters