Going Green: Will Customers Notice?

By Bob Krummert

You'll find the term “sustainability” on almost every list of hot restaurant trends for 2010. But while operators endorse sustainable practices in principle, many wonder if they can afford them in practice.

How come? A restaurant's costs go up when it installs pricey equipment to make its operation more sustainable and pays extra to source ingredients that meet sustainability standards. Not a problem if customers will pay more when menu prices inevitably rise to cover these added costs.

But will they? They did at burrito chain Chipotle Mexican Grill, which has shown that a commitment to buying food from sustainable sources does not have a negative impact on its menu pricing power. Chipotle was able to impose a big price increase in the middle of the recent recession without seeing much falloff in traffic. Strong testimony, indeed.

Now the chain is tackling the other part of the sustainability equation: energy. Chipotle has committed to installing solar panels on 75 units over the next year. Collectively, the panels will produce 500 kilowatt hours of electricity annually. And the chain is greening up other aspects of its buildings, too.

“Our effort to change the way people think about and eat fast food began with our commitment to serving food made with ingredients from more sustainable sources, and that same kind of thinking now influences all areas of our business,” says Chipotle founder and chairman Steve Ells. “Today, we're following a similar path in the way we design and build restaurants, looking for more environmentally friendly building materials and systems that make our restaurants more efficient.”

The solar panels are being installed in markets that have lots of sunlight (Denver, Austin, Dallas, San Antonio) and whose local utilities offer solar rebates. The panels can't fully power these units. Rather, the idea is to reduce the restaurant's energy consumption during peak hours (11 a.m. to 7 p.m.), taking pressure off the locale's energy grid and, collectively, eliminating more than 41 million pounds of CO2 emissions.

“Chipotle has recognized an eco-friendly method of reducing its operating costs while reducing its carbon footprint,” says John Berger, c.e.o. of Standard Renewable Energy, which is supplying Chipotle with its solar panels. “By applying solar, each individual restaurant will be decreasing its reliance on the local grid and fossil fuels and supplementing it with clean, renewable energy.”

The question about this effort is whether customers will notice. Chipotle's sustainable food practices are intertwined with quality, and they produce benefits customers can taste and see. Ultimately, this strategy has made the company money.

On the other hand, its solar panel installations sit on unit roofs. They are difficult for customers to see unless they happen to do a flyover in a helicopter.

Some other company initiatives along these lines are more visible. Chipotle's Gurnee, IL, unit was the first restaurant to received platinum-level LEED certification from the Green Building Council. It features an on-site wind turbine and an underground cistern that captures rainwater for irrigation. There's another LEED unit in Long Island, NY, and one in Minneapolis that hopes to get certified soon. New units elsewhere in the chain now incorporate environmentally friendly materials throughout their buildings.

All we have to watch now is whether the upfront investments in these initiatives pay off if and when Chipotle raises prices again. If the trend predictors are right, customers now value sustainability so highly that they'll pay more to restaurants like Chipotle that do business this way.