Chipotle wins 2021 Change Agent award for shift to Oracle Fusion Cloud ERP

Chipotle is on a mission—a mission to promote food integrity and support sustainable farms as part of the company’s business operations.

That mission depends on technology. One key investment Chipotle recently made was the modernization of accounting and financial management functions that drive business efficiency—which, in turn, gives the company the agility to support sustainable farms. This modernization effort earned the international restaurant chain a 2021 Oracle Change Agents Sustainability Award, which are a part of an annual global program that honors customers who exemplify environmental leadership, cost reduction, and business efficiencies using Oracle Cloud technologies.

For Earth Day 2022, the theme is “Invest in our planet” – a commitment that Chipotle has demonstrated through their adoption of Oracle Fusion Cloud ERP, Oracle Cloud EPM, and Oracle Cloud SCM applications to gain clearer views across financial systems, leading to improved demand forecasting and inventory control.

“I see a lot of peers who are still trapped in the past with fear of change,” says Curt Garner, Chipotle’s chief technology officer. “Today more than ever, technology leaders need to live in the future. If you’re evaluating a technology platform or a solution set, you need to think in terms of how different the environment will be three years from now and get on that path.”

Going digital for the future

When the pandemic forced lockdowns in March 2020, Chipotle joined other restaurants in quickly shifting from in-person service to online ordering, curbside pickup, and third-party delivery.

Less obvious was that when lockdowns went into effect, Chipotle was also in the midst of moving its finance systems to the cloud. That migration from Oracle E-Business Suite to Oracle Fusion Cloud ERP, which began in January 2020 and was completed on schedule in August 2020, gave the company an edge in adapting to a suddenly digital world.

“From an accounting perspective, we were able to scale for the increase in digital sales quickly, and we are now able to automatically reconcile every transaction that comes in digitally with a 99.9% match rate,” says Ben Thompson, director of accounting at Chipotle. “Our accounting team probably would have had to double in size if we didn’t have this technology.”

The swift rise in charges from a wide range of food delivery services was one area where automated account reconciliation saved staff time – and saved the company money. For example, if one of those delivery partner transactions is billed at $10, but because of a rebate or promotion the sale was actually $8, the new system can quickly identify that discrepancy and ensure that Chipotle pays the correct amount. Thompson estimates that this automated capability alone has saved the company millions of dollars already.

The right partner mix

In 2020, Chipotle saw digital sales rise from 18% to almost half of its total sales. The U.S.-based company has more than 3,000 locations, including a handful in Canada and Europe.

The chain has grown quickly and has a strategy to add some 200 new domestic locations each year. Those expansion plans, along with the company’s other evolving strategies, would have been limited by its legacy back-office systems, according to Garner. Its heavily customized version of Oracle E-Business Suite and a range of other bolted-on applications simply didn’t give the company the flexibility it needed.

“We knew that as we were growing the business, growing access for customers, and growing our supply chain and distribution network, we needed to move to a more modern technology footprint,” Garner says. “Transformations are best when they’re focused on an opportunity and how to get there, not forced upon you because your business is in jeopardy of not being competitive anymore.”

Chipotle enlisted its longtime advisor PwC, which was instrumental in helping the company develop the Chipotle app and its digital kitchens, which are second food prep lines specifically focused on serving digital orders. PwC also helped create and deploy Chipotle Rewards, a customer loyalty program that now has more than 24 million members.

Chipotle’s digital ecosystem was largely built from scratch. The company’s strategy is to customize technologies that are close to customers, so that they’re uniquely Chipotle. But for functions like finance and supply chain, the company wanted to use off-the-shelf technologies that incorporate industry best practices—and that’s where Oracle came in, Garner says.

“We want technologies and partners that have the same culture of innovation that we have and that align with our values,” he says. “Oracle is going to be at the top of everyone's list in terms of the technology. But with Oracle, we also found tremendous alignment from the beginning in terms of our mission to cultivate a better world.”

Time-saving recipe

Chipotle’s finance and accounting organization was concerned about the amount of change that they would experience with the move to Oracle Cloud ERP. “It wasn’t just the migration, but what it would mean to be on a cloud platform that was changing all the time,” says Thompson. “But after spending time with the Oracle team, that hesitancy turned into excitement about the contribution that they could make to the company.”

“So much is changing in accounting, including automation and robotics—and we don’t have to get approval for a big system upgrade to get new capabilities.” - Jamie McConnell, Vice President and Controller, Chipotle

The time the Oracle Cloud ERP system has saved for the accounting team has also been substantial, says Jamie McConnell, vice president and controller at Chipotle.

“Manual reconciliations are miserable for everyone,” she says. “Now, the team is spending less time manipulating and reconciling data and more time analyzing it and providing recommendations to the business.”

Oracle’s cloud applications have also enabled the team to speed the close process, she says: “We had gotten the close down to six days, but now we can close in five—and really it’s closer to four. And the forecasting process that used to take weeks now takes days.”

All the right spices

Having accurate data and modern forecasting tools will also help Chipotle meet some of the longer-term challenges businesses are facing because of the pandemic.

For example, as restaurants started opening again for in-house dining, many struggled to find and keep enough employees. Chipotle has tackled that issue on several fronts. The company now offers restaurant workers an average pay of $15 an hour, as well as referral bonuses and debt-free degrees in business, technology, agriculture, culinary, and hospitality through leading nonprofit, accredited universities. Chipotle also focuses on promoting from within; line employees can work their way up to restaurant management and a six-figure income in just three or four years.

Another challenge is controlling costs as Chipotle continues its expansion. For example, lumber prices have skyrocketed in the last year because of supply chain issues. Having systems that can more accurately estimate costs and help the company explore ways to more efficiently source materials will be a huge help to Chipotle’s growth plans.

Of course, international expansion also brings a range of challenges in accounting and reporting. But the multilanguage, multicurrency capabilities of Oracle Cloud EPM handles those automatically—no spreadsheets or reconciliations necessary, McConnell says.