Panera, Chipotle set sustainability standards by starting small, thinking big
Panera and Chipotle have long been standard bearers for food, operations, marketing and sustainability.
Perhaps it may be surprising, then, to learn that many of their sustainability initiatives start small; the two concepts nickel and dime their way to eco-inspired savings.
Caitlin Leibert, Chipotle's director of Sustainability, and Scott Davis, Panera's EVP and chief concept officer, outlined some of their brands' best practices last week during the Fast Casual Executive Summit in Denver.
Davis said that, until recently, silos have impeded the company's ability to find true value from a sustainability program.
"We had to figure out how to do the right things and how to use the supply chain and construction and all of it and we wanted to create a holistic vision of where sustainability would go for us," he said.
Panera shifted its focus to three verticals – planet, people and community – and brought its organization around them.
For the "planet" piece, Davis said Panera earned some "quick wins" through the expansion of its recycling program. From 2011-13, there was an 86-percent increase in cafés in the company's recycling program.
Packaging was also a priority, and is now 90-percent compostable. Davis said from 2010-12, Panera decreased its energy usage by 20 percent. The benefits far outweighed any costs incurred.
"We redesigned all of our packaging to be more sustainable, compostable, and it cost us about a quarter point in margin. Rethinking how you package plays a big role," Davis said.
Panera also began building LEED-certified cafés, which are now the basis for the company's next generation of growth. The first opened last year in Davis, California. There are a handful of prototypes testing vehicle charging stations and other technologies that are sustainable as well. Davis said companies are wise to seek these emerging technologies out and receive government subsidies.
For the "community" vertical, Panera added a number of partnerships, such as Soup's On; aided those partnerships with brand-oriented campaigns, such as the Pink Ribbon Bagels; matched contributions; implemented a daily donations food policy; removed artificial flavors, colors, preservatives and additives; and opened five Panera Cares locations throughout the country – Boston, Portland, St. Louis, Chicago and Detroit.
But it is the "people" vertical that Davis said incites "the magic" for Panera.
"We found one person in every café who is passionate about this and gave them the ability to rally other folks in their café – an environmental captain," he said. "This has helped drive a lot of our success. Our green warmth survey score increased by 13 percent on a three-year basis because of favorable responses.
"It doesn't take a lot of time or money, but it takes the right people to move this thing forward."
For Chipotle, waste, energy and water are the main focuses. These are the three areas that are the most impactful for restaurants, and the biggest opportunity to save is with waste, Leibert said.
"Waste is really expensive. It hits our PNL. The elephant in the room is we have a lot of packaging," she said, pointing out Chipotle's cup, which is paper lined with two thin layers of plastic. "This is our only cup and depending on where you are in the country, it can go to be composted, go to the landfill, or be recycled. But we can't rely on infrastructure and regulation – there is an increase in consumer demand to do more."
There is also a growing demand among Chipotle employees to do more. And so the company has issued a three-part approach to its sustainability efforts: before consumers come to the restaurant; during the restaurant visit; and what happens after the restaurant visit.
"Before" is the biggest opportunity for cost savings, Leibert said. Chipotle has taken a look at some small opportunities that have added up to big wins; for example making its straw one millimeter smaller.
"You couldn't see the change with the naked eye, but the change resulted in 6 tons less of plastic a year," she said.
Chipotle also trimmed its basket liner by an inch, which has led to "five, six figure raw material savings," Leibert said. And most recently, the company switched its cutlery from a shiny option to a matte option (polystyrene to polypropene), which is more efficient to produce.
"It has been a win-win – it has saved us a ton of money and they look sharp. The matte really matches the brand," she said. "You have to be careful not to cheapen the experience. There is a balance. All of these things equate to big savings and the customers don't notice. They're simple wins."
The brand is currently testing a more sustainable, sturdier bowl in a few restaurants in Colorado. The test is in direct response to consumer complaints regarding the brand's "leaky bowls."
"This is an example of how we let our challenges guide our sustainability effort. We've been wondering for years about how we can change (the bowls), since it's so iconic for us," Leibert said. "Packaging can be expensive, but it's also an opportunity to solve a big issue."
She said that although consumer demand for eco-friendly practices is increasing, it's important for brands to drive the narrative about sustainability.
"There are four ways you can dispose of something – recycle, landfill, compost and innovate," Leibert said. "If we accept the status quo, that's not very empowering or genuine to our brand. It's not good enough."
Alicia Kelso Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.