Please ensure Javascript is enabled for purposes of website accessibility

Chipotle Pulls the Pork, Stands by Its Mission

By Alyce Lomax - Jan 17, 2015 at 8:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shareholders should be proud when their companies take a stand. In this case, Chipotle lives up to its Food with Integrity pledge even if it might lose some sales.

Chipotle Mexican Grill (CMG 1.70%) is all about the tasty burritos. However, it doesn't have a taste for cruelty. Chipotle's core mission is "Food with Integrity," and it stood by that mission this week by pulling carnitas off its menu in about a third of its stores. A pork supplier had violated Chipotle's high -- and very particular -- standards, and the revolutionary restaurateur responded by putting its money where its mouth is.

In this case, we're dealing with a high standard for animal welfare. Remember Chipotle's animated short The Scarecrow, which was among the company's many attempts to raise awareness of industrial farming's dark side? By pulling the pork from a supplier that it found was violating animal welfare rules in ways that included failing to give pigs some room to roam, the company is being true to exactly those kinds of values.

Some shareholders may be shocked and appalled that Chipotle would possibly throw away some short-term sales by refusing to substitute conventionally raised pork from another source. (Pork burritos represent 7% of its sales.) That attitude is short-sighted, though. Chipotle's making the right decision for the long term; this is all about what the company stands for.

Respect for quality of life
Chipotle requires that its suppliers give their livestock space -- either outdoors or within barns. Pigs -- which are among the most intelligent animals -- have been subject to a lot of attention due to the cruelty of their conditions at many farms, such as the use of controversial gestation crates.

Chipotle is among the vanguard of companies that deals with this complex issue head-on. After all, Food with Integrity is built directly into its business, differentiating it from many other fast-food companies. The restaurant company made no bones about the real issue here and why it won't compromise.

"This is fundamentally an animal-welfare decision and is rooted in our unwillingness to compromise our standards," spokesman Chris Arnold said, according to Bloomberg. "Conventionally raised pigs generally do not have access to the outdoors, spend their lives in densely crowded buildings, live on hard, slatted floors with no ability to root and are given antibiotics to keep them from getting sick. We would rather not serve pork at all than serve pork from animals raised in that way."

By designing itself this way, Chipotle has been ahead of a serious curve in our marketplace instead of rushing to catch up. Today, it's not the only company that's demanding pork from well-treated pigs -- and getting it from suppliers. Some of the biggest are changing their ways and demanding humanely raised pork as consumers have increasingly indicated their desire for it.

For example, Cargill has vowed to have all pigs at company-owned facilities out of the stalls and into "group housing" where they can roam more freely this year, and also plans to have all of its contractors release their pigs from stalls or confining gestation crates by 2017.

(MCD 1.24%)

Big grocers are also driving this kind of change. For example, Costco (COST 1.59%) and Target have both vowed to eliminate gestation crates from their global supply chain by 2022. Suppliers and would-be suppliers have to evolve.

Trustworthiness is the key
Chipotle's ingredients standards aren't limited to animal welfare. The company's definition of Food with Integrity also includes using dairy products from cows raised without synthetic hormones and avoiding meat raised using antibiotics, as well as an emphasis on organic and local produce.

In June 2013, Chipotle also tackled transparency on its menu, labeling which ingredients contained genetically modified organisms (GMOs) and working toward phasing them out.

Social responsibility in its many forms is becoming increasingly important to American consumers, and investors need to be cognizant of that fact and push their companies to be responsive. In the animal welfare area, look no further than SeaWorld for an example of how a company can suffer real negative financial ramifications due to consumers' animal welfare concerns.

Of course, now more than ever, when a company claims lofty ideals, we -- as consumers or as investors -- need to look up the record and make sure it really adheres to them. Regardless of one's feelings about animal welfare or the trends in social responsibility, though, issues like these relate to something essential: trust. If we can't trust our companies' managements to do what they say, we can't trust that our future returns are very safe, either.

In this case, Chipotle has passed that test.

Alyce Lomax owns shares of Chipotle Mexican Grill and Costco Wholesale. The Motley Fool recommends Chipotle Mexican Grill, Costco Wholesale, and McDonald's. The Motley Fool owns shares of Chipotle Mexican Grill and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
$1,692.03 (1.70%) $28.33
McDonald's Corporation Stock Quote
McDonald's Corporation
$265.44 (1.24%) $3.26
Target Corporation Stock Quote
Target Corporation
$173.39 (0.53%) $0.91
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$545.75 (1.59%) $8.54
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
$53.99 (-0.46%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.