How Chipotle feels about spending $2 billion a year on labor

Unlike many of its peers in the restaurant space that have a franchise model, Chipotle Mexican Grill owns all of its 3,000 — on the way to a goal of 6,000 — restaurants. That means it also owns the relationship with near-100,000 employees, many on the front lines and in lower-paying, higher turnover restaurant positions. Even before the pandemic, turnover in the food sector was typically above 100% annually.

For Chipotle senior management, focus on investment in workers is nothing new, but at a time of a national labor shortage and wage inflation in lower-paying industries, it has a message for competitors: if you think about labor as a cost you are thinking about it the wrong way.

This week, the latest JOLTS report from the Labor Department showed a record level of workers quitting jobs that are concentrated in the restaurant and retail sector, and a continued record level of open positions.

The jobs situation is so tight CEOs from these industries are taking to desperate appeals. After many in the business world lashed out at extended unemployment benefits as a government assistance effort that was the primary reason people were staying out of the workforce, Barry Sternlicht of hotel operator Starwood Capital said on CNBC Wednesday the government now needs to pay people to come back to work. “The whole service economy is in a crisis,” he said. “The country can’t really work without its service people back.”

Marissa Andrada, chief diversity, inclusion and people officer at Chipotle, says it has been able to attract and retain talent by making an investment in workers ahead of the pandemic rather than as a sudden response to it.

“We feel like the investments we made in people in the past couple of years have set us up for the rest of the world opening up,” Andrada said at CNBC’s @Work Summit on Wednesday.

Starting in 2019, Chipotle invested in education benefits for workers, and it has since extended those to debt-free education for all employees rather than only tuition reimbursement, the latter being a benefit model that education experts said was not well-designed for low-wage workers and received limited use. This year has seen companies like Amazon, Target and Walmart all make moves to offer debt-free college degrees as well (Walmart has had a program in place for years, though it had been charging employees $1 a week.)

Rachel Carlson, the co-founder and CEO of Guild Education — which offers a platform for companies including Chipotle to make education available to workers and is a two-time CNBC…