San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Tuesday, December 20, 2016

It Is Christmas Time, A Perfect Time For Envy

Don't you just love the hypocrisy associated with Christmas?  People who hate God sing Christmas carols, thus increasing His wrath against them in the coming day of judgement if they fail to repent before they die.  People talk about love, peace and goodwill while fighting with each other in the shopping malls.  Families gather together to gossip about and slander one another.  People who only go to church services twice a year show up at church and the pastor, ever vigilant in his goal of increasing the membership rolls and the income to the church, preaches a bastardized and lie filled sermon designed to reinforce each man's view of himself; namely that God loves him and has a wonderful plan for his life this Christmas season.  Christmas is also a wonderful time for the expression of that lovely character quality known as envy.  Let me tell you a little Christmas tale today about envy and the Chipotle restaurant chain.
Chipotle is in trouble.  Third quarter revenues were down 22% y/y and the stock price has also dropped 26% this year.  All of these woes originally stemmed from the problem Chipotle had a year or so ago with quality control in regards to the food being served.  If I remember correctly, and I probably do not (and I am too lazy to look it up), some folks died after eating poisoned food from a Chipotle restaurant.  I don't remember how many folks died but I do recall it was a big news item for a month or so as Chipotle engaged upon several promotional stunts in an attempt to rehabilitate its reputation.  To date none of them have worked.
The Sunday Denver Post contained a story, in the Business Section, detailing Chipotle's woes.  That story described how Chipotle's woes no longer come from the ancient history of food poisoning but from a recent history of poor service and inferior quality food.  Gary Alfred, of Denver, responded to that story in yesterday's Letters to the Editor section of the paper.  Here is what Gary had to say, "It has been quite a while since I last visited my local Chipotle restaurant.  Improving the guest experience, as outlined in the Denver Post, is not something likely to encourage me to return. Such an experience is expected. Rather, if the new sole CEO Steve Ells would forgo his $10 million-plus annual salary and pledge to use the money to provide end-of-year bonuses to the restaurant's line workers, that would be quite welcoming.  With all the negativity surrounding the company, such a positive gesture around this holiday season would go a long way towards raising the profile of the company as a quality and responsible neighborhood employer."
Chipotle has 60,000 employees.  $10 million divided by 60,000 is $167/employee.  The average "team member" at Chipotle makes $25,000/year.  The average store manager makes $50,000/year.  Gary's proposed bonus would make up 0.67% of the average team members salary and 0.34% of the average store manager's salary.  Although I am sure nobody would turn his nose up at a free $167, do you really believe people would flock to Chipotle restaurants because the people working there each earned a year end bonus of $167?  That proposition stretches credulity.  Indeed, I suspect if Chipotle actually did give each employee a year end bonus of $167 the store would be castigated in the press for giving out such a stingy year end bonus.
Chipotle has a market capitalization of $11.3 billion. In the last fiscal year the company had gross revenues of $3.8 billion and EBITDA of $278 million.  The company's profit margin is 1.9%.  It pays no dividend on the more than 28 million shares outstanding.  Given the fact that the employees of the company are contract laborers and the shareholders of the company are the ones who have risked their money to provide a product to the public that has been, until recently, wildly popular, why should the CEO now be required to give up his salary and work for free?  Furthermore, if the CEO is to be required to forfeit his salary, why should it go to the employees instead of the shareholders?  The answer, of course, is Gary's envy demands it.
Gary is much holier than I am because he thinks about the little guy all of the time.  It drives him to madness that line workers at Chipotle are only making $25,000 year when the CEO of the company is making $10 million.  I many times has Gary, when he used to go to Chipotle, voluntarily given some of his money to the line workers as a bonus for their service to him?  In other words, does Gary put his money where his mouth is or is he simply another loud-mouthed, envy filled hater of the free market?  I suspect the latter.
Chipotle, like all profit seeking corporations, is not organized to be a "responsible neighborhood employer."  Entrepreneurs risk their own money to serve the public by providing them goods and services they hope the public will buy at a price they can afford.  Employees are a fungible quantity and ultimately nothing more than an additional factor in the cost of doing business.  Chipotle serves millions of customers and should not be required to pay its employees one red cent more than the free market will bear for their labor services.  It is the customer who reigns supreme in the free market, not the employees who work for the company.  I many jobs has Gary created in his neighborhood?  Do you think he has been a responsible neighborhood employer?  Chipotle has created 60,000 jobs.  How many has Gary created?  My guess is that Gary has never created a single job in his entire life.  Ah yes, Christmas time is a wonderful time to express your envy and display your hypocrisy, isn't it?

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