As fast-food companies across the United States struggle to recruit and retain low-wage workers, Chipotle Mexican Grill said this week that it would offer a new benefit designed to keep employees at the chain longer: free tuition at a group of colleges and universities.
On Tuesday, Chipotle pledged to cover upfront the tuition costs for 75 types of business and technology degrees — including programs at the University of Arizona, Southern New Hampshire University and Wilmington University — for employees who have worked at the company for at least 120 days.
The goal is to reverse an employment trend that has bedeviled Chipotle and many other fast-food chains in recent years: annual turnover rates of 150% or higher.
With unemployment at just 3.5%, fast-food companies across the United States are facing one of the most severe labor shortages in recent memory.
“It’s a way not only to attract talent into the organization, but also a way to retain them,” said Marissa Andrada, Chipotle’s chief people officer. “We think it’s a way to hold on to great people and make an investment in our future leaders.”
But the college program has some strings attached. Participants are required to keep working at Chipotle throughout their studies and for six months after they earn a degree. And the program does not cover other expenses, like room and board or textbooks.
“For low-wage employees, other college-related expenses are likely to be a barrier,” said Michael Reich, an economist at the Institute for Research on Labor and Employment at the University of California, Berkeley. “I’d expect takeup at Chipotle to be low.”
At some Chipotle locations, employees who attend college say restaurant scheduling issues have made life difficult for them. Cristy Garcia, who attends the New School and quit her job at Chipotle on Friday, said her manager at one of the chain’s Manhattan locations scheduled her for shifts that overlapped with her classes.
“They made me feel guilty for prioritizing my education,” Garcia, 18, said. “The fact that they’re introducing a program now that asks students to use them as a way to access education is very ironic.”
New York City sued Chipotle last month under the city’s Fair Workweek Law, alleging that employees are forced to work unpredictable schedules. The suit stemmed from complaints filed by dozens of employees to New York City and to the Service Employees International Union’s Local 32BJ, which is trying to organize fast-food workers.
For years, Chipotle has reimbursed employees who attend college and meet eligibility requirements for up to $5,250 a year in tuition payments. Unlike the new program, that benefit can go toward any college program.
While the original program has prompted many students to work at the chain, it can create unhealthy power dynamics with store managers, said Jeremy Espinal, an undergraduate at Hunter College who works at a Chipotle in Manhattan.
“A lot of college students, they feel like the company hangs that over their head,” Espinal, 20, said. “Their managers will say, ‘If you don’t act a certain way, I’m going to take away your tuition reimbursement.’”
A Chipotle spokeswoman said employees should take scheduling concerns and other labor complaints to the company so it could “make things right.”
“Managers are trained to work with employees to accommodate schedules whenever possible,” said the spokeswoman, Erin Wolford. “We’re proud to offer best-in-class benefits and want to ensure our employees are able to fully take advantage of them.”
Although the turnover rate among Chipotle’s hourly workers last year was 145%, a figure like that is not unusual in the restaurant industry given the tight labor market.
In recent months, fast-food chains have tried a variety of strategies to recruit workers, from training programs for former prisoners to a four-day week. In June, Chipotle announced a bonus program in which staff members who meet performance bench marks can earn what amounts to an additional month’s pay every year.
While tuition programs have a track record of improving retention, the best method for keeping workers is to raise wages, said Reich, the labor economist. Chipotle pays an average hourly wage of $12 across the United States. In New York, the chain’s employees make an average of $15.40 per hour, slightly above the minimum wage.
“We’re highly competitive for the kind of workforce that we have,” Andrada said.