• Chipotle is increasing composting across its more than 3,200 restaurants, with waste reduction one of the goals that executive compensation bonuses are based on.
• The restaurant chain is already diverting its waste from landfills, with nearly half of all trash produced getting composted or recycled last year.
• With plans to open more than 250 new locations a year, waste reduction remains key, but there are many composting challenges, from the products themselves and lack of composting facilities, to customer behavior.

Chipotle is used to customers coming into its restaurants and taking a moment to decide between a bowl, burrito, or salad, or which protein or veggie they want to fill it. The chain is also hoping customers take a moment when they leave the restaurant to ensure they're putting their garbage in the right trash receptacle, aiding Chipotle's composting and recycling efforts.

In 2022, Chipotle diverted 49% of its overall waste from landfills, totaling more than 196,000 tons, according to the company's sustainability report. Composting has been a key part of that for Chipotle, and the fast-casual restaurant chain is expanding that focus this year. In 2023, Chipotle has set a goal to institute composting programs in at least 23% more restaurants, or approximately 234 additional locations. Roughly 32% of Chipotle's more than 3,200 restaurants composted in 2022, according to its sustainability report.

The focus on waste reduction is being pursued alongside other environmental, social, and governance goals, such as upping the purchase of local produce and improving the retention rate for diverse employees in certain positions. The company's focus on these issues is reflected in executive compensation being linked to the goals, with the annual incentive bonuses of executives including CEO Brian Niccol positively or negatively impacted by up to 15%. This is the third year in a row that Chipotle has set ESG-related executive compensation goals, and it has shifted the specific environmental target to composting after a previous focus on reducing Scope 1 and 2 greenhouse gas emissions by at least 5% — it achieved a 13% reduction compared to 2019, the company said.

With plans to open more than 250 new restaurants a year, Laurie Schalow, Chipotle chief corporate affairs and food safety officer, said that reducing waste is a key strategy and Chipotle wants to "build that muscle" across the organization. The easiest time to set a restaurant up for composting is when it is built, she said, with retrofitting of existing restaurants a more difficult task.

All of the waste that goes into making food at Chipotle, and all the leftovers, are compostable, as well as many of the company's items, like burrito bowls, bags, napkins and quesadilla trays. Chipotle has been able to solve some of the traditional issues that kept other products from being composted or recycled. For example, inside paper cups there is a plastic lining that allows it to hold liquids. Chipotle worked with its suppliers to source a bioplastic that allows the cup to be compostable, said Lisa Shibata, director of sustainability at Chipotle.

Other items have been harder to solve for, Shibata said, like the small plastic portion cups that you use to put salsa in. While the company has found some fiber-based products that can hold those liquids, it's not up to the company's standards yet, she said. Chipotle has also looked to replace some of its forks with fiber-based forks, Shibata said, but it has found that alternatives don't pick up the food as well as its existing forks just yet.

"We've been working on different product designs so we can really give the customer experience and user experience that we would like to, along with that alternative material that will help us reduce the amount of landfill waste," she said.

Composting regulation and infrastructure are hurdles

Another challenge has been dealing with local regulations around composting and recycling. In certain jurisdictions, compostable products have to be fiber-based, while in others plant-based compostable products are accepted. There is no overarching national law or regulation around composting in the U.S. Frank Franciosi, executive director of the U.S. Composting Council, says the industry is not only one that is regulated differently by almost every state and local jurisdiction, but is also very reliant on what local composting businesses do.

Much of composting is still focused on yard waste rather than food waste, Franciosi said, and he estimates there are around 2,500 composting facilities in the U.S. that don't include just leaf dumps or other yard waste depositories. There are currently two bills focused on composting across the U.S., one that would fund composting infrastructure and the other to provide better data on composting and recycling facilities, with Franciosi saying that latter issue is perhaps one of the reasons there hasn't been as much focus on the industry.

"The EPA tracks a lot of stuff, the USDA tracks a lot of stuff. Nobody tracks compost, and recycling is in the same boat," he said. "No one really knows how much we recycle here in the U.S., it's just stupid."

Infrastructure is key for Chipotle, Shibata said, as there are many Chipotle restaurants in areas where there is no facility that can compost certain items. She sees more jurisdictions pushing in the direction of more composting, and said that a focus from companies like Chipotle on composting will help generate momentum. "There's more economic value for [waste management] companies to offer composting," she said.

But as much as Chipotle can do to make its products compostable and work with stakeholders to be more compost friendly, it also needs to make sure customers do their part. Recently, the company's board was presented with an update on sustainability efforts and the topic of how customers sort their garbage was brought up, Schalow said.

"We think it's simple because we put a picture, so if you see a fork, you put your fork in that spot, but people are in a hurry," she said. "We know there is work we could do to educate consumers."

Companies like Chipotle, where executives put their money on the line for waste reduction, can help shift the consumer mindset, Schalow said. But some of that education will come as composting efforts across the U.S. grow. The New York City Council recently voted to make composting of food scraps mandatory for all residents starting 2024, though that's well behind efforts on the West Coast, where cities including San Francisco and Seattle have had similar requirements for over a decade.

"Companies setting goals around waste reduction will have a big impact on consumers," she said. But she added that the adoption of composting as a residential behavior will be key. As composting becomes a task people do at home, "more people will be cognizant of it and want to do the right thing and take the extra step and go 'this item belongs in this bin,' versus putting the whole tray into one," she said.