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Chipotle CFO says 'we were losing our edge' even before E.coli outbreaks

Chipotle CFO: 'We were losing our edge' before E.coli

As Chipotle bounces back from the company's 2015 E.coli outbreaks with very strong earnings, CFO Jack Hartung said that the company's priorities were botched before the scare.

"Even before the crisis, we were losing our edge in terms of what it takes to run a great restaurant, and we're getting that edge back," Hartung told "Mad Money" host Jim Cramer on Wednesday.

The 18-month mark has passed since the crisis — Cramer's timetable for a restaurant to turn around after a food-related illness issue — and Hartung said the re-focused Chipotle is much better off.

"We discovered that we lost our focus on just the basics of running a restaurant, the basics of making sure that the customer comes first, and the basics of training each of our crew members and our managers and assistant managers what it takes to run a great restaurant, what it takes to provide a great customer experience. We'd made things too complicated over the years," he said.

Watch the full segment here:

Chipotle CFO says 'we were losing our edge' even before E.coli outbreaks

The first thing management turned to in order to re-vamp the company was its list of priorities, where Hartung said there was too much value placed on company culture.

"We were successful, and so, you know, success sometimes gets in the way of seeing reality, and the reality in our case was we focus on culture, which is a great thing. Of course you need a great culture. And we still value our people. We value a special culture. But we emphasized culture over and above the customer and over and above great training," he told Cramer.

When Chipotle's leaders realized that, they instantly shifted their priorities to making sure restaurant employees revisited their basic training, from knowing how to identify perfectly cooked chicken to rolling the perfect burrito.

"It's just been [in] a few short months that we changed our focus, we changed how we measure success, we changed how we define success, and then we've aligned all of our incentives around this new definition of success," Hartung explained.

The company also ousted its former co-CEO Marty Moran, leaving founder and CEO Steve Ells at the helm, which Hartung said reflected the fast-casual chain's changing outlook.

"When we made the change, we didn't say goodbye to culture. What we said was let's have culture be in the right balance, in the right balance of making sure we have great people who are well trained who are focused on the customer. And we had that balance out of order," he said. "And when we re-balanced things and we defined success based on the customer, based on training, our teams responded really, really quickly."

Now, Chipotle's customer satisfaction measures are improving month to month on every single count, and some stores in the central United States are seeing even better traffic than they were before the incidents.

"I think the best sign that this is working is not just the customer satisfaction scores, of course, but also our turnover at the manager level is as low as it's been in nine years. So our managers are voting by saying, 'I believe in where Chipotle's going, I know what success looks like,'" Hartung said. "They're reaching success at a faster level than they ever have before, and so we think that's a great sign in a matter of just a few months."

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