Illegal Worker Crackdown Bites Chipotle

Chipotle Mexican Grill has a lot going for it–an upscale burrito concept, a hip and eco-friendly image, expansion plans galore and a 500 percent-plus stock price gain in just over two years.

And then it has something not going its way–a federal crackdown on its immigrant labor force that has so far forced Chipotle to fire hundreds of allegedly illegal workers in the state of Minnesota, perhaps more than half its staff there.

The probe is widening. Co-Chief Executive Monty Moran told Reuters on Friday that U.S. Immigration and Customs Enforcement (ICE) has also issued “notices of inspection” for restaurants in Washington D.C. and Virginia.

Investors in the Wall Street darling are taking note and one firm, Calvert Investments, plans to talk to Chipotle about the large number of undocumented workers uncovered.

Dependence on illegal labor is the elephant in the room for the U.S. restaurant business.

And experts say the Chipotle ICE investigations are a wake-up call for an industry that is one of America’s biggest employers and generates over $300 billion in annual sales, according to research firm IBISWorld Inc.

Chipotle–a Denver-based company whose motto is “Food With Integrity”–is one of the most well-known names caught in the immigration enforcement shift that began two years ago.

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Onus ‘on employers now’

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Under Obama, immigration enforcement agents are cracking down on employers with so-called “I-9 audits”–I-9 being the employment eligibility verification form.

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The U.S. fast-food industry historically has offered relatively low pay and paltry benefits to legal workers and, as a result, has struggled with high employee turnover.

Hardworking, loyal

Longnecker and other experts said restaurant owners are attracted to illegal laborers because they work hard, are loyal and will go the extra mile to hold down a job.

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But immigrants–both legal and illegal–account for about a quarter of workers in the restaurant and food services industry and their numbers are up in recent years.

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The overall number of immigrants employed in the sector climbed from just over 1.7 million in 2008 to 1.8 million in 2010, according to this data, even as native employment fell from 6.4 million to 5.9 million.

The Pew Hispanic Center–whose demographic and labor market work is highly regarded–estimated in a 2009 report that 12 percent of the workforce in food preparation and serving in 2008 was undocumented.

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