Payhawk proudly sponsors the "Secrets of Rockstar CFOs" podcast hosted by Jack McCullough. McCullough's podcast features interviews with CFOs at top companies to offer practical insights on corporate finance strategy amidst industry challenges and opportunities. The article covers our best bits from his recent chat with Chipotle CFO Jack Hartung.
Payhawk proudly sponsors the Secrets of Rockstar CFOs podcast with Jack McCullough (2023/24).
Inspired by his hit 2019 book, Secrets of Rockstar CFOs, Jack McCullough's podcast explores "What it really takes to excel in the role of chief financial officer."
These days, the CFO role has changed and principally involves leading in corporate finance strategy and demanding more than just good financial know-how. The "Secrets of Rockstar CFOs" podcast offers practical insights from and for CFOs, serving as a guide to better financial leadership amidst industry challenges, economic change, and opportunities.
Having begun his career as a public accountant and auditor, Jack Hartung climbed the professional finance ladder at McDonald's for 18 years before taking the CFO helm at Chipotle for over 21 years.
Passionate about the Chipotle brand, problem-solving, and business analytics — beyond only the numbers — Hartung cites his experience in multiple business areas as his secret sauce for success. He joined Jack McCullough to share his insights in a recent podcast episode, and we dive into some of our best bits below.
Hartung describes his time at McDonald's as super valuable, highlighting the opportunity to work across different businesses within the organization as a big benefit for his career.
"At McDonald's, you could interview for openings in any area. So, you might be doing group accounting, but then interview for a strategic role in 'restaurant' and change jobs. It meant you could see different parts of the business, i.e. work in one part for a year, then do another…"
These varied experiences allowed him to understand different business areas in depth, including franchise operations, partnerships, hospitality real estate, international ventures, diversification efforts, and more. Thanks to this experience, Hartung shares that he left McDonald's with a deep understanding of CFO strategy related to different areas of the business and their needs.
"My experience with McDonald's led me not just to see the opportunities when I joined Chipotle but also the future. I could identify what capabilities we needed to build over time to make Chipotle successful not just for a few years but for a few decades," Hartung describes.
Hartung's own approach to CFO business strategy has been driven by his "in the weeds" work across different businesses and functions, and he cites this as one of the keys to his (and the company's) ongoing success.
"Parts of the CFO job is nuts and bolts: doing the accounting, closing the year, the financial reporting, etc., and you've got to be good at that. But at McDonald's, you also got to experience different businesses, so you weren't just seeing the numbers at close and reporting on a consolidated basis," explains Hartung.
Knowing how each of the businesses works and how they roll up to one big company is really critical — and that has helped me in my career to say 'what different levers do we need to pull' in certain areas so our overall business will be successful.
CFO business strategies don't start and end with numbers, and Jack Hartung shared what initially captivated him about Chipotle when he began working with them first as a McDonald's partner over twenty years ago and then as CFO.
"I first became attracted to the business after spending time with the founder. I saw this young chef teaching me how to make Chipotle rice. We would taste the rice, and he would talk about tasting the lime and cilantro and how to use the right amount of salt and how many times to rinse it — there was a level of detail that went into every part," Hartung describes. "I'm a finance guy, and I'm learning about all these tastes, and all I know is that these burritos taste delicious. But, they cared about every detail, and I was enamored with it… I thought this is the future of food."
Hartung's belief in the ethos of the brand and the product was strong, but so was his belief in the future of the business (and his own problem-solving prowess).
They were sophisticated from a food standpoint but not a business standpoint. I thought this is the kind of food people want to enjoy but it's not going to happen without a good business model. Yes, you can raise money based on existing restaurants, but you need sustainability to invest in your own growth.
Hartung goes on to describe some of the biggest challenges and opportunities they've faced as a company, too. Recalling going public, shifting gears through the Covid-19 pandemic, he says: "One of the things I'm most proud of is the ethos and purpose of Chipotle… It didn't just survive, it got stronger."
Any finance professor will tell you that typically, as you grow companies, you’ll find that you start to make quality compromises.
In the book Built to Last, Jim Collins wrote about the ‘genius of the AND,’ describing how you often have a or b but rarely have both. But as Hartung explains, at Chipotle, they do as they aren’t willing to “make the compromise.”
“We work hard on our supply chain and business model to find efficiencies in everything else in the business except for the food to ensure that we can continue to invest in the food. As a consumer, what better way to enjoy food than knowing this company spends less on P&L like rent and more on delicious food.”
Hartung explains that while price is vital, it’s not a priority above the food. He says price is the easiest thing to copy, after all, and the wrong business pricing strategy can be a brand killer. And instead, getting their margins right is the big one for Chipotle.
We invest in premium ingredients and pay more for organic and naturally raised produce, yet have high margins. Having all three together is hard, but it makes our business sustainable. We can continue to ensure the food is sustainably raised with respect for the animals, the farmers, and the environment. And the fact that we have higher margins (among the highest in the industry) means we can stay sustainable as a business, too.
The brand has never had any debt, either. Hartung explains how Chipotle still theoretically has the $100 million they raised when going public in 2006. “We've been able to invest and sustain in our future even during the rescission and the pandemic without running out of cash. We've made investments along the way without compromising.”
The last four years have challenged anyone in business with the Covid-19 pandemic, supply chain disruption, rising inflation, high interest rates, and talent shortages combined in a perfect storm.
Hartung cites Chipotle's ability to pivot and its fantastic team as the two most important factors for its survival and ongoing success.
We were fortunate to have a growing digital business and already had a separate restaurant 'make line' for digital orders, which allowed us to pivot quickly as our digital orders went from 18-20% to 60-70%.
The leadership team decided early on to pay their people even as sales dropped, but it was a big financial drain on the business. Despite this, Hartung cites the success as down to the people, explaining that they could close the office but keep restaurants open, all thanks to the company's amazing people.
The challenges came thick and fast in the post-lockdown world despite the restaurants being open. Hartung talks about some of the highest inflation he's seen in his career and the approach to this and other challenges, saying:
We built a balance sheet and an economic model that would sustain itself through good times and tough times – that's why, during the great recession and the pandemic, we've made the right investments in the things that matter at Chipotle. If you wait until those things are on you to deal with them as a CFO – it's probably too late.
Hartung's problem-solving skills and in-depth CFO business strategy became more vital than ever when driving the business through difficult economic times. As stated above, Hartung's leadership is driven by sustainable success, and his forward-thinking approach meant the company was robust enough to withstand tricky times.
On a spreadsheet, if you lever your balance sheet, meaning if you go out and borrow a bunch of money, you'll theoretically get a higher return on your capital and that's true during good times. But during bad times? You might be crippled to the point where you have to give up on making some of your long-term investments and lay off good people. We wanted to ensure we had a four-trust balance sheet that would help us overcome challenges ... and 'knock on wood’, it has allowed us to do just that.
A good handle on CFO strategy is the difference between making or breaking it as a major success story like finance rockstar Jack Hartung.
If you’re a CFO at a growing business, you know you have to understand and collaborate with different areas of the company to balance budgets, pinpoint opportunities, and create robust corporate finance strategies. For this, you need complete, real-time spend control and visibility and sufficient time to help your business make decisions that will move it to the next level.
But how can you save time and take control of spend, especially in a small finance team? The fastest, most effective way — Automation.
At Payhawk, our complete spend management solution helps businesses save time, control spend, and get real-time visibility of expenses. Our solution, including corporate cards, expense management software, multi-entity management features, procure-to-pay automation, native ERP integrations, and more, allows growing companies to save up to four days a week on manual finance admin.
Besides making time by removing tedious but important manual tasks with things like OCR data capture and real-time reconciliation, our solution also gives CFOs complete financial visibility. As Hartung describes above, a big part of the Chipotle model involves saving money on everything except food. But businesses can’t create models like this without complete, clear financial visibility.
As Andrew Jacobi, VP of US Finance at State of Play Hospitality (Payhawk customer), says:
We get complete spend visibility thanks to Payhawk's integration with NetSuite. That flow of spend data means we can understand our P&L very quickly after we produce it and spot if there's overspending in specific places. For example, if we see that we're spending too much or more than expected on DJs in a particular venue, we can say, 'We planned $5,000 for this period, but we spent $7,000. So, what happened?' Were we overcharged? Did we increase the frequency of DJs? And if so, should we adjust the budget for the next period?
Real-time spend visibility is key for CFOs, letting them see their financial positions, channel cash flow where it needs to be, adjust budgets, and more. All of which go a long way to attracting and reassuring investors.
Can't face the idea of finance change management? Stuck to your existing card and expense providers? It could be time to rethink this as the first step in your new strategy…
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Trish Toovey works across the UK and US markets to craft content at Payhawk. Covering anything from ad copy to video scripting, Trish leans on a super varied background in copy and content creation for the finance, fashion, and travel industries.