People Still Flocking To Chipotle Despite Higher Burrito Prices

Higher prices aren’t enough to keep burrito lovers away from Chipotle.

The Denver-based chain reported a 25-percent jump in profit in the second quarter from the same time a year ago. Same-store sales -- a closely watched retail metric tracking sales of stores open more than a year -- jumped 17.3 percent from a year ago.

All this despite the fact that the company raised prices over the past few months in an aim to counter food inflation.

“It seems that most customers haven’t blinked at a little bit of a menu-price increase,” Mary Chapman, the director of product innovation at Technomic, a food research firm, said before the company reported earnings.

Chipotle’s blockbuster earnings come at a time when other restaurants are struggling. Red Lobster and Olive Garden reported decreases in same-store sales during their most recent earnings reports. KFC and Pizza Hut saw sales at U.S. established stores drop 2 and 4 percent, respectively.

It helps that Chipotle has loyal customers: Chipotle consistently scores highly in “occasion driven by true loyalty,” a wonky term monitored by analysts who follow the food business. It essentially measures how often diners go to a restaurant because they seek it out, not just because it’s convenient, according to Dave Jenkins, a managing director at Datassential, a food research firm. Customers appreciate Chipotle’s “aura of health consciousness,” he said. And because they typically get so much food at Chipotle, diners see it as a good value, even with the price increases.

“For whatever reason, they crave the product,” Jenkins said.

Indeed, though price increases did help boost same-store sales figures, store traffic grew, too, according to the earnings release.

McDonald's Workers Claim They Were Fired For Union Activity

McDonald's is under investigation by the National Labor Relations Board for allegedly firing workers for union activity, in a case that could have much broader implications for the fast-food industry.

According to documents obtained by Bloomberg News through a Freedom of Information Act request, a worker group has alleged that McDonald's fired nine New York-area workers between November 2012 and April 2014 for joining unions and helping organize workers.

Workers were also suspended and had their hours cut for being involved with unions, according to the worker group, known as the Fast Food Workers Committee.

What makes this case significant is that it does not just target franchise owners, but rather the McDonald's corporation as a whole. McDonald's has been accused by labor advocates and franchise owners of shifting blame for such controversies onto its franchisees in the past.

“The franchisee relationship is a smokescreen so corporations don’t have to take responsibility for paying more,” Mary Kay Henry, the head of Service Employees International Union, told Bloomberg Businessweek in a separate article.

Some 90 percent of McDonald's restaurants are independently managed by franchise owners, who hand over a portion of their sales to the McDonald's corporation.

If the NLRB sides with the workers, parent companies like McDonald's may be held more accountable for what goes on in their restaurants. The NLRB will determine whether or not McDonald's qualifies as a "joint employer" with the franchise owners, meaning McDonald's could be responsible for the wage and firing practices of its franchisees.

Worker groups argue that this would be an important step in addressing exploitation, low wages and wage theft, while franchisees argue that it would force the company to hire more compliance staff and ultimately raise prices.

The National Labor Relations Board and Fast Food Workers Committee did not respond to a request for comment by The Huffington Post, and McDonald's spokesperson Terri Hickey said it was too early to discuss the investigation.

"As this is a pending matter, it is both inappropriate and premature for us to comment," Hickey wrote in an email to HuffPost.

The case comes at a time when McDonald's and other fast-food companies are being criticized for their low wages. In May, fast-food workers in dozens of countries protested for higher wages and better working conditions. Hundreds of protesters also descended on McDonald's headquarters in Oak Brook, Illinois, that same month:

Police guarded the entrance of McDonald's corporate campus as about 2000 fast food workers and activists demonstrating for higher wages march toward the facility on May 21, 2014 in Oak Brook, Illinois. (Photo by Scott Olson/Getty Images)

GM Has Replaced Under 20 Percent Of Ignition Switches On Recalled Small Cars

DETROIT (AP) — General Motors says it has replaced faulty ignition switches on just under 20 percent of 2.6 million small cars that are being recalled.

The company has repaired just over 491,000 cars that are covered by the recall announced in February.

Switch maker Delphi Automotive says it has produced over 1 million parts and expects to have made 2 million by the end of August. GM says it expects all parts to be made by late October.

Delphi CEO Rodney O'Neal tells lawmakers his company has added three lines to speed up production.

Some car owners have complained it's taking too long for GM to finish repairs.

The switches can slip into the accessory position and unexpectedly shut off engines. That has caused crashes that killed at least 13 people.

Wall Street Big Shot Tells Elon Musk To Stop Making Cars

Tesla CEO Elon Musk should get out of the car business, according to one Wall Street big shot.

DoubleLine Capital founder Jeff Gundlach, considered one of the most influential people in the bond market, said the billionaire entrepreneur should focus on building the battery systems that power his luxury electric vehicles.

“If I was Elon Musk, I might go to all the other auto companies and say, ‘I’ll make you a deal, I’ll get out of the car business, but let’s set up a long-term deal on you buying my batteries,’” Gundlach said on Saturday in a radio interview with Bloomberg View columnist Barry Ritholtz.

Skip to 19:54 to hear the interview segment focused on Tesla:

“If I was running BMW, GM or Ford, I think I’d be open to the idea of just buying the batteries from Tesla.”

Gundlach first suggested Tesla concentrate on batteries back in May, saying they "could be wildly transformational the way electricity and electromagnets were." Gundlach has suggested that Tesla is a better stock to own than Twitter. Last year, on the other hand, he declared he wouldn't buy Tesla stock, calling it "cultish."

Batteries could become the backbone of Tesla’s future business as the company urges rivals to use its technology and breaks ground on a planned "gigafactory."

Last month, days after Musk announced that Tesla would free up most of its patents, BMW and Nissan confirmed to The Huffington Post that they were in talks to work with the electric-car company, though they declined to give details on any nascent deals. Analysts said the company wants to set the industry standard for powering rechargeable vehicles.

So far, the new Mercedes B-Class electric car will feature a Tesla battery and drive train, a move Gundlach said Musk should replicate with other companies.

The company has plans to build a “gigafactory,” which would be the biggest battery-making facility in history. At its peak, Tesla estimates it would create 500,000 lithium-ion packs a year] -- more than all batteries produced worldwide last year.

Musk recently sparked a “bake-off” between Arizona, Nevada, New Mexico and Texas to see which state could cook up the best offer to entice Tesla to host the $5 billion factory.

“We’ll be making electric vehicle technology more prevalent and economic by building batteries locally and under our control,” Diarmuid O’Connell, vice president of business development, told HuffPost in a phone interview. “We’ll build them more cheaply, with higher quality.”

Barring a brief hiccup after weak fourth-quarter earnings last year, Wall Street adores Tesla. The Silicon Valley company's stock price has soared in value compared to auto giants such as Daimler, General Motors and Toyota. In his interview with Ritholtz, Gundlach suggested the run might not be over.

"I'm not convinced that it is overvalued, relative to the potential," Gundlach told Ritholtz. "Now, it's high risk: What's the percent chance that it turns into this world-beating ubiquitous technology? Maybe it's 30 percent or something. But the payoff for that would be incredibly high."

Tesla was rattled last week by the death of a driver who crashed after stealing a Model S sedan from a service center in Los Angeles. Though this was the first-ever death of a Tesla driver, the car split in two, stoking old fears over safety.

Still, Musk seems unlikely to back out of the car business.

Musk last month told CNBC that he planned to work with Tesla for his entire life and insisted he still had plans to roll out an affordable consumer model.

“I’m really feeling good about being able to produce a compelling mass-market car,” he said.

The Man Who Made Abercrombie & Fitch Less White Just Quit

The man who made Abercrombie & Fitch's workforce less dominated by whites and men has quit the company. He will be replaced by a woman.

Todd Corley, chief diversity officer at the teen apparel retailer, is starting the TAPO Institute, an advisory firm that will advocate for "inclusive leadership," Abercrombie announced on Thursday.

A decade ago, more than 90 percent of Abercrombie's store associates were white. The issue received public scrutiny in 2004, when the company settled three class-action lawsuits filed by former employees who accused Abercrombie of race and gender discrimination. Abercrombie paid nearly $50 million to thousands of minority and female plaintiffs and pledged to diversify its workforce.

Chief executive Mike Jeffries tapped Corley, then a senior manager of diversity for Starwood Hotels & Resorts, to head Abercrombie's new Office of Diversity.

Now, more than half of Abercrombie's associates are minorities, according to the company. As for senior executives: More than 40 percent of Abercrombie's vice presidents are women, as are 75 percent of executive vice presidents and 33 percent of the board of directors, according to Abercrombie. These figures are notably higher than at many public companies.

Abercrombie did not provide information about how many of its senior executives are minorities.

"I am proud of the accomplishments we have made together as an organization," Corley said in a statement. "The efforts began around race and ethnicity but evolved to include diversity in the way people think, cultural differences and creating an inclusive place to work."

Amy Zehrer, executive vice president of stores and a 22-year veteran of Abercrombie, will take over the company's diversity program.

While Abercrombie has received praise in some areas for its inclusive environment -- a company press release notes that the Human Rights Campaign has named A&F a Best Place to Work for the LGBT community every year since 2007 -- it has also been dogged by allegations of religious, racial and size discrimination, even after its diversity program was well underway.

The retailer's exacting dress code, for example, has been the subject of much scrutiny. It dictates everything from how Abercrombie retail workers can highlight their hair to the way they should double-cuff their skinny jeans.

Store employees told The Huffington Post in 2013 that enforcement of the style guide ensnared workers who wore religious items such as hijabs and crosses. A pair of lawsuits from Muslim women who were fired or refused employment over their hijabs led to a change in Abercrombie's policies last August, specifically acknowledging that the headscarves must be accommodated in the workplace.

"I felt like I never belonged and was uncomfortable working at Abercrombie," one former employee told HuffPost. "It was pretty ironic how they were recruiting diverse employees, but only if your hair is not covered."

Last year, Abercrombie was skewered for discriminating against people with larger body types, refusing to stock bigger sizes for female customers in accordance with Jeffries' ideal of the "attractive all-American kid." In a 2006 interview with Salon, which resurfaced in May 2013, Jeffries said: "A lot of people don't belong [in our clothes], and they can't belong. Are we exclusionary? Absolutely."

Following the backlash, Abercrombie decided to offer larger sizes for some of its women's clothes in its online store. A new XL size is now available for some women's tops, and some pants and shorts are available in size 14, up from the previous maximum of size 10.

In 2012, models for Abercrombie's sister brand Hollister mocked Asians by squinting their eyes as they posed for photos. Abercrombie fired the employees.

But perhaps Abercrombie's most infamous racial controversy occurred before Corley's tenure.

In 2002, a line of racist T-shirts hit Abercrombie's shelves. Emblazoned with caricatures of Asians with slanted eyes and conical hats, the shirts were quickly recalled after outrage among the Asian-American community. One shirt bore the slogan "Wong Brothers Laundry Service -- Two Wongs Can Make It White." Another displayed an image for "Abercrombie's Pizza Dojo," which promised customers, "You Love Long Time."

Crumbs Could Rise Again Thanks To Reality TV Star

The Crumbs cupcake chain isn't getting swept off the table just yet.

Just days after announcing it was shuttering virtually all of its stores, CEO and General Counsel Edward Slezak has told the Associated Press that "various interested parties" could give the business an opportunity to restructure and rise again.

One such interested party is Marcus Lemonis, star of CNBC's business turnaround show "The Profit" and the chairman and CEO of Camping World and Good Sam Enterprises. Lemonis told the Los Angeles Times on Thursday that he has already made moves to stabilize the company as a "prelude to an acquisition."

“The company has limited cash, and we are trying to come up with a situation that allows the company to remain viable,” Lemonis told the LAT. “We are in the final stages of working on a plan to get the stores reopened and people rehired.”

Lemonis, who is working with an investment group, told the New York Daily News that the plan is "not fully baked yet" but could include expanding the brand's offerings beyond just cupcakes to include "sweets and snacks."

Crumbs was founded by a husband-and-wife team in 2003. If the New York City-based company does close, more than 60 stores across the U.S. could be affected.

Obama Lawyers: Corporations May Be People Under Law, But Actual Humans In Gitmo Are Not

WASHINGTON -- After the Supreme Court ruled last month that for-profit corporations like Hobby Lobby should be considered "persons" under a law intended to protect religious liberties, the Obama administration said this week that Guantanamo detainees should not be.

As "nonresident aliens outside the United States sovereign territory," Guantanamo detainees "are not protected person[s] within the meaning and scope" of the Religious Freedom Restoration Act, Justice Department lawyers argued in a filing on Tuesday evening.

The government lawyers were responding to an emergency request from attorneys for Guantanamo detainees asking a federal judge to allow their clients to pray communally during Ramadan, a month-long observance that is already underway. Lawyers with the human rights group Reprieve had pointed to the Supreme Court's recent decision in the Hobby Lobby case. They argued that ruling "makes clear that all persons -- human and corporate, citizen and foreigner, resident and alien -- enjoy the special religious free exercise protections of the RFRA."

Justice Department lawyers disagreed, saying that the Supreme Court has "never addressed whether unprivileged enemy belligerents detained overseas during a period of ongoing hostilities are 'persons' to whom RFRA applies." Congress never intended that law to cover "enemy belligerents detained overseas," they wrote.

Though RFRA was passed in 1993, long before detainees arrived in Guantanamo in the aftermath of the Sept. 11, 2001, attacks, the government argued that "Congress did not intend to extend RFRA to Guantanamo Bay" and urged the lower court to rule that "RFRA does not apply to the actions of the military officials charged with detaining the unprivileged enemy belligerents at Guantanamo Bay."

A lawyer for the detainees said the government needs to recognize that Guantanamo detainees are people, too.

"It is staggering that the Obama administration is prepared to argue that Guantanamo prisoners aren't people, while accepting that corporations are," Cori Crider, an attorney for Reprieve, said in a statement. "I fail to see how the President can stand up and claim Guantánamo is a scandal while his lawyers call detainees non-persons in court. If the President is serious about closing this prison, he could start by recognizing that its inmates are people -- most of whom have been cleared by his own Government."

Both sides will make their arguments before a federal judge in Washington on Thursday morning. Read the government's filing below.

DOJ: Guantanamo Detainees Aren't 'Persons' Under The Law

Obamacare Has Already Dramatically Increased Access To Free Birth Control

WASHINGTON (AP) — More than half of privately insured women are getting free birth control under President Barack Obama's health law, a major coverage shift that's likely to advance.

This week the Supreme Court allowed some employers with religious scruples to opt out, but most companies appear to be going in the opposite direction.

Recent data from the IMS Institute document a sharp change during 2013. The share of privately insured women who got their birth control pills without a copayment jumped to 56 percent, from 14 percent in 2012. The law's requirement that most health plans cover birth control as prevention, at no additional cost to women, took full effect in 2013.

The average annual saving for women was $269. "It's a big number," said institute director Michael Kleinrock. The institute is the research arm of IMS Health, a Connecticut-based technology company that uses pharmacy records to track prescription drug sales.

The core of Obama's law — taxpayer-subsidized coverage for the uninsured — benefits a relatively small share of Americans. But free preventive care— from flu shots to colonoscopies —is a dividend of sorts for the majority with employer coverage.

Expanded preventive coverage hasn't gotten as much attention as another bonus for the already insured: the provision that allows young adults to remain on their parents' policy until they turn 26. That may start to change with all the discussion of birth control.

Business groups and employee benefits consultants say they see little chance that employers will roll back contraceptive coverage as a result of the Supreme Court ruling. The court carved out a space for "closely held" companies whose owners object on religious grounds. Most companies don't fit that niche.

"I don't think you will see a broad impact," said Neil Trautwein, the top employee benefits expert for the National Retail Federation. "It's a commonly offered benefit for many employers, including retailers."

The court decision involved "a very unique set of facts," Trautwein added. "Intense religious beliefs, closely held companies and the vehement objection to contraceptive coverage."

Before the Supreme Court ruling, some "grandfathered" plans unchanged since the health care law passed were already exempt from covering prevention at no cost, but that number is expected to shrink over time as employers make coverage changes.

IMS says it is still too early to discern the health care law's ultimate impact on birth control.

At least for now, it doesn't seem like more women are going on birth control because it's free. The number of prescriptions for oral contraceptives that were filled grew in 2013, but at about the same rate as in recent years.

There's also not much evidence of a shift to costlier long-acting contraceptives, such as hormonal implants. More reliable than the pill, they are gaining popularity in other economically advanced countries.

"Awareness of the provisions of the law has not been very clear sometimes," said Kleinrock. "Certainly this is something we are going to be watching."

Birth control use is virtually universal in the United States, but about half of all pregnancies are still unplanned. Forgetting to take the pill is a major reason.

As recently as the 1990s, many health insurance plans didn't even cover birth control. Protests, court cases and new state laws changed that. Obama's law is taking it another step.

Many medical groups see a strong rationale for free birth control. Contraception can help make a woman's next pregnancy healthier by spacing births far enough apart, generally 18 months to two years. Closely spaced births carry a risk of such problems as prematurity, low birth weight, even autism. And even modest copays for medical care can discourage its use.

"It's one of the most concrete ways that women have seen that the Affordable Care Act is helping them," said Amy Allina, deputy director of the National Women's Health Network, an advocacy that supports the law's requirement.