Chipotle’s CEO search is over. The fast-casual burrito chain named Taco Bell CEO Brian Niccol its next leader, the company announced Tuesday afternoon.
"I am very excited to be joining Chipotle at this pivotal time in its history," Niccol said in a statement. "I have tremendous respect for the Chipotle brand and its powerful purpose. At Chipotle's core is delicious food, which I will look to pair up with consistently great customer experiences. I will also focus on dialing up Chipotle's cultural relevance through innovation in menu and digital communications. This will attract customers, return the brand to growth, deliver value for shareholders, and create opportunities for employees."
Earlier in the day, YUM! Brands announced Niccol, 43, was stepping down from his role “to assume a senior position at another public company,” effective immediately. Julie Felss Masino, the president of Taco Bell North America, and Liz Williams, president of Taco Bell International, will assume leadership of the Taco Bell Division in their respective roles, the company said.
Niccol has helmed Taco Bell for three years. “I want to thank Brian for his leadership and focus on always keeping Taco Bell culturally relevant, innovative, and accessible for customers,” YUM! Brands CEO Greg Creed said in a statement. “As Brian moves on to another opportunity, we’re grateful he has built a world-class leadership team.”
Chipotle founder Steve Ells, who announced he was stepping down in November to focus on innovation, said Niccol’s “expertise in digital technologies, restaurant operations, and branding make him a perfect fit for Chipotle as we seek to enhance our customer experience, drive sales growth, and make our brand more relevant. ” Ells will now assume a chairman role.
Chipotle unveils multimillion-dollar plan to fix its business.
Is Chipotle Worse Off Now than After the Outbreaks?
During Chipotle’s most recent earnings report, a fourth-quarter review that showed paltry same-store sales growth of 0.9 percent, Ells said “I fully intend to have the new CEO be in charge.”
Taco Bell’s same-store sales were up 4 percent for fiscal 2017, year-over-year.
Niccol has been center to Taco Bell’s turnaround in recent years. Like Chipotle, Taco Bell was facing down a public relations nightmare in 2011 when a customer filed a lawsuit alleging that the chain’s taco mixture was more filler than beef. Despite the suit being withdrawn, Taco Bell’s image took a serious hit.
Niccol, who served as CEO from January 2015 until this move, was Taco Bell’s marketing and innovation chief at the time. Niccol was also Taco Bell's president from 2013–2014. He was the driving force behind the brand’s decision to turn Taco Bell into a hip concept that connects with younger guests beyond its late-night menu. This included hiring interns to run its social media accounts, devising a taco lens on Snapchat, and pushing Taco Bell’s food through Instagram via user-generated content.
Taco Bell released a Forever 21 clothing line this past fall and has continued to drive the creative envelope, with weddings being offered at one location, and its growing Cantina locations serving alcohol and even a branded beer.
Niccol oversaw Taco Bell’s introduction of breakfast, mobile ordering and payment, and several menu innovations, including the famed Doritos Locos Tacos and, most recently, the Nacho Fries.
Niccol is also credited with inspiring the crunchwrap sliders, an idea he garnered from watching employees use tortillas to make miniature wraps.
Chipotle can unquestionably benefit from some of these risk-taking maneuvers. The chain saw its stock pop more than 11 percent in after-hours trading Tuesday after the news broke. Still, the brand ended the day at $251.33. For some perspective, Chipotle was trading for $674.89 on February 13, 2015.
This has been a steady decline since November 2015, when the chain voluntarily closed 43 of its Washington and Oregon locations as health officials investigated an outbreak of E. coli food poisoning. The 14-state crisis erased half of Chipotle’s market cap and has hardly let up.
This was especially true in 2017. Chipotle faced a norovirus outbreak in Sterling, Virginia, had rodents fall from the ceiling in a Dallas store, absorbed lukewarm reviews to its queso, and continuously beat back erroneous reports that sent its stock reeling.
Analyst Dennis Geiger found that 37 percent of the more than 1,600 customers polled online by UBS said they frequent Chipotle less often than they used due to food-safety concerns, proving the issue is far from bottled up.
Financially, the company posted a revenue increase of 7.3 percent to $1.1 billion in the fourth quarter. In that review, Chipotle outlined widespread initiatives to get its business back on track. It also said it would bolster benefits to all 71,000 of its employees thanks to tax reform savings.
Among these changes: Chipotle said it’s planning to spend $45 million to retrofit new make-lines at about 30 percent of its restaurants in an effort to increase the amount of digital orders that can be processed. These digitally enhanced second make-lines will be in about 1,000 restaurants by the end of the year.
Chipotle is also working on new restaurant designs to cater to the mobile user. This refresh program is running the company about $50 million, John Hartung, Chipotle’s chief financial officer, said in a conference call.
Also due to arrive in the second half of the year is Chipotle’s long-awaited loyalty program as part of a larger CRM effort and the brand is testing new catering offerings as well, which include options for smaller groups, more convenient packaging, and lower-priced offerings (as low as $9 per person and for groups as small as 10).
Currently, Chipotle’s catering is only available to minimum parties of 20 people starting at $12 per person. Delivery support for catering is also only active in about 40 percent of restaurants and Ells said the chain expects to expand that moving forward.
Creed said Taco Bell believes in its current team’s ability to progress the brand. “I’m confident that Julie, an accomplished brand builder and restaurant industry executive, and Liz, a strong brand veteran, are well positioned to ensure a seamless transition and will continue to elevate Taco Bell into a distinctive, relevant and easy brand. As we look ahead, I couldn’t be more excited about the strength of Taco Bell as the brand continues its journey to become a $15 billion company with 9,000 restaurants globally by 2022.”
Felss Masino joined Taco Bell in January and is “responsible for ensuring the brand continues to deliver same-store sales growth by driving innovation, new store development and a frictionless customer experience through digital and technology initiatives,” YUM! Brands said. She joined Taco Bell from Mattel. She worked with Starbucks and Sprinkles Cupcakes before that.
Williams was Taco Bell’s CFO before this role, helping the chain deliver “six years of industry-leading sales, profit, and brand growth under her financial leadership. “