• Niccol will seek to use technology to lure diners back
• Chipotle shares jump as much as 13 percent in late trading
Chipotle Mexican Grill Inc. tapped the head of Taco Bell as its next chief executive officer, turning to a fast-food veteran who drove growth with brash, indulgent dishes such as Doritos Locos Tacos.
Brian Niccol, 43, who had served as CEO of Yum! Brands Inc.’s Taco Bell division, will replace Chipotle founder Steve Ells – a dramatic changing of the guard that threatens to reshape the burrito chain’s culture. Ells, who will remain chairman, began Chipotle in 1993 as an alternative to fast-food restaurants and the company has derided the kind of fare that Taco Bell sells.
Investors applauded the move, sending Chipotle shares up as much as 13 percent in late trading.
“They’ve gotten a seasoned executive who’s had a lot of success,” BTIG analyst Peter Saleh said in an interview. “Taco Bell is kind of edgy and forward thinking – they’re not an old stodgy type brand.”
Niccol, who’s led Taco Bell since 2015, has been credited with helping to turn around sales and speeding the introduction of technology at the chain. Now, he’ll be asked to do the same for a struggling company that’s been rocked by a string of foodborne illnesses spanning several years, along with a recent data breach.
Niccol, who said he has “tremendous respect for the Chipotle brand and its powerful purpose,” will now be in charge of a chain obsessed with promoting the quality of its ingredients – a big change from his past role.
“His 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, ” said Ells, 52.
Niccol will start at Chipotle on March 5, and is also joining a board of directors that’s been criticized in the past for being too insular.
Chipotle’s biggest shareholder, Bill Ackman’s Pershing Square Capital Management, praised the CEO pick.
“We are thrilled that Brian Niccol is joining Chipotle as CEO,” said a spokesman for the firm, which held more than 10 percent of Chipotle shares as of September. “He is the right leader to reinvigorate the company and help it achieve its enormous potential.”
Chipotle shares rose to as high as $283.21 in late trading. The stock has lost almost 40 percent of their value over the last 12 months and has fallen for five straight sessions after its fourth-quarter report showed it was still struggling to boost customer traffic. New dishes such as queso – a cheese dip – and desserts haven’t had the desired effect.
Yum shares dropped as much as 1 percent to $77.01 in extended trading. The shares have gained 14 percent in the last year – partly powered by Taco Bell’s strength and expansion that’s included an international push.
Niccol started at Taco Bell in 2011 and was also credited with introducing breakfast items at the chain, which now has about 7,000 restaurants globally. He’s also held leadership jobs at Pizza Hut and began his career at Procter & Gamble Co. He earned an MBA from the University of Chicago.
“It’s a good fit for them, but he’s got some work to do,” BTIG’s Saleh said. “Taco Bell is a predominantly franchised model with a drive-thru. Chipotle is a company-owned business model with no drive-thru. Chipotle is also a $12 check. Taco Bell is probably half that.”
Julia Felss Masino, Taco Bell’s president for North America, and Liz Williams, head of the brand’s international business, will take on Niccol’s role, Yum said.
A key factor to watch will be how much room Niccol will be given to turn around the ailing burrito chain, said Bloomberg Intelligence analyst Michael Halen.
“It will be critical that chairman and founder Steve Ells gives him the autonomy to succeed,” Halen said. Niccol “has a great track record.”
Source: Business Insider
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