Can Chipotle Recover its Mojo?
Chipotle Mexican Grill is back in the news this week – in mostly good ways. The company has hired a new CEO – Brian Niccol, poached from Taco Bell. Wall Street apparently liked the hire as Chipotle stock spiked more than 14% on Wednesday, up more than $36 per share.
A surging stock price is always good news, but even with its best daily performance in four years, Chipotle stock remains down 66% from its August 2015 high of $758 per share, posted just ahead of the first string of food-safety issues that plagued stores in several states.
Some Wall Street traders believe Niccol can improve Chipotle’s image and develop digital delivery and marketing innovations, though many think it’s a tall task. BTIG analyst Peter Saleh wrote in a research note, “We believe the appointment of Brian Niccol as CEO is a step in the right direction for Chipotle, though we don't expect his hiring will result in any material change in fundamentals until at least 2019."
Niccol, 43, has an engineering degree and an MBA in business. He worked for 10 years at consumer products giant Procter & Gamble. In 2005 he moved to Yum Brands, first working for Pizza Hut, then on to Taco Bell in 2011, where he introduced mobile ordering and payment across Taco Bell’s 7,000 U.S. locations.
"We always aim to stay relevant with changing consumer tastes and trends, whether that be creating innovative menu items or offering the latest technology that connects customers to our brand when they want it, where they want it," Niccol said in a statement at the time.
Chipotle was a darling of Wall Street in 2015 as profits had reached $445 million the year before on sales of $4.1 billion. The crash came in the fall of 2015 when 500 people fell ill in several states after eating Salmonella- and E. coli-contaminated Chipotle burritos. The crisis lasted well into 2016.
The chain’s full-year 2016 revenue fell 13.3% to $3.9 billion, and profits dipped 95%, in part because of a PR campaign that gave away 6 million free burritos in an effort to win back consumer trust.
Now, Niccol will be judged on how well and how quickly he can help Chipotle regain its mojo with what once was a loyal clientele. Investors were told he plans to use social media to make Chipotle "more youthful and culturally relevant."
