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.
Leslie Patton of Bloomberg News had the story:
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 could help Chipotle into delve into breakfast, late night, delivery and menu innovation.
Neil Saunders, managing partner at GlobalData, expects Niccol to bring both operational discipline and fresh thinking to Chipotle at a time when it needs it most.
“Investors will be relieved to have stability at the top and, all being well, this should usher in a less dramatic period for the company,” he said.
But, that’s no easy task. Chipotle has struggled of late to win customers back after reports of a norovirus outbreak at its Sterling, Virginia, restaurant circulated in July, once again dinging the chain’s reputation. The company has faced numerous foodborne illness outbreaks since 2015.
Jackie Wattles of CNNMoney.com reported that Niccol boosted Taco Bell’s popularity on social media:
Chipotle, in a press release Tuesday, credited Niccol with boosting Taco Bell’s popularity.
“Under his leadership, he successfully repositioned Taco Bell as a lifestyle brand and successfully launched numerous product initiatives, including the new breakfast daypart, the fastest growing daypart in the industry,” the release states.
Chipotle’s press release also points out Taco Bell’s social media savvy — it has 1.9 million Twitter followers compared to Chipotle’s 882,000 — indicating that’s another area where Chipotle is looking to improve.
Investors appeared to be pleased with Chipotle’s selection. The restaurant chain’s stock was up by more than 11% during after hours trading Tuesday.
Yum Brands said Taco Bell will be run by Julie Felss Masino and Liz Williams, who are the presidents of Taco Bell North American and Taco Bell International respectively. They’ll report directly to Yum Brands CEO Greg Creed.
