Coverage: One Chipotle CEO departs amid a struggling recovery

Chipotle Mexican Grill said Monday than one of its co-chief executive officers is departing the company as it attempts to rebound from a food poisoning scare in 2015 that has lingered longer than expected.

Lisa Bartlein and Sruthi Ramikrishnan of Reuters had the news:

Chipotle Mexican Grill Inc said founder Steve Ells will retake the helm as sole chief executive officer after co-CEO Monty Moran stepped down on Monday amid intense pressure to turn around the burrito chain which has struggled to recover from a string of food safety lapses that have damaged its sales and reputation.

Ells, who has confirmed that the chain is in discussions with billionaire investor William Ackman about shaking up its long-serving board, told Reuters the Chipotle would “soon” name “a few” new directors. He declined to elaborate.

Ells, 51, also said he would remain board chairman, even as Amalgamated Bank and CtW Investment Group urge fellow shareholders to name an independent chairman to replace Ells as leader of the board.

“That’s the plan right now,” Ells told Reuters.

Shares in Chipotle added 3.3 percent to close at $382.48 on Monday. Chipotle’s shares traded above $750 before the chain was linked to a series of foodborne illnesses in late 2015.

Stephanie Strom of the New York Times notes Chipotle is struggling to regain repeat customers:

The company says about 33 million new or lapsed customers ate at a Chipotle restaurant in the last six months, but fewer of them made repeat visits. Last week the company said that roughly half of its stores had failed to deliver the customer experience it expected, a part of the business Mr. Moran oversaw.

Chipotle is also dealing with an activist investor in William A. Ackman, whose Pershing Square Capital Management disclosed in September that it owned a 9.9 percent stake in Chipotle. Chipotle and Pershing Square have described their interactions as “cordial” and productive. Pershing Square declined to comment on Monday.

Mr. Ells said Mr. Moran’s departure was not at Pershing Square’s behest. But other investors have been clamoring for change.

Chipotle is also planning to overhaul its board, where the median tenure is 17 years and four of the seven outside directors were appointed when the company was still private. Critics have also deplored a lack of diversity on the board, which is all white and has one female member.

Julie Jargon of The Wall Street Journal reported that customer service is also an issue:

A new concern emerged last week when Mr. Ells said the company had neglected customer service. He said employee hiring and training practices had become too complex over the years and that the company added even more operational changes to workers after the food safety crisis, all of which led to restaurants not being well-maintained and food running out.

He said the company is now focusing on simplifying restaurant operations in an effort to provide better service, and serving better food made from whole, unprocessed ingredients.

Mr. Ells said the company will more closely tie employee incentives to the guest experience.

“Given the ongoing challenges facing the company, the board felt strongly that it was best for Steve to resume leadership of the company going forward,” Neil Flanzraich, lead director of the board, said.