Commentary

Taco Bell's Brian Niccol Tapped To Lead Chipotle Out Of Its Miseries

After an extensive search, beleaguered Chipotle yesterday named Brian Niccol as its CEO, replacing founder Steve Ells, who will become executive chairman on March 5. Niccol has been credited with revitalizing Taco Bell as its CEO in recent years.

“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,” Ells says in the release announcing Niccol's appointment.

Denver-based Chipotle “has struggled to lure back diners after food-safety scares began in 2015, including outbreaks of E. coli, salmonella and norovirus. The chain’s problems attracted the attention of activist shareholder William Ackman, who negotiated to fill two seats on Chipotle’s board,” Julie Jargon reports for the Wall Street Journal.

“Despite the introduction of food giveaways, a loyalty program and new menu items like chorizo sausage and queso dip, many customers have stayed away. Chipotle executives have acknowledged neglecting basic operational details, like keeping restaurants clean and up-to-date, while they focused on food safety,” Jargon continues.

“No doubt, the company hopes to win back some of the millennial customers Chipotle lost to Taco Bell. In addition, Niccol will bring his experience with digital innovation, having introduced mobile ordering and payment across Taco Bell's 7,000 locations in the U.S.,” writes Sarah Whitten for CNBC.com.

“Today's Gen Z and millennial generations consider restaurants a lifestyle choice,” restaurant industry trend expert Darren Tristano tells Whitten via email. “These younger consumers are looking for a connection to brands. While Chipotle's quality position has been challenged through food safety issues, Taco Bell continues to provide value and innovation.”

Niccol, 43, had been at Taco Bell since 2011. Before that, he was at sister brand Pizza Hut as vice president of strategy, chief marketing officer, and general manager. He began his career at Procter & Gamble, where he spent 10 years in brand management. 

“Niccol was Taco Bell’s president from 2013 to 2014 and then its chief executive starting in 2015. Under his leadership, the chain was frequently the best-performing subsidiary of Yum Brands, which also owns Pizza Hut and KFC,” reports Tiffany Hsu for the New York Times.

“In recent years, Taco Bell has teamed up with Lyft and the GrubHub online delivery service, pledged to remove artificial ingredients from most of its products, experimented with alcohol on the menu and pushed hard into the breakfast market — all moves that have elevated its reputation with the younger consumers who frequent quick-serve establishments. It has also started a more health-conscious menu called Cantina Bell and tested the Chinese market,” Hsu continues.

For investors — who saw Chipotle’s stock jump nearly 12% in after hours trading yesterday — choosing Niccol is “certainly a safer, more reassuring choice,” University of Denver assistant business professor Paul Seaborn tells The Denver Post’s Joe Rubino.

“But the average consumer might be put off by the hire considering Chipotle built its brand around using more natural, wholesome and fresh ingredients than fast-food competitors such as Taco Bell,” Rubino continues.

“I do think that is where all the speculation will be. Will Chipotle somehow mimic the Taco Bell menu, market positions and brand flavor?” Seaborn tells Rubino. “I would suspect not, but that will be the key question. It will be on the new CEO to really separate his management skills from the specific strategies that were implemented at Taco Bell.”

For Bloomberg, Leslie Patton and Craig Giammona report that “a key factor will be how much room Niccol will be given to maneuver and make changes, said Bloomberg Intelligence analyst Michael Halen. Niccol ‘has a great track record,’ Halen said. ‘It will be critical that chairman and founder Steve Ells gives him the autonomy to succeed.’”

Presumably, that applies to Ackman’s Pershing Square, too, which held more than 10% of it shares as of September. A spokesman for Chipotle’s biggest shareholder called Niccol “the right leader to reinvigorate the company and help it achieve its enormous potential,” Patton and Giammona write.

As Niccol departs, Julie Felss Masino, 47, president of Taco Bell North America, and Liz Williams, 42, president of Taco Bell International, are splitting his duties in their respective roles and will report to Yum! Brands CEO Greg Creed, the company announced earlier yesterday.

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