Chipotle will drop one co-CEO as recovery drags on
NEW YORK - Chipotle Mexican Grill (CMG) named founder Steve Ells as its sole CEO on Monday as the burrito chain keeps trying to recover from a series of food scares that has driven customers away.
Ells had been co-CEO with Monty Moran, who is stepping down from that position and from his seat on the board of directors, and will retire from the company in 2017. Ells, who founded the company more than 23 years ago, will remain chairman of the board.
“The board and Monty and I talked about the need to have one CEO, one voice and a very focused approach,” Ells told The Associated Press on Monday.
Moving to one chief executive is “about stripping away” things that are getting in the way of the business and, in general, complicating what is a “very simple idea,” Ells said.
The changes at the top come as Chipotle’s sales and customer traffic still have not rebounded, more than a year after an E. coli outbreak first surfaced in 2015. Since then, activist investor Bill Ackman’s Pershing Square Capital has taken a nearly 10 percent stake in the chain.
Chipotle shares rose more than 3 percent in late Monday afternoon trading at around $382 a share, but have lost about 38 percent of their value since the E. coli outbreak surfaced.
The company has publicized changes to its food safety procedures, given away millions of free burritos, launched a temporary loyalty program and added chorizo to its menu, all to win back customers. But the worry is that they may have simply gotten in the habit of going elsewhere.
At an analyst conference on Dec. 6, Ells noted that sales were still down 19 percent and have been recovering at a rate of about 1 percent per month over the past 10 months. He added that sales were uneven and that it was difficult to predict.
Canaccord Genuity restaurant analyst Lynne Collier said after comments from Chipotle management at that conference, including “nervousness” about its 2017 guidance given in late October, the firm was being more conservative about the company’s stock.
“Consumers now have a plethora of fast casual brands to choose from and Chipotle (perhaps) is no longer in the rotation for some consumers,” Collier wrote in a note on Wednesday.
Chipotle has been working to improve its customer service, with better training for employees. In the last six months, Chipotle has said it attracted 33 million new or one-time customers that had stopped coming to its restaurants.
Ells said he’ll work on tying employee incentives more closely with customer experience.