Chipotle just made a deal with the devil in a bid for resurrection.
The restaurant chain this week (Feb. 13) announced it’s hiring Brian Niccol, the former head of Taco Bell, as its new CEO. In hiring Niccol, the beleaguered chain hopes to take a shot at redemption after years in the public doghouse, where it has been ever since a 2015 food-safety scandal sucker-punched the once-high flying company.
Niccol is, without a doubt, a battle-tested food-industry veteran, and probably a smart pick by Chipotle’s board of directors. Still, the irony of the decision is palpable. The Denver, Colorado-based chain spent years railing against fast-food restaurants and the non-transparent supply chains that stock them. The company commissioned cutesy animated videos that pitted a food system replete with factory farms against its own sunny vision of a fresh and more ethically-pure food future. That marketing campaign struck a cord, riling competitors and boosting Chipotle’s own image as, essentially, the anti-Taco Bell.
And then the scandal hit.
A norovirus outbreak in late 2015 sickened more than 300 Chipotle customers across 14 states, hospitalizing 22. The event shattered consumer trust and sent the company on a long and arduous journey to regain its place in the hyper-competitive fast-casual market. Along the way, one of its top executives was charged criminally in a sweeping cocaine bust, the company gave away more than 6 million free burritos, and another food safety outbreak hit. Chipotle even tried launching new food items that included a much-derided queso dip. Its founder, Steve Ells, wound up stepping down as CEO in Nov. 2017.
“Simply put, we need to execute better to ensure our future success,” Ells said in a statement at the time. “Bringing in a new CEO is the right thing to do for all our stakeholders.”
So the company turned to Taco Bell, arguably its arch nemesis from the very beginning. Niccol has served as Taco Bell’s CEO since 2015. Before that, he was the company’s president for two years. During his tenure, he was credited with launching a successful breakfast menu and mobile ordering. He also oversaw the brand as it became a restaurant leader on social media, where it found a voice playfully engaging with consumers.
One of Chipotle’s most vocal critics, analyst Howard Penney, dispatch a message on Twitter approving the hire while simultaneously criticizing Ells.
Industry analysts, including Penney, have for months said the company should stop opening new restaurant locations to focus on the business already in place. They’ve also said Chipotle should hire more employees to relieve pressure on existing staff, which has been under duress and has had to deal with an increase in responsibilities since the food-safety issues arose.
Short-term, at least, Chipotle’s choice appears to have paid off: stock shot up when the news broke.