Chipo­tle looks to Taco Bell for CEO

In­vestors ap­plaud move to hire ‘sea­soned ex­ec­u­tive who’s had a lot of suc­cess’

Waterloo Region Record - - Business - LES­LIE PAT­TON AND CRAIG GIAMMONA

For years, the brass at Chipo­tle Mex­i­can Grill knocked ri­vals’ fast-food fare. It was overly pro­cessed, the rap went, with too many in­gre­di­ents, none of them very fresh or healthy.

Now strug­gling Chipo­tle is turn­ing for help to an in­dus­try cru­sader for the sort of fat-crammed, high-calo­rie items that have made the bur­rito chain shud­der. The new chief ex­ec­u­tive of­fi­cer will be Brian Nic­col, who ran Taco Bell for three years and met sweet suc­cess court­ing crowds with in­dul­gent dishes such as Dori­tos Lo­cos Tacos and A.M. Crunch Wraps.

In­vestors in­clud­ing Bill Ack­man’s Per­sh­ing Square Cap­i­tal Man­age­ment ap­plauded the an­nounce­ment, send­ing Chipo­tle shares higher on Wed­nes­day.

“Taco Bell is kind of edgy and for­ward think­ing — they’re not an old stodgy-type brand,” said BTIG an­a­lyst Peter Saleh. With Nic­col, Chipo­tle “has got­ten a sea­soned ex­ec­u­tive who’s had a lot of suc­cess.”

Nic­col, 43, will re­place Steve Ells, 52, in a dra­matic chang­ing of the guard. Ells, who will re­main chair, founded Chipo­tle in 1993 as an al­ter­na­tive to tra­di­tional fast-food restau­rants, build­ing it into a com­pany that stressed the whole­some­ness of its in­gre­di­ents and de­rided the kinds of of­fer­ings that pop­u­late Taco Bell menus.

As CEO of Yum Brands Inc.’s Taco Bell divi­sion, Nic­col was cred­ited with help­ing turn around sales and speed­ing the in­tro­duc­tion of tech­nol­ogy. He be­gan at that chain in 2011, work­ing in mar­ket­ing and prod­uct in­no­va­tion be­fore tak­ing the top job in 2015. Dur­ing his ten­ure, Taco Bell lured din­ers with lim­ited-time of­fer­ings, re­cently gen­er­at­ing buzz with its new Na­cho Fries.

Taco Bell un­der Nic­col also em­braced dig­i­tal or­der­ing, one area where Chipo­tle has lagged. The com­pany has had other prob­lems, in­clud­ing suf­fer­ing a string of sales damp­en­ing food­borne-ill­ness crises span­ning sev­eral years.

Ells praised his re­place­ment, say­ing that “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.” For his part, Nic­col said he has “tremen­dous re­spect for the Chipo­tle brand and its pow­er­ful pur­pose.”

A spokesper­son for Per­sh­ing Square, Chipo­tle’s big­gest share­holder, called Nic­col “the right leader to rein­vig­o­rate the com­pany and help it achieve its enor­mous po­ten­tial.” The firm held more than 10 per cent of shares as of Septem­ber.

Julie Felss Masino, Taco Bell’s pres­i­dent for North Amer­ica, and Liz Wil­liams, head of the brand’s in­ter­na­tional busi­ness, will re­place Nic­col in a co-CEO role, Yum said.

While Nic­col is “a good fit” for Chipo­tle, “he’s got some work to do,” BTIG’s Saleh said. “Taco Bell is a pre­dom­i­nantly fran­chised model with a drive-thru. Chipo­tle is a com­pany-owned busi­ness model with no drive-thru. Chipo­tle is also a $12 check. Taco Bell is prob­a­bly half that.”

A key fac­tor will be how much room Nic­col will be given to ma­noeu­vre and make changes, said Bloomberg In­tel­li­gence an­a­lyst Michael Halen.

Nic­col “has a great track record,” Halen said. “It will be crit­i­cal that chair and founder Steve Ells gives him the au­ton­omy to suc­ceed.”

AS­SO­CI­ATED PRESS FILE PHOTO

Chipo­tle’s new chief ex­ec­u­tive of­fi­cer, Brian Nic­col, pre­vi­ously ran Taco Bell.

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