Chipotle to replace its CEO
Steve Ells announces he will step aside.
Chipotle Mexican Grill is looking for a new CEO.
The current one, Steve Ells who founded the company in 1993, will become executive chairman after his replacement is found, the restaurant chain announced Wednesday.
“(W)hile we are continuing to make progress, it is clear that we need to move faster to make improvements,” Ells said in a statement. “Bringing in a new CEO is the right thing to do for all our stakeholders. It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food.”
The Denver-based company has suffered numerous hits to its reputation, including several food-safety scares in recent years and the public’s lackluster response to the long-awaited addition of queso to its menu.
Neil Saunders, managing director of GlobalData Retail, called the Ells announcement “the inevitable consequence of Chipotle’s inability to get to grips with its various problems” and pointed out that investors had been concerned about the chain’s lack of momentum.
“Under his leadership, the chain has stumbled from one crisis to the next and has failed to reignite the growth that it once enjoyed,” he said. “While a new CEO is not a silver bullet, the move gives Chipotle a chance to look again at its strategy and its approach.”
The change in top leadership isn’t a panacea, UBS analyst Dennis Geiger agreed. Ells’ exit could trigger Wall Street uncertainty about the company’s new direction.
“Longer-term challenges, including competition and a difficult industry backdrop, are likely to continue to pressure the trajectory of sales and earnings growth,” he wrote in a research note. “(W)e continue to believe a more significant recovery is unlikely to be quick, and obvious fixes aren’t apparent.”
He also said that the Chipotle CEO job is high-profile enough to “draw interest from several current and recent industry heavyweights.”
Ells, who is a classically trained chef, was CEO until 2009 when the company’s president and chief operating officer Monty Moran joined him as co-CEO. Moran stepped down in December 2016 and Ells became the sole CEO again.
The company went public in 2006.
Chipotle’s third-quarter earnings, released Oct. 24, disappointed Wall Street. Adjusted earnings per share were $1.33 on revenues of $1.13 billion, below the $1.63 on revenue of $1.14 billion, which Thomson Reuters I/B/E/S had forecast.
In 2015, Chipotle customers were infected with E. coli in a multistate outbreak that was a public-relations nightmare.
In July 2017, there was a norovirus outbreak at one of its Virginia locations. And Chipotle closed a restaurant in Dallas temporarily in August after rodent sightings.
“Steve made the decision, and the board agreed, that now is the right time to identify a new CEO who can reinvigorate the brand and help the company achieve its potential,” said Neil Flanzraich, Chipotle’s lead independent director.