Tags: chipotle | ceo | mexican | grill

Chipotle Loses One CEO, and the Second's in the Hot Seat

Chipotle Loses One CEO, and the Second's in the Hot Seat


By    |   Tuesday, 13 December 2016 02:38 PM

What about the other guy? 

Chipotle Mexican Grill Inc.'s Monty Moran stepped down from his co-CEO role Monday, leaving founder Steve Ells as chairman and sole CEO.

Shares rose 4 percent as investors cheered the move. It was a long time coming -- I've been writing for some time that Chipotle should dismantle its distracting co-CEO structure and overhaul its long-tenured and entrenched corporate board.

But with Moran out, is Ells the right person to lead the beleaguered company as it struggles to recover from last year's food-safety crisis? 

More details should come Monday evening -- a full eight hours after the announcement, but who's counting? -- when Ells is set to lay out his plans on a conference call with analysts and investors.

In the meantime, Ells would be wise to jot down some notes on how he can justify keeping the top job and what he will do differently to convince customers to come back and eat at the burrito chain. It would also be nice to hear whether he will relocate to Chipotle's home base of Denver full-time, rather than commuting from New York City, in order to run the company on his own. 

Founders of companies are often rewarded with some extra leeway when playing the role of shining knight riding in to save the business. The most famous example is Steve Jobs's return to Apple. More recently, Twitter's shares soared after co-founder Jack Dorsey  returned (for a third time) to lead the company in 2015. But Twitter's stock has slumped since, as Dorsey hasn't figured out how to convince more people to use the service.

There should be similar concerns about Ells, who hasn't handled the food-safety crisis well. 

Remember how Ells dragged his feet before finally apologizing to customers for the crisis? And it took the company months to shift its advertising from extolling its fresh ingredients to finally acknowledging customers' real concerns about food safety. For too long, Chipotle was defensive, blaming the Centers For Disease Control and Prevention for dripping out news and media companies for sensationalizing the food-borne illnesses.

Perhaps emotion got the best of Ells, who started the company 23 years ago. But he has now had more than a year to stage a comeback, with little improvement to show. 

Investors have been waiting to see if sales in the upcoming quarter -- the fifth since the slump really began -- would be an inflection point. Other companies overcoming food-safety issues, such as Taco Bell and Yum! Brands, started showing signs of improvement after five quarters of sales declines.

But last week, Chipotle said it was "nervous" it wasn't going to hit upcoming sales targets, raising concerns about the quarter.

And on Monday, Ells again seemed a little tone-deaf. As part of the CEO announcement, he laid out a newly crafted corporate mission statement aimed at expanding access to better food to more people. It's a nice thought for a company not still suffering double-digit quarterly sales declines, but perhaps Chipotle's mission statement right now should simply be to run restaurants where people want to eat. 

Maybe the new leadership structure and a few new board members can help accelerate a recovery. But with activist investor Bill Ackman owning nearly 10 percent of Chipotle's shares, Ells might be the next CEO on the chopping block if he isn't able to speed up a turnaround. The clock starts now.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.


Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.


© Copyright 2020 Bloomberg L.P. All Rights Reserved.

1Like our page
What about the other guy? Chipotle Mexican Grill Inc.'s Monty Moran stepped down from his co-CEO role Monday, leaving founder Steve Ells as chairman and sole CEO.
chipotle, ceo, mexican, grill
Tuesday, 13 December 2016 02:38 PM
Newsmax Media, Inc.
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved