Chipotle's new CEO lays out his plan to turn around the embattled burrito chain

Hollis Johnson

  • ChipotleMexican Grill CEO Brian Niccol, who took over in March, outlined a five-step plan to win back customers after an E. coli outbreak plagued the chain over two years ago.
  • Niccol wants to put a focus on brand visibility and the digital experience to improve customer access.
  • Chipotle shares are up more than 16% early Thursday.
  • Watch Chipotle trade in real-time here.

ChipotleMexican Grill’s new CEO Brian Niccol laid out a plan focused on the digital experience, branding, and innovation to revive the struggling burrito chain in his first earnings call Wednesday. Niccol, who joined in March, plans to use his experience as an ex-Taco Bell executive to take “a fresh look at every element” of the business. The company’s first-quarter results beat analyst expectations across the board and shares are up more than 16% early Thursday.

The restaurant chain has been struggling to win back customers, facing the drawn out consequences of a string E. coli outbreaks that plagued several locations over two years ago. Since its initial E. coli outbreak in October 2015, shares tumbled as much as 65%.

But on Wednesday, Niccol outlined a five-step plan to win back customers and usher in a new era for Chipotle. He intends to start with growing sales, followed by elevating the brand, building the structure to sustain performance, creating a new culture, and delivering a “best-in-class financial performance.”

Under Niccol, Chipotle plans to continue pushing mobile orders. Over the past quarter, digital sales grew 20% year-over-year and accounted for 8.8% of sales. Mobile sales specifically grew 41% year-over-year, and the company believes its second “make-line” acts as a competitive advantage.

With the digitally enhanced second “make-line” and recent launch of Smarter pickup Times, he hopes to cut average wait time for orders and increase order accuracy. In the long term, customers can potentially see increased access and innovation through mobile, delivery, kiosks, catering and eventually drive-thrus.

“In the coming months you will see us piloting various tests across key innovation focus areas such as consumer access, the digital experience, our menu and restaurant experience, and realigning the organisation to support the go-forward strategy,” Niccol said.

Already, the company has launched new marketing initiatives under Niccol to help with branding. Improved comps in the quarterly results show his plan is working, Berstein analyst Sara Senatore wrote in a note. She believes a new visible brand “can be exponentially more effective at (or even below) existing spending levels.”

Senatore has a price target of $US500 a share.

Chipotle shares have gained about 35% this year, including Thursday’s gains.

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