Chipotle Tightens Up Strategy With New CEO and Nixing of Tasty Made Chain
DENVER, CO - After taking a beating over the last few years, it looks like Chipotle will still not go down without a fight. New strategies have emerged from the fast casual company’s playbook; investors seem to be responding. Following Chipotle’s announcements that it had tapped former Taco Bell CEO Brian Niccol and abandoned plans for its Tasty Made burger restaurant, shares rose by as much as 15 percent, according to CNBC.
While Niccol, who previously served as CEO of Yum! Brands’ Taco Bell Division, won’t take the reins until, March 5, 2018, he has built a strong record of elevating brand images. Upon the announcement that Niccol would assume his role, current Executive Chairman Steve Ells commented, “The Board is confident that Brian's passion and skill set ideally position him to make the bold moves needed to improve operations and take the company to the next level, all while remaining true to our purpose and the values that are essential to our customers."
It sounds like the finance community agrees. One Wall Street firm, Baird, raised its rating of Chipotle’s shares to ‘outperform,’ up from ‘neutral.’
"We think the appointment of Brian Niccol as CEO (starting March 5) marks an important inflection point, as we are confident that his skills sets are well-suited to lead a return to better top and bottom-line momentum over the next 12-24 months," said David Tarantino, Associate Director of Research and Baird's Senior Analyst covering Restaurants, according to CNBC. "We view Niccol as an extremely talented leader whose expertise in brand management brings a valuable skill set that is complementary to the existing team. We know Niccol quite well, and we have been impressed with his track record of success in driving good sales performance during his past leadership roles."
After Chipotle confirmed Niccol as CEO, shares for the company soared 15 percent, leveling out to around $328 in the days after, CNBC said. As for Baird, Tarantino raised his price target to $400 from $315 for Chipotle shares, representing a 28 percent increase from Monday, February 26th's close.
As for Chipotle’s Tasty Made Burger experiment, the shutdown of the concept marks a return to basics for the company. After opening its first burger location in October 2016, with a limited menu of burgers, fries, and shakes, reviews for the chain were decidedly ‘meh,’ reported the Lancaster-Eagle Gazette. Even tapping celebrity chef Richard Blais to revamp its image in September 2017 was not enough to get Tasty Made on track.
And while some may be sad to see the restaurant go, looking at the stock prices, investors seem glad that the company is turning toward bigger, better strategies. Stay tuned as AndNowUKnow continues to track Chipotle’s growth.