Food: Can Taco Bell’s CEO turn Chipotle around?
At the height of its popularity, Chipotle was “the paragon of cool casual dining,” said Tiffany Hsu in The New York Times. An industry innovator and Wall Street favorite, the chain grew from a single burrito stand in Denver in 1993 to more than 2,400 restaurants, winning over diners by pairing the convenience of fast food with the quality of a sit-down restaurant. “Basically, nothing like Taco Bell.” Yet last week, Chipotle announced that Taco Bell boss Brian Niccol would become its next CEO on March 5, replacing embattled founder Steve Ells. For plenty of industry watchers, it was a shock to see Chipotle turn “to the quick-serve cousin that many once thought was inferior” for its next leader. But since 2015, Chipotle has been hobbled by a series of scandals: First came “case after case of food contamination involving E. coli, salmonella, and norovirus.” Then last year, hackers aggressively attacked the chain’s payment systems, and a video of rodents scampering through a Dallas outlet went viral. Meanwhile, Taco Bell under Niccol’s leadership grew to be the best-performing subsidiary of Yum Brands, which also owns Pizza Hut and KFC. “How the tables have turned.”
Let’s call this what it is: “the end of an era,” said Conor Sen in Bloomberg.com. Chipotle’s raison d’être was to prove that “fresh, organic, locally sourced food” could be served at affordable prices. But economic conditions have changed, and that business model is now harder to pull off. When Chipotle began its expansion, joblessness was high and workers were plentiful. As unemployment has fallen, however, Chipotle’s labor costs have risen, cutting into profitability. As it added new locations, the company also struggled to manage its supply chain of organic ingredients, illustrated by the widespread food contamination. Now that Chipotle faces “sustained wage inflation, supply chain issues, expensive ingredients, and rising prices,” the hiring of a battle-tested fast-food veteran like Niccol makes perfect sense. After all, these pain points arguably “led to the creation of the fast-food industry in the first place.” It’s certainly ironic that a company that once marketed itself as the antithesis of Taco Bell would poach its leader, said Chase Purdy in QZ.com. But someone with Niccol’s skill set may be the chain’s best “shot at redemption.”
Niccol’s biggest test will be applying his successes “in an entirely different environment,” said Rachel Abrams in The New York Times. He’s widely credited with reversing Taco Bell’s own “public image problem and sputtering sales” by adopting a savvy social media strategy, redesigning stores, and introducing new menu items like the popular Doritos Locos Tacos. Change could be more difficult at Chipotle, which has rarely altered its menu. When Niccol starts his new job, he needs to focus on the basics, said Abha Bhattarai in The Washington Post. Decelerating Chipotle’s far too rapid growth and emphasizing efficiency and organization, especially when it comes to food quality and cleanliness, could help rein in skyrocketing costs and calm public health fears. The social media blitz and menu revamp can come later. If it wants to have a future, “Chipotle needs to slow down.”