Once the darling in quick serve restaurants, Chipotle has endured a series of issues that has put it in a difficult situation for both consumers and shareholders. Steve Ellis, the embattled CEO and founder of the Denver-based company, announced that he is stepping down (but will remain in the chairman’s role) and there is plenty of speculation on what the next steps will be for the company to rebound.
One question that is arising is what background the new CEO should have to right the ship that has struggled to recover after widely-publicized E. coli, salmonella and notorious outbreaks.
To some, the answer is running Chipotle more like McDonald’s, the global fast-food giant.
Doug Ehrenkranz, a managing partner with executive search firm Boyden told Bloomberg that: “You really need someone who understands fast food. There’s no room for on-the-job training.”
Further, trust, an issue that Chipotle is struggling with in light of food safety issues, is an important marker for the next leader of the brand.
“[The new CEO should be] someone that is trustworthy and has an impeccable reputation in Chiptole’s market segment,” noted Ira Kalb, assistant professor of clinical marketing at the University of Southern California’s Marshall School of Business.
However, in light of Chipotle’s unique position in the market, Kelly O’Keefe, professor and head of creative brand management at Virginia Commonwealth University’s Brandcenter thinks that going down that path could be counterproductive.
“I actually think an outsider would be more useful to them,” he said. “They have already established a point of difference from everybody else in the fast food, quick serve, restaurant category. Their brand resonates in ways that the traditional brand doesn’t. They need to understand trends in food, they need to understand how to give consumers what they want, and how to keep Chipotle on a track where they're staying simple and yet relevant.”
Getting Chipotle back to growth mode
Keeping the brand moving towards greater growth is critical. Long lauded for its menu simplicity, for example, Chipotle has begun experimenting with expansion of the menu — including launching a queso offering that was met with tepid enthusiasm after an initial bump — but likely won’t chase a wide-ranging menu like its Mexican fast-casual competitors including Moe’s Southwest Grill and Qdoba.
“[The brand] has great potential for growth, in terms of just the number of stores. But I think the challenge will be, in addition to the number of stores, how do you grow either the menu or the kind of things you're doing?” said O’Keefe. “And that's tricky because Chipotle has been a brand built on simplicity.
“They have a real respect for simplicity and straight forwardness. That will actually make growth harder because McDonald’s can do almost anything they want and we'll say, ‘Well, it's McDonald’s.’ But Chipotle has a limited playing field. Great brands do. It's kind of like Apple. We respect Apple as unlocking the power of creativity but if they said we acquire Crayola we'd be disgusted.”