A series of food-borne illness outbreaks, including E. coli and norovirus, had scared away customers. A culture of fear permeated the company. On top of this, Chipotle was forced to announce a data breach that potentially exposed hundreds of thousands of customer credit card information.
In the meantime, Taco Bell, Chipotle's chief competitor, was thriving--partially due to the effective leadership of its CEO at the time, Brian Niccol.
Many saw Niccol as the driving force behind Taco Bell, a company that had suffered its own PR nightmares through the years. Additionally, Niccol, who served as Taco Bell's marketing and innovation chief (and then president) before taking over as CEO, oversaw the launch of a popular mobile app and several new items to the core menu. These moves helped establish the company's solid relationship with younger customers.
Chipotle wanted to turn things around, too. So, about a year ago, Chipotle did the smartest thing possible:
They poached Taco Bell's CEO--and made him their own.
Fast forward to today, and Chipotle is thriving: The company just released its latest results, which beat analyst's expectations. Store sales are on the rise, the stock price has surged, and the future looks bright.
A look back at the new CEO's actions over the past year reveals a combination of corporate strategy and emotional intelligence.
Here are a few things that stick out:
In the short time since taking over Chipotle's top spot, Niccols has focused on modernizing the brand, including:
- Upgrading Chipotle's app and loyalty program
- Adding delivery services through its mobile app and website (via DoorDash)
- Slowly testing and introducing new menu items
- Streamlining operations to make mobile pickup orders more efficient
The new measures seem to be working. In the fourth quarter of 2018, digital sales grew by 66%, accounting for 12.9% of all sales. And a new, simple pick-up system for mobile orders--which basically consists of a collection of shelves with a sign above--has helped further boost sales.
"Over time we believe this can be a multibillion-dollar opportunity," says Niccol.
While Chipotle had once succeeded at building a successful brand, the company had lost their way.
So when Niccol took over, he brought in new blood, which included installing former Taco Bell executives to run various teams at Chipotle. The new hires brought along fresh enthusiasm.
Additionally, Chipotle decided to move its headquarters from Denver, Colorado to Newport Beach, California--right down the road from, you guessed it...
Taco Bell's corporate headquarters.
"Corporations are only as good as the people you have running them," Niccol told CNBC. "I firmly believe that with the talent we have in place, we are making smarter decisions."
3. Emotionally intelligent marketing.
For years, Chipotle was known for a low-key marketing effort, relying mostly on old-school methods like billboards and word-of-mouth advertising. The strategy evolved over the years, but marketing continued to seem like an afterthought.