Chipotle shares jump as new chief sparks hope of quicker turnaround


(Reuters) – Chipotle Mexican Grill Inc (CMG.N) shares jumped more than 11 percent premarket on Wednesday, as analysts called its recruitment of Taco Bell chief executive Brian Niccol a potentially “transformational moment” after two years of brand-crushing food-safety scandals. However, they cautioned that Niccol – the man behind “Doritos Locos Tacos” and a savvy marketer who could transform Chipotle’s menu – would need at least a year to make an impact as chief executive. Some underlined the stark differences in Taco Bell and Chipotle’s business models and the scale of the burrito chain’s problems in two years that saw its stock sink nearly 50 percent. Of 37 analysts who cover the stock there were no changes in ratings on the news. But after another round of results last week that offered few major new ideas on how to turn around Chipotle’s battered public reputation, they said Niccol’s appointment was at least a step in the right direction. Niccol checks all the boxes for the skill set Chipotle needs, including operational expertise, turnaround experience, brand management knowledge and credibility with investors, several analysts said. “We’re hard-pressed to find a better fit for Chipotle’s CEO position than Brian Niccol,” Morningstar analyst R.J. Hottovy said in a note. At Taco Bell, Niccol has largely been credited for mastering mobile ordering and introducing food options such as Doritos tacos and Nacho Fries, which were a big hit among customers. BTIG analyst Peter Saleh said he expected the new CEO would lean on his past success driving sales at Taco Bell by introducing breakfast, limited-time-offers and compelling marketing to help improve trends at the company. But Saleh stuck to his neutral rating for the company. “Niccol was critical to Taco Bell’s turnaround, but we note CMG is starting in a position of far greater weakness,” Cowen analyst Andrew Charles said. “Further, we note Mr. Niccol has less experience with cost management, given Taco Bell is a primarily franchised brand compared to Chipotle’s 100 percent company-operated model,” Charles said. Reporting by Sangameswaran S in Bengaluru; Editing by Bernard OrrOur Standards:The Thomson Reuters Trust Principles.
Source: Reuters