Ells departure as Chipotle CEO could be just what the restaurant needs

Ells departure as Chipotle CEO could be just what the restaurant needs

Ells will remain with the company as executive chairman and plans to oversee innovation once a new CEO is selected.

The restaurant chain’s board has formed a committee to help find a new leader, Chipotle said. On the committee are directors Robin Hickenlooper and Ali Namvar, who were nominated and added to Chipotle’s board in 2016 at the behest of activist investor Bill Ackman’s Pershing Square. Ells is also on the committee and recruitment firm Spencer Stuart will assist in the search efforts.

“We expect new management to take a fresh look at loyalty, mobile, marketing, daypart strategy, management compensation, corporate hierarchy, product quality, sustainability, and a more streamlined approach to the store labor configuration (already under way), particularly in morning prep,” Mizuho’s Scott said.

The chain has launched several turnaround initiatives in recent years, including a refreshed advertising campaign and a nationwide rollout of queso dip, which was criticized by some customers. Chipotle has since hinted at other new items, such as salads and desserts, to come.

“In our opinion, with Ells remaining involved in setting the vision for the food/concept (including oversight of how to execute the food experience within the restaurants), the addition of a complementary leader who can bring fresh perspective in the effort to strengthen core operating and brand fundamentals can prove to be a major long-term positive for the company,” David Tarantino, analyst at Baird, wrote in a research note Wednesday.

Darren Tristano, a restaurant industry trend expert, said that Chipotle has opportunities to delve into breakfast, late night, delivery and expanding its menu.

“It will be of paramount importance for the next CEO to continue Chipotle’s long-standing philosophy of food with integrity,” he told CNBC via email. “The right candidate should have a very strong understanding and experience with food service supply chain so the brand can continue to operate without major ingredient changes and avoid potential food safety issues that have plagued them.”

Food safety issues have cropped up an again and again. Most recently, “Supergirl” actor Jeremy Jordan said he had “almost died” from eating at one of the chain’s restaurants, sending shares spiraling down.

That followed reports in July where customers were sickened by norovirus at a location in Sterling, Virginia. Then, a few days later, a viral cellphone video was released that showed rodents falling from the ceiling at a restaurant near Dallas.

“The next CEO will have his or her work cut out for them.”

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