Nation & World

Chipotle CEO cites 'recovery story'

Profits exceeded expectations for its first quarter

Reuters

Sales at Chipotles open a least 13 months rose a better-than-expected 2.2 percent in the first quarter. Menu price increases offset declines in customer visits.
Reuters Sales at Chipotles open a least 13 months rose a better-than-expected 2.2 percent in the first quarter. Menu price increases offset declines in customer visits.

LOS ANGELES — Chipotle Mexican Grill on Wednesday reported sales at established restaurants and profit for the first quarter that beat expectations. New CEO Brian Niccol told investors the beleaguered burrito chain has begun its turnaround.

Chipotle is “clearly a recovery story in the U.S.,” Niccol said in his first conference call with analysts and investors, after taking over as chief executive on March 5.

Wall Street is hungry to learn details of Niccol’s strategy for putting Chipotle’s sales slump from food safety lapses behind it and adding flair to a menu that has grown tired.

Niccol, the former chief of Yum Brands’s Taco Bell, is known for launching hot new menu items, such as $1 Nacho Fries shortly before he made the leap to Chipotle.

Sales at Chipotle restaurants open a least 13 months rose a better-than-expected 2.2 percent in the first quarter, with menu price increases again offsetting declines in customer visits.

Chipotle has struggled since outbreaks of E. coli, salmonella and norovirus that were linked to the chain in 2015, and despite millions of dollars in free food giveaways it failed to win back diners.

Niccol said “mission one” is to make the brand more visible with messages that remind diners what makes the chain different.

He brought in a Taco Bell alum to replace longtime Chipotle marketing chief Mark Crumpacker.

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The chain also already has made some “simple pivots” on messaging — releasing punchy and lighthearted ads focusing on Chipotle’s “real” ingredients such as grilled adobo chicken, freshly made chips and hand-mashed guacamole.

On the operational side, Chipotle set new goals for cutting food and packaging waste and linked executive compensation to sales and margin growth at restaurants.

Other opportunities include adding new meal occasions — more likely late-night than breakfast in the near term — tweaking menus to broaden appeal, and increasing access through delivery, catering and mobile ordering, Niccol said.

Selling the chain’s 2,441 restaurants, something some investors advocate, is not on the table.

“We see no need to go down that path right now,” Niccol said.

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