Chipotle's new CEO is coming from a very different type of Mexican-food chain: the fast-food icon Taco Bell. Here are the changes you should expect.
Chipotle's new CEO is coming from a very different type of Mexican-food chain: the fast-food icon Taco Bell.
On Monday, ex-Taco Bell CEO Brian Niccol officially stepped into his new role as the struggling chain's top executive. Taco Bell experienced a period of impressive growth under Niccol's leadership, as the CEO pushed for creative marketing and wild new menu items, such as the Naked Chicken Chalupa.
While both Taco Bell and Chipotle serve tacos and burritos, the two chains' reputations and strategies are extremely different. Chipotle needs a change, however, as it has struggled to win back customers following an E. coli crisis more than two years ago.
Niccol will bring a very different perspective from his time at Taco Bell — and that's expected to affect how Chipotle runs its business. Here are the changes customers can expect with Niccol in control of Chipotle.
Bringing on Niccol almost guarantees that the chain will start trying to add items to the menu. While Chipotle has long attempted to keep its menu simple, Taco Bell has found success by constantly rolling out new limited-time offerings, such as nacho fries and the Naked Chicken Chalupa.
One of the biggest differences between Taco Bell and Chipotle is that Taco Bell is more reliant on budget shoppers while Chipotle can charge more for more premium products.
But when customers aren't willing to pay, Chipotle needs to make changes.
The chain boosted traffic with several giveaway deals in 2016, but the promotions didn't result in the long-term growth that Chipotle was looking for.
Taco Bell has found success in building out its $1 menu. The items aren't part of a promotion and don't cost the fast-food chain much, but they are able to bring in customers who don't want to spend much money. With Chipotle's push for new menu items, some less expensive options are likely to join the menu.
This may be a long shot, but there's reason to believe that Niccol could bring breakfast to Chipotle.
Niccol was president of Taco Bell in 2014 when the chain rolled out breakfast nationally for the first time.
"When we look at the category, we haven't seen much besides me-too offerings," Niccol told Ad Age at the time. "We want to create something that isn't round and requires a bun ... The big innovation in the last decade is an egg white, but I think the consumer wants more and we can give them more."
The Mizuho analyst Jeremy Scott said in a note to investors in February that Niccol's experience with "daypart strategies" could bring a fresh perspective to Chipotle.
Ells said in a statement that Niccol's experience with "branding" was part of the reason he was chosen for the role.
Chipotle has long eschewed advertising in the traditional sense. Taco Bell, on the other hand, is responsible for some of the most iconic TV ads in recent decades. With many customers avoiding Chipotle — its E. coli crisis still firmly imprinted in their mind — Chipotle needs a new way to reach customers. In other words, it needs a more Taco Bell-influenced approach to marketing.
One of Taco Bell's biggest achievements under Niccol's leadership was its social-media domination. The chain considers how things will look on Instagram every time it tests new menu items.
Taco Bell has more than twice the number of followers as Chipotle on Instagram and Twitter. That isn't because Chipotle isn't posting some quality food pictures — it is. But Taco Bell continues to adjust its strategy as other brands catch up with pretty pictures and quirky captions.
"On Instagram, we saw everyone was catching up," Ryan Rimsnider, the chain's senior manager of social strategy, told Business Insider last year. "What we're going to do now is ... create a digital art gallery on our Instagram feed."
Ells also name-dropped "expertise in digital technologies" when describing why Niccol was tapped for the role. Under Niccol's leadership, Taco Bell rolled out mobile payment, doubled down on social-media marketing, and announced plans to add kiosks to locations in 2018.
Chipotle is already making a push to bulk up its digital sales. The company reporting earlier in February that digital orders had increased by 50% in the most recent quarter compared with the same period the prior year.
This is another long shot — and one unlikely to affect most locations — but Niccol's leadership could mean that Chipotle will more seriously consider adding alcohol to the menu.
Taco Bell began serving booze at higher-end Cantina menus in 2015.
Chipotle already serves margaritas at select locations, including its test kitchen in New York City. With Niccol looking for ways to boost traffic, more locations could start serving booze.
Last week, Chipotle shuttered the only location of its "better burger" concept, Tasty Made, after less than two years in operation.
While the company did not clarify whether it planned to open more Tasty Made locations, Niccol's experience is focused on single-concept brands. While Yum Brands, the owner of Taco Bell, also owns Pizza Hut and KFC, Niccol worked solely on the Taco Bell business — and made it the most successful out of the three brands during his tenure.