Jack Hartung is retiring after a stock run that helped shares of Chipotle Mexican Grill Inc. increase 65-fold, ultimately becoming the nation’s third most valuable publicly traded restaurant chain.
Hartung, who started as the chain’s chief financial officer in 2002, on July 8 announced plans to retire and turn the title to Vice President of Finance Adam Rymer, effective Jan. 1.
“Rymer has big shoes to fill as Jack Hartung is widely considered one of the best CFOs in the industry,” Raymond James’ Managing Director Brian Vaccaro wrote in a note to investors.
Hartung “has played an instrumental role in supporting the company’s tremendous unit growth (from less than 200 units to over 3,500 today), industry leading margins and new unit ROIs, and significant shareholder value creation over time,” Vaccaro added.
Hartung oversaw the company’s initial public offering in 2006, when it opened at a split adjusted 90 cents. Last week, the shares traded as high as $58.67 and an $80 billion market cap, making it Orange County’s most valuable publicly traded firm. Only McDonald’s Corp. and Starbucks Corp. are more valued restaurant chains nationwide.
“I have been fortunate to work for such a great brand with amazing people, and I am proud of the significant impact we have made on elevating food culture, as well as successfully driving our compelling growth strategy and unlocking considerable shareholder value over the years,” Hartung, 66 as of the latest proxy, said in a statement.
“I started working with Chipotle when there were less than 200 restaurants, and with over 3,500 today, I’m confident Chipotle has a long runway of profitable growth ahead led by the best team in the industry.”
Hartung was unavailable to talk with the Business Journal because of an upcoming second-quarter earnings report. Analysts are expecting the company’s sales to jump 15% this year to $11.4 billion.
Big Mac’s Burrito Bite
Steve Ells opened the first Chipotle in Denver in 1993. An early investor in 1998 was McDonald’s, where Hartung served in a variety of management roles, including CFO of the fast-food chain’s former Partner Brands Group, which included concepts outside of the namesake business. He moved to Chipotle in 2002.
“It was jumping from a giant company to a tiny company, but I thought my goodness I want to be part of a movement,” Hartung previously told the Business Journal.
“My thinking at the time was they were like a startup. Coming from McDonald’s, I could tell that they could benefit from having somebody take a more disciplined and a more strategic business view of Chipotle.”
During Hartung’s tenure, he oversaw Chipotle’s public debut in 2006 and stayed on throughout the notorious food poisoning cases in 2016 that caused sales to plummet. He remained during the 2018 departure of founder Ells and appointment of current Chief Executive Brian Niccol, who replaced most of the other senior managers and moved the headquarters from Denver to Newport Beach.
“Jack is one of the best CFOs in the business, and he has played an instrumental role in helping Chipotle deliver unprecedented growth while building our culture and multiple, strong teams with deep expertise,” Niccol said in the statement last week.
The Business Journal honored Hartung with an Outstanding CFO of a Public Company in 2020.
Chipotle’s annual proxy said Hartung’s recent successes included increasing its operating margin to 15.8% from 13.4% in 2022, boosting earnings by 38% year over year and exceeding food cost margin goals by 40 to 50 basis points.
Hartung’s compensation package in the past three years ranged from $5.8 million to $8.4 million. He owns shares worth almost $250 million, according to Chipotle’s most recent proxy.
Succession
Hartung’s successor Rymer spent time as a financial analyst at Sabre Holdings Corp. before moving into the restaurant industry with companies such as Which Wich and Rock Bottom Restaurant & Brewery in Colorado. He joined Chipotle in 2009, starting as an analyst before moving into different management positions until landing in his current VP role in 2020.
“I’m also pleased to have Adam Rymer succeed Jack as CFO, which is a testament to our strong talent bench and thoughtful succession planning,” Niccol said.
“I am confident that his deep understanding of Chipotle and the restaurant industry, coupled with his strong financial and senior leadership experience, will help to ensure Chipotle’s future success,” Hartung added.
Another executive change announced last week was Jamie McConnell becoming chief accounting and administrative officer in January, reporting to Rymer.
Shares fell 3.4% the day of Hartung’s retirement announcement. Chipotle was trading around $57.76 apiece at press time, following a 50-for-1 stock split on June 25.
Chipotle will report second-quarter results on July 24. Analysts are forecasting second-quarter revenue of $2.9 billion, showing 16% sales growth and earnings of 31 cents per share.