Brian Niccol’s tenure as Chipotle Mexican Grill Inc.’s chief executive has been one of the biggest business stories in Orange County—and the restaurant industry—over the past year.
Since leaving Irvine-based Taco Bell to take over the helm of the then-embattled burrito chain in early 2018, Niccol has overseen a slew of corporate changes, including a revamp of Chipotle’s marketing and customer retention strategies, a shake-up of the company’s executive team, and a focus on digital sales.
Those efforts are paying off. Chipotle (NYSE: CMG) posted first-quarter revenue of $1.3 billion, a 14% gain year-over-year. Net income climbed 48% to $88.1 million, according to the earnings report released on April 24.
A corporate headquarters move from Denver to Newport Beach completed earlier this year vaulted Chipotle to among the top ranks of OC’s largest public companies, and a surging stock—shares have risen about 125% since Niccol’s hiring was announced in February 2018— now has the company entrenched as the area’s No. 2 public company by market value at $19 billion.
It only trails Irvine-based Edwards Lifesciences Corp., which is valued at about $36 billion.
“The most stunning executive move of the year may turn out to be the best executive move of the year,” said CNBC Mad Money host Jim Cramer, in a blog post late last month, lauding Chipotle’s 9.9% same-store sales growth, the fifth consecutive quarter of accelerating comps.
“Chipotle’s back, and what can I say? Thanks to Brian Niccol, and to the company’s stalwart CFO, Jack Hartung, it’s better than ever,” Cramer said.
Niccol is one of 15 new entries to this year’s edition of the OC 50, the Business Journal’s annual listing of the area’s most influential people in business.
More’s in store, including nearly 150 new stores, according to Niccol.
“I think the strategies that we outlined over a year ago—we’re starting to see the impacts of the execution around that strategy,” Niccol told analysts in late April, touting the company’s marketing efforts, menu updates, and other operational improvements.
Going Digital
“The first quarter strong results were driven by the same strategic focus areas that we’ve talked about for several quarters now; being culturally relevant and increasing brand engagement and visibility; digitizing and modernizing the restaurant experience,” Niccol said.
Since Niccol came on board last year, his strategy has been to use digital marketing, a rewards program and increased convenience to refocus consumers on the brand. One of Niccol’s first executive hires was former Taco Bell exec Chris Brandt as the company’s new chief marketing officer.
The strategy seems to be working.
The company used national advertising campaigns to showcase fresh ingredients and healthy cooking techniques, and social media marketing helped drive a 300% increase in digital impressions and a 400% increase in social media impressions year-over-year. Chipotle tempted users with a free delivery campaign in December, among other promotions.
“Nearly half of the guests taking part in this offer were new or lost users. And we are seeing increased new customer retention with higher levels of delivery sales after the promotion,” Niccol said of the free delivery campaign.
Digital sales doubled in the first quarter to represent 16% of revenue.
Digital is a “key driver of sales growth” for the company, and Niccol said mobile order pickup shelves, which allow delivery drivers to pick up food without standing in line to decrease delivery time, have been added across the country.
Chipotle also plans to cut in-store wait times by adding a second food-make line just for digital orders in 1,300 of its 2,500 restaurants. The program will be rolled out broadly by the end of the year.
The chain also began testing drive-thru “Chipotlanes” in February, so customers can pick up their online orders without getting out of their cars.
The company recently rolled out a new website, and in March, Chipotle launched its rewards program. It already has more than 3 million members.
“In addition to allowing us to reward and thank our guests, we’re beginning to gather data that can be used to more effectively target them to engage and grow their loyalty,” he said.
“We want to have Chipotle solve people’s needs for how they want to eat in today and in the future.”
Other changes for the company included the appointment last month of two new board members, Patricia Fili-Krushel, chief executive of New York-based Center for Talent Innovation Inc., and Scott Boatwright, former Starbucks chief financial officer.
Food and restaurant entrepreneur Kimbal Musk, brother of Tesla’s Elon Musk, recently stepped down after serving on the board since 2013.
The earnings call also revealed that Chipotle plans to open between 140 and 155 new restaurants this year.
A new Orange County location in Aliso Viejo Town Center along Aliso Creek Road is slated to open this week.
The biggest short-term challenge for the company right now might be managing food costs, in particular spiking avocado costs, according to Hartung.
“We’re paying a lot more right now,” he said, citing a likely lower avocado crop coming out of California this summer.
