Chipotle Mexican Grill is among the most prominent, was certainly among the most vocal, of a new breed of US fast-casual chains that set out to replace processed and artificial ingredients with fresh high quality while also providing the same speed and efficiency as McDonald's or - more specifically in this case - Taco Bell. The chain's profile was further boosted by a series of charming, widely acclaimed animated films which highlighted its commitment to "food with integrity". Indeed it was all going exceptionally well until summer 2015, when Chipotle suffered unconnected food poisoning outbreaks at different restaurants. A series of further incidents later the same year spread across a total of 14 states prompted a sharp decline in performance, as well as a complete overhaul of all food preparation systems. The precise cause of the outbreak remains a mystery, but several different ingredients came under suspicion. From the beginning of 2016, with no further outbreaks, the chain began fighting to rebuild trust with customers. However, that process was up-ended once more during 2017 by new outbreaks. By the end of 2017, there were 2,408 Chipotle restaurants, mostly in the US, with a handful of outlets in Canada and Europe. It had around 24% share of the US Mexican limited service market in 2017 (down from 29% pre-outbreak) behind Taco Bell's 54%. Combined revenues peaked at $4.5bn before slumping in 2016 to $3.9bn. There was a rebound to $4.5bn for 2017. The company has also experimented with different formats, launching ShopHouse Kitchen, offering Asian cuisine, and burger concept Tasty Made. However, there were only a handful of outlets, most of which were shuttered in 2017 or 2018. Steve Ells, who founded the business in 1993, stepped down as CEO in 2018 in favour of Brian Niccol, recruited from Taco Bell. Ells remains executive chairman. Ironically, a key player in the success of Chipotle was Big Food itself, McDonald's, which acquired a controlling stake in the business in 1999 when it had only 14 outlets in Colorado and helped expand that number to over 500 nationally by the time its divested its stake in 2006 via an IPO. Adbrands doesn't offer a business profile for this company but subscribers may access account assignments and contact information. The searchable account assignments database is available to full subscribers to Adbrands.net premium services. Click here to access Adbrands account assignments (subscribers only); or see here for information on how to subscribe.
Capsule checked 25th September 2018
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Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 22nd Mar 2018: Chipotle's new CEO Brain Niccol was quick to fill the vacancy created by the departure of chief marketing office Mark Crumpacker last week. He reached out to his former Taco Bell colleague Chris Brandt, who will join Chipotle as CMO next month. Brandt has spent the past two years as marketing chief of another restaurant group, Bloomin' Brands, parent to Outback Steakhouse and other chains.
Adbrands Weekly Update 15th Mar 2018: Chipotle Mexican Grill's chief marketing officer is the first casualty of new CEO Brian Niccol's overhaul. Mark Crumpacker is leaving the struggling restaurant chain this week. His successor has yet to be named.
Adbrands Weekly Update 15th Feb 2018: Still struggling to maintain momentum following a series of food contamination incidents, Chipotle Mexican Grill poached rival Taco Bell's widely respected CEO Brian Niccol to lead its turnaround. Chipotle's founder Steve Ells had already announced plans to move up to executive chairman. "Brian's expertise in digital technologies, restaurant operations and branding make him a perfect fit for Chipotle," he said. Despite continuing contamination scares, Chipotle's revenues rebounded from its dismal 2016 to $4.47bn, just below the best-ever $4.5bn it reported in 2015. Same-store comps were up over 6%, and net income topped $176m, even after a large one-off tax charge.
Adbrands Weekly Update 30th Nov 2017: Chipotle Mexican Grill's founder Steve Ells launched a search to find his replacement as CEO as the once-feted chain struggles to recover from a string of food contamination outbreaks and a slump in sales. In a statement, the company said it was seeking an executive "with demonstrated turnaround expertise to help address the challenges facing the company, improve execution, build customer trust, and drive sales." Ells will become executive chairman as soon as a new leader can be appointed.
Adbrands Weekly Update 9th Nov 2017: Chipotle Mexican Grill just can't seem to get a break. A weak set of 3Q results a few weeks ago, which the company blamed on hurricanes and a cyber breach, caused its stock to plunge to its lowest level since 2012. Now a group of shareholders are attempting to revive a lawsuit that alleges the store knew about dangers of E.coli contamination months before the 2015 outbreak which affected more than 40 stores, sickened hundreds of customers, and caused a downturn in sales from which the chain has yet to recover. That lawsuit has already been dismissed once, but the shareholder group behind it says they have discovered new evidence of Chipotle's prior knowledge as a result of a smaller outbreak in 2014.
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