MEXICO CITY: Chipotle Mexican Grill Inc is searching for a turnaround expert to replace founder and Chief Executive Steve Ells, (pictured) who said he would step aside after failing for two years to rescue the burrito chain’s sales and reputation from a string of food safety lapses.
Investors welcomed the move, sending Chipotle shares up more than 5 per cent to $301.99. The stock is still down more than 20 per cent this year and has tumbled from a high of $742 in 2015, when sales-crushing E.coli, salmonella and norovirus outbreaks sickened hundreds of US customers.
In response, Chipotle shook up its board, revamped food safety and gave away millions of dollars in free food with little effect. A new norovirus outbreak and lackluster launch of ‘queso’ dip earlier this year only amplified concerns about Ells’ leadership.
Hedge fund manager William Ackman, whose Pershing Square Capital Management LP is Chipotle’s largest investor with a 10 per cent stake, soured on Ells, failing to mention him at all in a recent investor letter that complimented other Chipotle top executives after praising him only months before.
Ackman said on Wednesday he supported Ells’ decision to go and was “as excited as ever about the future of the company.” Chipotle said on Wednesday it hired executive recruitment firm Spencer Stuart to find a “new leader with demonstrated turnaround expertise” to replace Ells, who will stay on as executive chairman once a new CEO is found.
“Bringing in a new CEO is the right thing to do for all our stakeholders,” Ells said in a statement. “Simply put, we need to execute better to ensure our future success.”
— Reuters
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