Chipotle Steers Towards Fast Track, Leaving Founder and CEO Behind



In the end, Chipotle CEO Steve Ells suffered the fate of many brand founders—they may have been ideal for building their concept from nothing, for being visionaries, but that doesn’t mean they’re as great leaders or operators.

Having conceived and launched Chipotle, Ells confirmed that in a way by announcing he is stepping down from his role as CEO of the fast-casual pioneer he nurtured, Chipotle, to pivot toward “bringing innovation to the way we source and prepare our food,” as he put it in a press release announcing his departure and the company’s search for a new CEO.

After two years of battling a spate of food-poisoning incidents and a subsequent sales slump, and after struggling to turn around the company through moves such as updating Chipotle’s static if antibiotic-free menu, the CEO, chairman and founder gave in to his evident inability to hand over the wheel and let someone else drive the company onto a fast track and sustainable growth.

Now the board seeks a successor to Ells who’s got “turnaround expertise,” an “experienced leader with a passion for driving excellence across every aspect of our business,” as the release said. While Chipotle is “continuing to  make improvements,” Ells said, “it is clear that we need to move faster to make improvements.”

Give Ells credit for passion. He founded the Denver-based chain in 1993 and got a major investment from McDonald’s in 1998 that helped propel growth. After parting ways with McDonald’s in 2006, Ells fashioned a boom for the newly independent entity by positioning Chipotle, its antibiotic-free meats and simple ingredients, as a sort of anti-McDonald’s.

For years, with pricey branded entertainment—animated short films such as the “Back to the Start” video with Willie Nelson and Coldplay to benefit its Cultivate Foundation—and other digital marketing moves, Chipotle attacked traditional quick-serve players as serving as “industrial food,” caricaturing the mainstream industry’s supply chains as toxic while extolling its own pristine approach.

While pointing fingers at others, Ells neglected to make sure Chipotle’s fare was safe to eat, let alone above reproach. An evident breakdown in the 2,350-store chain’s food safety regime led to the poisoning of dozens of customers at a handful of locations in 2015—and a slump in same-store sales that dipped to nearly 30% revenue losses in early 2016.

Nothing Ells has done since then has returned Chipotle to form, including a massive and highly publicized overhaul of its safety practices, freebies and promotional giveaways, and the launch of a loyalty program. Another food-poisoning incident over the summer undermined much of the progress that Chipotle had begun to demonstrate early this year, including an 18% increase in same-store sales for the first quarter.

Chipotle also has struggled with its menu, which has changed very little over many years despite having an innovation kitchen that’s constantly testing new ideas. Its lack of flexibility meant a shortfall in its pork supply chain a couple of years ago became a bigger problem than it needed to become. And earlier this year Chipotle pulled a new chorizo sausage option that it had announced with great fanfare only a year earlier.

Its biggest menu innovation in a long time? Adding queso, along with a new-size bag of chips, this year. Now, in a sense, it’s going back to the start and rebooting its brand.

Interestingly, in the press release, Ells said that he wants to focus on his “strengths” in the “way we source and prepare our food.” No doubt he has other startup ideas tucked away that he can now dust off and rediscover his entrepreneurial zeal as Chipotle tries to do the same.