Once the darling in quick serve restaurants, Chipotle has endured a series of issues that has put it in a difficult situation for both consumers and shareholders. Steve Ellis, the embattled CEO and founder of the Denver-based company, announced that he is stepping down (but will remain in the chairman’s role) and there is plenty of speculation on what the next steps will be for the company to rebound.
One question that is arising is what background the new CEO should have to right the ship that has struggled to recover after widely-publicized E. coli, salmonella and notorious outbreaks.
To some, the answer is running Chipotle more like McDonald’s, the global fast-food giant.
Doug Ehrenkranz, a managing partner with executive search firm Boyden told Bloomberg that: “You really need someone who understands fast food. There’s no room for on-the-job training.”
Further, trust, an issue that Chipotle is struggling with in light of food safety issues, is an important marker for the next leader of the brand.
“[The new CEO should be] someone that is trustworthy and has an impeccable reputation in Chiptole’s market segment,” noted Ira Kalb, assistant professor of clinical marketing at the University of Southern California’s Marshall School of Business.
However, in light of Chipotle’s unique position in the market, Kelly O’Keefe, professor and head of creative brand management at Virginia Commonwealth University’s Brandcenter thinks that going down that path could be counterproductive.
“I actually think an outsider would be more useful to them,” he said. “They have already established a point of difference from everybody else in the fast food, quick serve, restaurant category. Their brand resonates in ways that the traditional brand doesn’t. They need to understand trends in food, they need to understand how to give consumers what they want, and how to keep Chipotle on a track where they're staying simple and yet relevant.”
Getting Chipotle back to growth mode
Keeping the brand moving towards greater growth is critical. Long lauded for its menu simplicity, for example, Chipotle has begun experimenting with expansion of the menu — including launching a queso offering that was met with tepid enthusiasm after an initial bump — but likely won’t chase a wide-ranging menu like its Mexican fast-casual competitors including Moe’s Southwest Grill and Qdoba.
“[The brand] has great potential for growth, in terms of just the number of stores. But I think the challenge will be, in addition to the number of stores, how do you grow either the menu or the kind of things you're doing?” said O’Keefe. “And that's tricky because Chipotle has been a brand built on simplicity.
“They have a real respect for simplicity and straight forwardness. That will actually make growth harder because McDonald’s can do almost anything they want and we'll say, ‘Well, it's McDonald’s.’ But Chipotle has a limited playing field. Great brands do. It's kind of like Apple. We respect Apple as unlocking the power of creativity but if they said we acquire Crayola we'd be disgusted.”
Deb Morrison, director of the University of Oregon School of Journalism and Communication’s advertising program thinks that growth could potentially come from an existing place.
“It feels like the Chipotle brand needs to grow up from the wildcat startup that grew quickly to a more mature brand that leverages the remaining equity and followers,” she noted.
Brand love grows from the start
Growth is clearly one critical piece of Chipotle’s future, but the brand itself, often revered in the marketing industry with breakthrough creative work, may still be working out what exactly it is.
“Over the past couple of years, Chipotle’s advertising has blended in the [fast food/quick-serve] category,” said Morrison. “They got away from a brand promise of fresh and simple, offered visually and with charm.”
To O’Keefe, losing what made Chipotle so special in the first place could be to its detriment in the future.
“One of the wonderful things about their persona as a brand is they have not been afraid to have very caused-related branding messages,” he said. “And it puts a stake in the ground that I think is beautiful and I hope they never lose that sense of purpose behind their brand. Their willingness to take a strong stand.”
But trust is the thing
All in all, though, all roads to a strong recovery for Chipotle lies in the simple notion of trust, an issue that the new, incoming CEO will have to work hard to rebuild.
“The new hire is the first step to restoring the brand reputation,” said Kalb.
“This reset should mean a leader dedicated to doing the right thing for customers,” added Morrison. “Fixing the real issues of food safety to ensure a stronger core brand.”
Though a daunting task for whomever take the lead chair in the C-suite, O’Keefe believes that there could potentially be a bright light at the end of the tunnel in a short period of time.
“I would think they can overcome the trust issues pretty quickly with the right person and the right focus,” he said. “So even though job number one is get the trust issues taken care of and get the quality issues taken care of, that should be able to be done in six months to a year. Now for the next thing, they need to be working on where they go from there.”