Leadership

Why an outsider might be best for Chipotle

Chain’s problems are difficult, which is why it shouldn’t limit its talent pool.
Chipotle
Chipotle

Earlier this week I wrote about the number of restaurant companies that changed CEOs in 2017. It’s a substantial list, and it includes some big-name executives.

Yet none of these changes have generated quite as much attention as Chipotle, which is looking for a new CEO after Steve Ells opted to step down from the role to become executive chairman.

Several publications have since written lists of potential Ells successors. We did one ourselves. Others did, too, including Bloomberg.

All of these lists include existing restaurant executives. Brian Niccol, current CEO of Yum Brands’ Taco Bell, is one of the most commonly listed potential successors. But former Popeyes CEO Cheryl Bachelder, former Panera Bread CEO Ron Shaich, Restaurant Brands International CEO Daniel Schwartz and various current and former McDonald’s executives have been included in these lists.

None of them, however, has included this one: an outsider.

I believe Chipotle is as likely to hire someone without any, or much, restaurant industry experience to be its next CEO as it is anybody else mentioned thus far.

I’m not necessarily predicting it will happen. But a case could be made that the company would, and should, go in that direction.

The biggest reason is marketing. The fast-casual burrito chain has long advertised itself as a new, different type of restaurant company. That remains an important part of who Chipotle is, especially with Ells, the man who created that branding, still involved in the company. In addition, the chain is too big and too important to limit its talent pool to only a handful of companies that consider themselves restaurants.

Chipotle has spent years bashing established fast-food chains. So why would it tap one of those chains for its next CEO? How would it look if the company billing itself as the anti-McDonald’s hired a McDonald’s exec for a role as visible as CEO?

To be sure, hiring an industry insider would not preclude the chain from continuing to market itself as a new type of chain. And it’s not as if the company hasn’t tapped other chains for its management: Chief Operating Officer Scott Boatwright comes from Arby’s, for instance; board member Matthew Paull comes from McDonald’s; and of course the chain spent years under the giant’s ownership.

But I believe hiring someone who comes from outside the restaurant industry would only add to the brand’s persona, while someone like Boatwright could provide the industry knowledge to improve operations.

Chipotle’s problems are immense, and no company perhaps in industry history has dealt with issues quite like them. Theoretically, that should demand an experienced restaurant executive. Yet it should also force the company to think outside the box with its new hire.

If Chipotle finds an experienced executive with all the talent it needs, why should a lack of industry experience keep it from hiring that person?

It’s not without precedent.

In 2013, Arby’s hired Paul Brown, who had been with Hilton Hotels, to be its new CEO.

Arby’s comeback had already begun under predecessor Hala Moddelmog, but the company was in bad shape. It had weak unit volumes, and many of its company-owned stores had costly leases.

Brown told Business Insider earlier this year that his lack of industry experience gave him freedom to ask silly questions that helped the chain recover. Arby’s same-store sales have increased for more than six years, and the company just bought Buffalo Wild Wings.

And one of the candidates mentioned above, Schwartz, had no industry experience when he was named Burger King CFO in 2010. He was given the CEO job three years later. He was 32 at the time.

None of this is to say that Chipotle won’t hire a restaurant veteran. Someone like Taco Bell’s Niccol would make a lot of sense, as would Bachelder — who will probably be on a short list of any restaurant CEO opening as long as she is out there, given the job she did at Popeyes.

But Chipotle is in uncharted territory as it seeks to recover from a steep sales slide following a series of foodborne-illness outbreaks in 2015. Solving that problem will take creative thinking — something that an outsider could easily supply.

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