Chipotle Picks Taco Bell CEO Brian Niccol to Be Its New Chief - Wall Street Journal

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Taco Bell CEO Brian Niccol will be the next chief executive of Chipotle.


Photo:

Mark Lennihan/Associated Press

Chipotle Mexican Grill Inc.


CMG -1.23%

on Tuesday will name

Taco Bell

CEO

Brian Niccol

its next chief executive, tapping a fast-food veteran to try to revive the struggling burrito chain.

Mr. Niccol, 43 years old, has run Taco Bell for three years as the chain has been the most successful in the portfolio of

Yum Brands Inc
.


YUM 0.08%

, which also owns Pizza Hut and

KFC
.

He will succeed Chipotle founder Steve Ells on March 5.

Mr. Ells said last year that he would step down as chief executive and become executive chairman to allow an outsider to address Chipotle’s struggles with food-safety problems and a decline in customer visits. Mr. Ells said Mr. Niccol’s “expertise in digital technologies, restaurant operations and branding make him a perfect fit for Chipotle.”

Chipotle has struggled to lure back diners after food-safety scares began in 2015, including outbreaks of E. coli, salmonella and norovirus. The chain’s problems attracted the attention of activist shareholder

William Ackman,

who negotiated to fill two seats on Chipotle’s board.

Chipotle founder Steve Ells said Mr. Niccol’s ‘expertise in digital technologies, restaurant operations and branding make him a perfect fit for Chipotle.’


Photo:

Stephen Brashear/Associated Press

Despite introducing food giveaways, a loyalty program and new menu items like chorizo sausage and queso dip, many customers have stayed away. Chipotle executives have acknowledged neglecting basic operational details, like keeping restaurants clean and up-to-date, while they focused on food safety. Chipotle shares had lost nearly 40% of their value in the past year through Monday, but were up 11% after the news Tuesday.

“Other companies were working on doing a better job to close the gap between them and Chipotle through value offerings and improved quality,” said Deutsche Bank analyst

Brett Levy.

Mr. Niccol must also get along with Mr. Ells, who has been described by people who know him as a hands-on leader and a perfectionist. “I fully intend to have the new CEO be in charge,” Mr. Ells had said when Chipotle reported earnings earlier this month.

Mr. Niccol has experience turning around a brand with perception problems regarding quality. He helped revive Taco Bell’s image and financial performance after a disgruntled customer filed a lawsuit in 2011 alleging that its taco mixture was more filler than beef. The suit was withdrawn, but the publicity hurt Taco Bell’s reputation and sales.

As marketing and innovation chief of Taco Bell at the time, Mr. Niccol repositioned the chain as a youthful lifestyle brand. The company hired interns to handle the brand’s

Twitter

and Pinterest accounts, circulated a petition to create a taco emoji, created a taco lens on Snapchat and developed an ad showcasing photos of people posting Taco Bell food on Instagram.

Mr. Niccol aims to draw on that work at Chipotle, using social media to make the brand more youthful and culturally relevant, according to a person familiar with the matter.

Mr. Niccol is also known at Taco Bell for welcoming ideas from employees, including its restaurant workers. During a visit to a Taco Bell, he noticed employees using tortillas to make miniature wraps, which became the inspiration for Taco Bell’s crunchwrap sliders, he has told investors.

Also under Mr. Niccol’s watch, Taco Bell introduced breakfast, mobile ordering and payment, and hit products like Doritos Locos Tacos, Quesalupas and Nacho fries. Taco Bell also opened “Cantina” restaurants in urban markets to compete directly for Chipotle customers with open kitchens serving small bites and alcoholic beverages.

Some of those ideas earned him a reputation as a risk taker. That could help Chipotle win back the 75% of former Chipotle customers who now favor other fast-food brands, according to investment firm Cowen & Co.

In monthly surveys of 2,500 consumers, Cowen has found that ratings of Chipotle’s food quality and trustworthiness have fallen since 2015.

One customer, George Nenni, who is a digital marketing consultant for retail automotive dealers in Middletown, Ohio, ate at Chipotle twice a month before the chain’s food safety problems. Now he visits about once every two months.

Mr. Nenni, 52, said he can find healthier options elsewhere, including at the fast food chains he frequents a few times a week. He said those restaurants are also more consistent than Chipotle. Sometimes, he said, Chipotle guacamole is so overwhipped it resembles green mayonnaise, the barbacoa meat is too fatty or the burritos are too stuffed for his liking.

“It’s just really inconsistent,” he said.

Write to Julie Jargon at julie.jargon@wsj.com