Categories Earnings, Retail

Chipotle shares surge as new CEO Brian Niccol lays out turnaround plan

After a series of food safety scandals, it looks like Chipotle (CMG) is finally celebrating its comeback, thanks to the new CEO Brian Niccol. Investors see a ray of hope for the company which struggled to gain momentum for years, as the new CEO stays determined to fix the struggling burrito giant.

Chipotle shares surged more than 20% today in the morning session after the company reported better than expected profit and sales for its first quarter after the market closed yesterday. Investors welcomed the menu price hike rolled out during the last year. The same-store sales also topped consensus estimates during the quarter.

Niccol — the former Taco Bell leader— in a certain way was brought right into a sinking ship. At the YUM! Brands chain, he was noted for bringing unique and interesting items to the menu. During his leadership, YUM shares more than doubled.

Investors expect him to spin a similar tactic and introduce some outside-the-box menu at Chipotle and help revive the company’s brand that was lost after a series of food safety scares.

Niccol’s job is challenging as he aims at making Chipotle more relevant. The biggest challenge is to get back the customers to the Chipotle restaurants. His initial plans for the company include redesigning restaurants, introducing some minor changes to the menu and expanding delivery services. Investors hope that these strategies will help the company to win back its once-loyal customers. In the future, Niccol also plans to operate drive-thru restaurants.

Chipotle shares surged more than 20% today in the morning session

Apart from restaurant operations, he is an expert in digital technologies. During his tenure at Taco Bell, the restaurant has rolled out the mobile order and pay services to its customers. His turnaround plan for Chipotle includes focusing on digital platforms.

During the first quarter 2018, the company’s revenue increased 7.4% to $1.1 billion and earnings per share surged 33% to $2.13.  Chipotle’s comparable restaurant sales increased 2.2%.

Commenting on the results, CEO Niccol said, “While the company made notable progress during the quarter, I firmly believe we can accelerate that progress in the future.  We are in the process of forming a path to greater performance in sales, transactions, margins and new restaurants.”

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