Shares of Chipotle Mexican Grill (CMG - Free Report) rose on Wednesday morning following the announcement that it will begin to search for a new CEO in order to help turn the struggling restaurant chain around.
Steve Ells, the chairman, CEO, and founder of Chipotle, announced today that he intends to step down from his role as chief executive once a new CEO is appointed. Ells’ move comes after a string of food-related incidents, including an E. coli outbreak and norovirus stomach bugs, caused multiple Chipotle customers to get sick.
An E. coli outbreak in 2015 forced Chipotle to close multiple locations and helped sparked the company’s now more than a two-year downturn. Shares of the fast casual burrito chain were sitting at their all-time high of over $740 per share in the summer of 2015. The first reports of an E. coli outbreak at Chipotle began in October 2015. Today, Chipotle shares sit at $296.
Ells will stay on as executive chairman after the committee formed by the board of directors finds a new chief executive. Chipotle’s team hopes to replace Ells with someone that has “demonstrated turnaround expertise to help address the challenges facing the company, improve execution, build customer trust, and drive sales,” according to a company statement.
Investors have greeted Ells’ decision to walk away as CEO of the company he started in 1993 very favorably so far, as shares of Chipotle climbed over 4.70% following the announcement.
“Simply put, we need to execute better to ensure our future success,” Ells said in a statement. “Bringing in a new CEO is the right thing to do for all our stakeholders... Chipotle has vast unrealized potential. As we work hard to restore our brand, I believe we can capitalize on opportunities, including in areas such as the digital experience, menu innovation, delivery, catering, and domestic and international expansion, to deliver significant growth.”
Ells reportedly made the decision to step down on his own, and Chipotle’s board agreed. “It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food,” Ells continued.
The company currently boasts more than 2,350 restaurants. Since the start of the year, shares of Chipotle have sunk over 24%, including a 7.28% decline in the last 12-weeks.
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