Shares of Chipotle (CMG - Free Report) skyrocketed over 15% on Wednesday after making a massive after-hours move yesterday, as investors seem to be more than happy with the company’s choice of former Taco Bell head Brian Niccol as its new CEO.
Chipotle’s recent struggles have been well documented. This prompted founder and former CEO Steve Ells to announce the company was in search of a replacement in late November. After months of searching, the fast-casual burrito chain surprised many investors when it decided to hire the head of Yum! Brands’ (YUM - Free Report) eccentric taco chain.
Niccol’s selection might seem unconventional considering the fact that Chipotle currently runs nearly the exact opposite type of restaurant chain. However, before today’s gains, shares of Chipotle had plummeted 40% over the last year and 23% in the last four weeks alone. The company needed to take a risk with its new CEO to spark a big change and inspire investor and company-wide confidence.
The former head of Taco Bell helped transform the fast-food taco chain into a brand with an identity. From its whacky advertisements and strong social media presence to the constant new food fusions and a successful push into the breakfast market, Niccol seems to know how to grow a restaurant chain.
Niccol helped worldwide system sales climb by 7% at Taco Bell in 2017. And even though customers aren’t likely to see crunchy Doritos-infused burritos at Chipotle, big changes are in order.
Customers around the U.S. have lost their faith in Chipotle, and their trust won’t be regained overnight, but brands can be rebuilt—and that process needs to start as soon as possible.
"At Chipotle's core is delicious food, which I will look to pair up with consistently great customer experiences,” Niccol said. “I will also focus on dialing up Chipotle's cultural relevance through innovation in menu and digital communications.”
A big push in digital and social media-based advertising is likely on the horizon, and a menu shake-up beyond its widely-panned queso is due. Only time will tell what the brain behind Taco Bell ends up doing, but his background in out-of-the-box thinking is needed. And for now, investors seem more than pleased with this choice.
Niccol is set to officially take over as chief executive officer on March 5, and don’t be surprised if changes happen on his first day.
Don’t Even Think About Buying Bitcoin Until You Read This
The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 4 crypto-related stocks now >>