Chipotle's new CEO is coming from a very different type of Mexican chain — fast-food icon Taco Bell. Here are the changes you should expect.
- Chipotle announced on Tuesday its new CEO will be Taco Bell's former top exec.
- While Taco Bell and Chipotle both serve burritos, the chains are extremely different.
- The new CEO could bring changes such as new menu items, breakfast burritos, more advertising, and boozy drinks at Chipotle.
Chipotle's new CEO is coming from a very different type of Mexican chain — fast-food icon Taco Bell.
On Tuesday, Chipotle announced that it had tapped Taco Bell CEO Brian Niccol as the struggling chain's new top executive. Taco Bell experienced a period of impressive growth under Niccol's leadership, as the CEO pushed for creative marketing and wild new menu items, such as the Naked Chicken Chalupa.
While both Taco Bell and Chipotle both serve tacos and burritos, the two chain's reputations and strategies are extremely different. However, Chipotle needs a change, as it has struggled to win back customers following an E. coli crisis more than two years ago.
Niccol will bring a very different perspective from his time at Taco Bell — and that's expected to impact how Chipotle runs its business. Here are the changes customers can expect with Niccol in control of Chipotle.
New menu items — including nachos
Chipotle hinted at new menu items earlier in February. CEO Steve Ells said in a call with investors that the company is considering "salads with different kinds of grains," as well as "traditional things" like nachos and quesadillas.
Bringing on Niccol almost guarantees that the chain will start trying to add more items to the menu. While Chipotle has long attempted to keep its menu extremely simplistic, Taco Bell has found success by constantly rolling out new limited-time offerings, such as nacho fries and the Naked Chicken Chalupa.
New, cheaper Mexican-inspired food on the menu
One of the biggest differences between Taco Bell and Chipotle is that Taco Bell is more reliant on budget shoppers. Meanwhile, Chipotle can charge more for more premium products.
However, when customers aren't willing to pay, Chipotle needs to make changes.
The chain boosted traffic with several give-away deals in 2016, as a somewhat desperate attempt to bring customers back to the chain. The promotions didn't result in the long-term growth that Chipotle was looking for.
However, Taco Bell has found success in building out its $1 menu. The items aren't part of a promotion, and don't cost the fast-food chain much, but are able to bring in customers who don't want to spend much money. With Chipotle's push for new menu items, it's likely some less expensive options get added to the menu to appeal to budget-conscious customers.
This might be a long shot, but there's reason to believe that Niccol could bring breakfast to Chipotle.
Niccol was president of Taco Bell when the chain rolled out breakfast nationally for the first time in 2014.
"When we look at the category, we haven't seen much besides me-too offerings," Niccol told Ad Age at the time. "We want to create something that isn't round and requires a bun … The big innovation in the last decade is an egg white, but I think the consumer wants more and we can give them more."
Mizuho analyst Jeremy Scott said in a note to investors on Tuesday that Niccol's experience with to "daypart strategies" could bring a fresh perspective to Chipotle.
Ells said in a statement that Niccol's experience with "branding" was part of the reason he was chosen for the role.
Chipotle has long eschewed advertising in the traditional sense. Meanwhile, Taco Bell is responsible for some of the most iconic TV ads in recent decades. With many customers still avoiding Chipotle because its E. coli crisis is still firmly imprinted in their brains, Chipotle needs a new way to reach customers — in other words, a more Taco Bell-influenced approach to marketing.
Weirder social media
One of Taco Bell's biggest achievements under Niccol's leadership has been its social media domination. The chain considers how things will look on Instagram every time it tests new menu items.
Taco Bell has more than twice the number of followers than Chipotle on Instagram and Twitter. That isn't because Chipotle isn't posting some quality food pictures — it is. But, Taco Bell continues to adjust its strategy, as other brands catch up with pretty pictures and quirky captions.
"On Instagram, we saw everyone was catching up," Ryan Rimsnider, the chain's senior manager of social strategy, told Business Insider last year. "What we're going to do now is… create a digital art gallery on our Instagram feed."
Major digital investments
Ells also name dropped "expertise in digital technologies" when describing why Niccol was tapped for the role. Under Niccol's leadership, Taco Bell rolled out mobile payment, doubled down on social media marketing, and announced plans to add kiosks to locations in 2018.
Chipotle is already making a push to bulk up its digital sales. The company reporting earlier in February that digital orders had increased 50% in the most recent quarter, compared to the same period last year.
Adding more alcohol to the menu
This is another long shot — which likely won't impact most locations — but Niccol's leadership could mean that Chipotle will more seriously consider adding alcohol to the menu.
Taco Bell began serving booze at higher-end Cantina menus in 2015.
Chipotle already serves margaritas at select locations, including its test kitchen in New York City. With Niccol looking for ways to boost traffic, more locations could start serving booze.