Does fast-food veteran have special sauce?
When burrito maker Chipotle came under fire on social media for supposedly shrinking portion sizes this year, CEO Brian Niccol made a striking admission: the company’s critics had a point.
He told investors on the brand’s recent earnings call that Chipotle had identified “outlier” stores skimping on portion sizes, and would retrain them. In doing so, he generated dozens of media stories that reprinted his comments emphasising Chipotle’s brand as a purveyor of “generous portions ”— effectively turning a public relations fiasco into good press.
That is the magic trick that Starbucks, faced with sagging sales in the US and abroad, may be looking for.
On Tuesday, Starbucks’ surprise decision to name Niccol as the battered brand’s new top executive electrified Wall Street, which added $21bn to Starbucks’ stock market value in a single day, while Chipotle lost nearly $6bn in value.
Directly confronting speculation about Chipotle’s portion sizes, which other executives may have dismissed as viral misinformation, gave investors a reminder of Niccol’s reputation within the fast food industry as a brand-centred executive who wades into crises with his sleeves rolled up.
“If you aren’t walking the talk on what you’re promising to the customer, you’re not going to win,” Niccol said in a 2022 interview with Madhav Rajan, dean of the University of Chicago’s Booth School of Business.
Niccol brings to the job a resumé heavy on marketing experience, particularly for brands in crisis.
Niccol spent 10 years at Procter & Gamble managing brands such as Scope mouthwash and Pringles potato chips, before spending more than 10 years at Yum Brands. He served as the top marketing executive at Pizza Hut and Taco Bell and capped off his time at the company with a three-year stint as Taco Bell’s CEO.
Niccol took the reins as Chipotle’s top executive in 2018, after repeated breakouts three years earlier sent the brand into a tailspin. It was struggling to win back customers despite pouring millions of dollars into food giveaways.
“It is mission one to make this brand visible,” Niccol told investors on his first earnings call soon after his appointment. “This brand needs to be leading culture, not reacting to it.”
Under Niccol, the brand moved away from promotions to advertising fresh ingredients and restaurant-style food prep techniques that few other fast food chains were using. It launched an ad campaign emphasising “radical ingredient transparency”.
During Niccol’s tenure, Chipotle’s sales doubled to about $10bn in fiscal 2023, while the chain’s stock has more than tripled in value over the past five years. Under his helm, the burrito maker added more than 1,000 new stores globally. The company also started testing automated avocado processors and dual-sided grills to speed up cooking. Those efforts parallel Starbucks’“siren system”, which is meant to help automate making complicated coffee drinks.
At Chipotle, he also focused on modernising the digital and mobile ordering platforms, and pushed through a store layout redesign that allowed for digital order pickup lanes.
It remains to be seen how Niccol will address Starbucks Workers United — the union trying to organise the coffee chain’s US workforce. It has already unionised about 475 stores.
Starbucks founder Howard Schultz took a hard stance against the union, while former CEO Laxman Narasimhan oversaw a thawing of relations earlier this year, when the coffee giant and the union announced they would begin working towards a labour contract.
Chipotle last year agreed to pay $240,000 to two dozen former employees at a store in Maine it closed illegally after the workers filed a petition for a union election.
Lynne Fox, president of Workers United, released a statement in response to Niccol’s hiring by Starbucks without mentioning him. “The constructive relationship we continue to build with Starbucks is important, including dozens of tentative agreements and hundreds of hours of productive bargaining,” the statement said.
Wall Street analysts and restaurant consultants have high praise for Niccol. Andrew Charles at TD Cowen said Niccol was a “hall of fame restaurant CEO” and his appointment suggests “a new era is under way”.
Niccol’s appointment will “get Starbucks out of this conservative mode, which is unfortunately Laxman’s legacy”, said John Gordon, founder of Pacific Management Consulting Group.