- Chipotle‘s new CEO, Brian Niccol, led Taco Bell‘s impressive turnaround efforts over the last seven years.
- Niccol’s strategy involved wild new menu items, like Doritos Locos Tacos, and quirky marketing campaigns.
- He needs to replicate his Taco Bell success at Chipotle.
Chipotle’s soon-to-be CEO has turnaround experience, albeit at a very different chain.
On Tuesday, Chipotle announced that Taco Bell CEO Brian Niccol had been tapped to lead the fast-casual chain.
Niccol has been at Taco Bell since 2011, when he was hired as the chief marketing and innovation officer for the then-struggling chain.
Taco Bell was, at the time, having difficulties growing sales in part because of problems related to how customers viewed the chain. From 2000 to 2012, Taco Bell closed roughly 1,000 locations. In 2011, a customer filed a class-action lawsuit against the chain, arguing that Taco Bell’s beef was not fully beef.
While the case was dropped, executives said that the negative effects lingered for months — longer than they had expected.
In other words, Taco Bell in 2011 was in a pretty similar place to where Chipotle is in 2018. The chain has struggled to turn around business following an E. coli outbreak that began more than two years ago. As in Taco Bell’s case, the repercussions of the scandal lasted longer than executives expected.
Niccol’s game plan to fix Taco Bell started with new advertising and wild products
The Doritos Locos Taco, which rolled out in 2012, was a wild success and epitomized the chain’s new strategy of introducing bizarre menu items that intrigue customers.
“The second you can get it to move from, we’re telling you should go try this, to consumers actually advocating for it, that’s when the brand moves into an experience that is worth you repeating,” Niccol told Fast Company at the time.
Taco Bell’s advertising also evolved to emphasize not just the food, but the experience of eating at Taco Bell. In February 2012, Taco Bell announced it would replace its slogan “Think outside the bun” with “Live más,” in an effort to emphasize the brand’s “lifestyle” elements.
The changes worked. The rollout of the Doritos Locos Tacos and the breakfast menu kicked off a period of growth at Taco Bell, which the chain has continued over the last six years.
Taco Bell has continued to find success with quirky advertising, such as in its 2013 Super Bowl ad that featured grandparents clubbing at a retirement home. In 2014, Taco Bell rolled out its new breakfast menu nationwide with the heavily-hyped Waffle Taco. In 2015, Taco Bell began serving booze at classy Cantina locations, which have continued to open across the US.
The chain also made a huge investment in digital advertising, growing the digital marketing budget from $1 million in 2011 to $70 million in 2015.
At the same time, Niccol rose through the ranks at Taco Bell
Niccol was promoted to president of Taco Bell in 2013 and to CEO in 2015.
In 2011, Yum Brands said in its annual report that Taco Bell was “under-performing” in the US, with same-store sales down 1% and profit down 12%. Same-store sales have grown every year since, with Taco Bell emerging as a leader in the fast-food industry.
Now, Niccol’s challenge is to take what he learned at Taco Bell and apply the lesson to Chipotle. While he’s likely to add new items to the menu, Niccol won’t be able to add anything with Doritos to the menu at the fast-casual chain. And, marketing could be a challenge, as Chipotle has shied away from traditional advertising for years.
However, investors seem confident that Niccol is up for the job. Chipotle’s stock quickly popped after the CEO announcement, and analysts have mostly celebrated the news.
“During Mr. Niccol’s tenure at Taco Bell, he helped transform the brand’s image, appealing to millennial consumers,” UBS analyst Dennis Geiger wrote in a note to investors on Wednesday.
He continued: “Implementation of initiatives [including] compelling new product launches, a breakfast daypart, creative marketing & social media focus, and digital development supported Taco Bell’s brand revitalization. Similar actions will likely be needed to transform Chipotle.”