(Adds detail for conference call, comment from Amalgamated
By Lisa Baertlein and Sruthi Ramakrishnan
Dec 12 Chipotle Mexican Grill Inc said
founder Steve Ells will retake the helm as sole chief executive
officer after co-CEO Monty Moran stepped down on Monday amid
intense pressure to turn around the burrito chain which has
struggled to recover from a string of food safety lapses that
have damaged its sales and reputation.
Ells, who has confirmed that the chain is in discussions
with billionaire investor William Ackman about shaking up its
long-serving board, told Reuters the Chipotle would "soon" name
"a few" new directors. He declined to elaborate.
Ells, 51, also said he would remain board chairman, even as
Amalgamated Bank and CtW Investment Group urge fellow
shareholders to name an independent chairman to replace Ells as
leader of the board.
"That's the plan right now," Ells told Reuters.
Shares in Chipotle added 3.3 percent to close at $382.48 on
Monday. Chipotle's shares traded above $750 before the chain was
linked to a series of foodborne illnesses in late 2015.
"Given the ongoing challenges facing the company, the board
felt strongly that it was best for Steve to resume leadership of
the company going forward," Neil Flanzraich, the company's lead
director, said in a statement.
"Having two CEOs did not serve Chipotle well once the food
safety crisis hit, so this is only a modest step forward. Lots
more needs to be done to refresh the board," said Keith
Mestrich, president and CEO of Amalgamated Bank.
"It still doesn't resolve the question of independent
oversight," said Derrick Wortes, director of equity strategies
at CtW Investment Group.
Ackman, who reported a nearly 10 percent stake in Chipotle
in September, wants several board seats, sources have told
Reuters. A spokesman for Ackman's fund declined
Ells was Chipotle's CEO from 1993 until 2009, when Moran was
Moran, 50, was Chipotle's chief operating officer prior to
being named co-CEO and continued overseeing restaurant
operations following that promotion.
Moran, a friend of Ells' since their student days, also
stepped down as a director on Monday. He will be an adviser to
the company until 2017, when he will retire.
"Given Chipotle's mostly self-inflicted and significant
challenges of the last 12-15 months, it would have been unusual
if no top person at the company hadn't undergone a transition
such as this," Instinet analyst Mark Kalinowski wrote in a
Chipotle's same-restaurant sales have fallen for four
straight quarters, dropping 21.9 percent in the latest quarter,
even as the company has issued millions of coupons for free and
Ells and other executives said on a conference call that
service speed has slowed since the company was linked to
high-profile E. coli, salmonella and norovirus outbreaks last
Staff turnover and complaints about running short of white
rice or chicken are also up, they said.
Ells told Reuters he would oversee a program aimed at
improving and streamlining crew hiring, training and incentives
with the end goal of improving the customer experience, the
appearance of dining rooms and service speed.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Anil
D'Silva and Lisa Shumaker)