Monty Moran has stepped down as co-CEO at Chipotle Mexican Grill Inc., the company said Monday, after a year of weak sales following a series of food safety outbreaks in 2015.
Moran will retire from Chipotle in 2017 and has also stepped down from his seat on the company’s board of directors, effective immediately, according to the company.
Steve Ells, who had been co-CEO, has taken over as the sole CEO of the company he founded and turned into a successful restaurant chain.
“Steve founded Chipotle more than 23 years ago with a powerful vision to use great ingredients prepared skillfully by hand, but served very fast,” Neil Flanzraich, lead director of Chipotle’s board, said in a statement. “This approach has proven to be a very successful formula, but as the company grew, operations became more complicated and less consistent.
“Given the ongoing challenges facing the company, the board felt that it was best for Steve to resume leadership of the company going forward. This will ensure that his high standards for the guest experience and his unyielding commitment to the company’s mission are top priorities.”
Chipotle had experienced almost unfettered growth for more than two decades and especially since its 2006 initial-public offering — until late last year when an E. coli outbreak and other food safety issues sent its traffic, sales, profits and stock price tumbling.
The company’s same-store sales have struggled to recover all year even though Chipotle gave away free burritos and started its first loyalty program. Same-store sales on a two-year basis have fallen 19.3 percent in each of the first three quarters this year.
The activist investor Pershing Square Capital, led by Bill Ackman, recently took a position in the company, which promised changes to its board in response. Moran had been rumored to be out for weeks. Last week, Hedgeye Risk Management Analyst Howard Penney tweeted that Moran was out.
“I’d also like to thank Monty for his extraordinary contributions to Chipotle over the years,” Ells said in a statement. “Monty inspired us with his vision for an enlightened people culture, and I wish him the best as he retires from the company.”
Ells, a classically trained chef, started Chipotle in 1993 with a loan from his father. Ells had been CEO from 1993 through 2009 when he became co-CEO along with Moran.
Ells indicated he would pursue employee incentives that are more tied to the guest experience. The company pays above the minimum wage and provides its workers benefits. It also provides stock to general managers who achieve the chain’s coveted “Restaurateur” status.
The company said Ells is “committed to re-envisioning the program by placing an emphasis on the guest experience and making the path to Restaurateur more intuitive and accessible to more general managers.”
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All photos courtesy of Chipotle Mexican Grill