Chipotle Shakes Up Its Leadership Team: Co-CEO Moran To Step Down

This morning, Chipotle announced that Monty Moran, the struggling fast-food chain’s co-CEO and a longtime friend of founder Steve Ells, will step down from his role and board seat early next year. Ells will remain the sole CEO of Chipotle as well as chairman. The company indicated more changes to the board would be coming soon.

Chipotle has failed to rebound from a string of food-safety incidents that began in late 2015, including outbreaks of salmonella, norovirus, and E. coli. The company has seen its stock, which peaked above $750 shortly before the outbreaks, cut in half. Despite launching a handful of initiatives to attract lapsed customers such as a summer-long rewards program and an expansive marketing campaign, same-store restaurant sales decreased 21.9% last quarter. At a recent investor conference, Ells admitted he was “nervous” about the company hitting its guidance for future sales.

As Fast Company detailed in our extensive profile in November of the “Food With Integrity” company, the food-safety crisis was just one of the significant challenges facing the company. Other issues included the treatment of its store workers (Chipotle has an annual turnover rate of 130%) as well as the growing pains of its “Restaurateur Program,” a once-popular initiative that Moran developed to give employees a path to rise from the kitchen staff to a manager position but which many now criticize for having become too bureaucratic.

In an email to employees Monday, Ells said “distractions…are limiting our team’s ability to deliver.” In recent years, he wrote, “Our restaurant operations have become needlessly complicated. We have become overly focused on details and processes that interfere with our team’s ability to deliver…I have not been happy with the guest experience in many of our restaurants, and for that, I take full responsibility.”

Chipotle’s stock jumped 4% on the announcement of Moran’s coming departure. We’ve included Ells’s full email to his employees below, and we’ll have more for you as this story develops.

To the entire Chipotle family,

There’s no question that the last year has been incredibly difficult for all of us. I’m extremely proud of all of your hard work and dedication addressing the challenges we faced. But it’s especially important during tough times like these to take a step back and look at how far we’ve come over the last 23 years. It’s hard to argue that our journey has been anything other than extraordinary. Starting with a single restaurant and the simple idea that food served fast did not have to be a typical fast food experience, we have delighted hundreds of millions of customers while helping transform the food industry—all in pursuit of a mission that truly matters.

Today, as we look toward the next 23 years, the board of directors has asked me to serve as Chipotle’s sole CEO. Monty has stepped down from both the co-CEO role and his board seat, and will retire from Chipotle in the near future. Along with Gretchen and Duffy, and our talented Regional Directors, I will oversee all restaurant operations. We are already working hard to develop a plan to simplify our field operations, and we will improve the Restaurateur program and strengthen our people culture. Before I share some of the details of our plans, I want to take this opportunity to thank Monty for his exceptional contribution to Chipotle over the years.

As many of you know, Monty and I have been good friends since school. Though he joined the company in 2005, Monty has been part of Chipotle from the beginning. He was encouraging when I opened the first Chipotle, and he helped me navigate many of the challenges I faced in the early years. During his time at Chipotle, Monty’s vision of an enlightened people culture has inspired us all. I have no doubt that whatever comes next in Monty’s life, he will achieve extraordinary success. I consider myself lucky to have worked side-by-side with Monty for so many years, and I look forward to the next chapter of our friendship.

As I look to the future, I see many reasons to be very optimistic. First, I know that our mission is more important than ever. Over the last 23 years, we have truly changed the way people think about and eat fast food. Going forward, I envision Chipotle having an even bigger impact on food culture in the U.S. and around the world. We have proven that our approach, based on sourcing responsibly raised ingredients and preparing them using classic cooking techniques—without things like added colors, flavors or additives typically found in fast food—results in food that is extremely delicious and truly nourishing. We have the responsibility to do everything we can to make this type of food accessible to everyone, and I am more than committed than ever to helping Chipotle achieve this important mission.

I am also very confident that we already have the extraordinary teams we need to accomplish our goals. Our teams have faced many challenges in the last year, and while I am not satisfied with the pace of our recovery, I am incredibly proud of the teams in our restaurants. I’m proud that we have mastered the many food safety-related changes to our operations. And I continue to be very pleased with the delicious food we serve in our restaurants every day.

But I have not been happy with the guest experience in many of our restaurants, and for that, I take full responsibility. Ensuring that every one of our restaurants is delivering an excellent guest experience is my top priority and I will work tirelessly to remove distractions that are limiting our team’s ability to deliver it. When Chipotle started, we were focused on doing just a few things extremely well, but over the years our restaurant operations have become needlessly complicated. We have become overly focused on details and processes that interfere with our team’s ability to deliver an excellent guest experience. I am relentlessly focused on ensuring that we remove unnecessary complexity so that our terrific teams can succeed at providing the incredible guest experience I know they can.

I am also committing to improving the Restaurateur program, which is the foundation of our people culture at Chipotle. I will make sure that we closely align Restaurateur status with the things that ensure an excellent guest experience. And, I will work to ensure that even more of our team members achieve Restaurateur status by making the path to Restaurateur more straightforward.

I’d like to thank each and every member of the Chipotle family for your commitment and your dedication to making better food accessible to more and more people. I am honored and humbled to lead such an incredible company and promise I will work hard each day to earn your respect and loyalty. I am more committed than ever to accomplishing our mission, and I am extremely confident in the ability of our teams to build a bright future for Chipotle.

I also invite you to explore our expanded mission by visiting http://www.chipotle.com/mission

Sincerely,
Steve