When Brian Niccol was announced as Starbucks’ new chief executive officer Tuesday morning, replacing Laxman Narasimhan after a stunningly short stretch, the coffee giant’s stock skyrocketed more than 20%, putting the chain on track for its largest single-day percentage increase since going public in 1992.
Meanwhile, shares at Chipotle, where he has served as CEO since 2018, tumbled nearly 13% on the news.
To get a clear understanding of Niccol’s impact, this divergence pretty much sums it up. Indeed, few leaders are as tenured and effective in this industry as Niccol has been.
He joined the industry from Procter & Gamble in 2005, when he was named vice president at Yum Brands. In 2007, he was named chief marketing officer at Yum’s Pizza Hut brand and moved over to sister chain Taco Bell in 2011 to serve as chief marketing and innovation officer. He then served as president from 2013 to early 2015, spearheading the chain’s successful breakfast launch, introducing mobile ordering and payment, and solidifying its presence on social media.
In 2015, Niccol took on the CEO role at Taco Bell after his predecessor Greg Creed became CEO of Yum. During his time in that role, Taco Bell began testing delivery, deepened its digital footprint, opened its first Cantina location with alcohol, experimented with innovations like Biscuit Tacos, the Quesalupa, and the Naked Chicken Chalupa, and doubled down on its Live Más brand positioning. Taco Bell also doubled its system sales, opened 2,000 new restaurants and forayed into international markets. During his tenure, there was just one quarter of negative same-store sales at Taco Bell (Q2 2016).
When he took over the leadership role at Chipotle in February 2018, Niccol said his focus was going to be “dialing up cultural relevance through innovation in menu and digital communications.” That focus, he added, would deliver value for shareholders and create opportunities for employees.
It’s safe to say he delivered on those promises. On Niccol’s watch, Chipotle’s share price has jumped by over 770% compared to the general S&P 500, which is up 99% during the same period. Beyond the company’s stock price, Chipotle has experienced just one quarter of negative same-store sales since Q1 2018 and that just happened to come during the COVID crisis that shut down restaurants across the globe. When Niccol took over, restaurant-level margins were about 19%. Last quarter, they were 28.9%.
Additionally, average unit volumes in early 2018 were around $2 million. They surpassed the $3 million mark at the end of 2023 and the company now has its sights set on $4 million.
Niccol is largely credited for turning the company around after a food safety crisis, leveraging his marketing background to create cultural and menu relevancy at the chain. Inarguably, he did just that with activations like National Avocado Day giveaways and TikTok menu partnerships, as well as popular introductions like the Chicken al Pastor and Carne Asada.
Further, his expertise in digital technologies largely insulated the company during the pandemic, with digital sales now representing nearly 40% of the company’s mix. Much of those sales are driven by his initiatives such as order-ahead drive-thru Chipotlanes and digital makelines.
Niccol is also sharply focused on operations, driving a culture of throughput in tandem with his chief operating officer and now-interim CEO Scott Boatwright to expedite recovery in a post-pandemic environment. The past several quarters have underscored the success of this throughput focus, with traffic and sales far outpacing the rest of the industry, and average unit volumes hitting record highs.
Finally, Niccol’s leadership playbook has plenty of pages dedicated to the employee proposition. Under his direction, Chipotle has been industry leading in providing employee benefits like mental healthcare, expanded parental leave, tuition reimbursement, English as a second language classes, pet insurance, matching contributions to 401(k) workers’ student loan repayments, and more. Chipotle’s 50-to-1 stock split decision earlier this year was made to make the company’s stock prices more accessible for employees. These benefits have helped the chain generate the strongest staffing levels since Niccol came on board.
Niccol is finishing out the month at Chipotle, so it’s way too early to know if or how his track record will continue in his next role. But for now, his impressive résumé, illustrates why Starbucks investors are feeling optimistic today after two-plus quarters of feeling anything but optimism.
Chipotle’s numbers under CEO Brian Niccol
2018
Q1: Comp store sales up 2.2%; restaurant-level margins, 19.5%
Q2: Comp store sales up 3.3%; restaurant-level margins, 19.7%
Q3: Comp store sales up 4.4%, restaurant-level margins 18.7%
Q4: Comp store sales up 6.1%; restaurant-level margins 17%
2019
Q1: Comp store sales up 9.9%; restaurant-level margins, 21%
Q2: Comp store sales up 10%; restaurant-level margins, 20.9%
Q3: Comp store sales up 11%; restaurant-level margins, 20.8%
Q4: Comp store sales up 13.4%; restaurant-level margins 19.2%
2020
Q1: Comp store sales up 3.3%; restaurant-level margins, 17.6% (both impacted by the onset of the pandemic in March)
Q2: Comp store sales down 9.8%; restaurant-level margins, 12.2% (the only negative quarter during Niccol’s tenure)
Q3: Comp store sales up 8.3%; restaurant-level margins, 19.5%
Q4: Comp store sales up 5.7%; restaurant-level margins, 19.5%
2021
Q1: Comp store sales up 17.2%; restaurant-level margins, 22.3%
Q2: Comp store sales up 31.2%; restaurant-level margins 24.5%
Q3: Comp store sales up 15.1%; restaurant-level margins, 23.5%
Q4: Comp store sales up 15.2%; restaurant-level margins, 22.6%
2022
Q1: Comp store sales up 9%; restaurant-level margins, 20.7%
Q2: Comp store sales up 10.1%; restaurant-level margins, 25.2%
Q3: Comp store sales up 7.6%; restaurant-level margins, 25.3%
Q4: Comp store sales up 5.6%; restaurant-level margins, 24%
2023:
Q1: Comp store sales up 10.9%; restaurant-level margins, 25.6%
Q2: Comp store sales up 7.4%; restaurant-level margins, 27.5%
Q3: Comp store sales up 5%; restaurant-level margins, 26.3%
Q4: Comp store sales up 8.4%; restaurant-level margins, 26.2%
2024
Q1: Comp store sales up 7%; restaurant-level margins, 27.5%
Q2: Comp store sales up 11.1%; restaurant-level margins, 28.9%
Contact Alicia Kelso at [email protected]
