Chipotle ditches one of its CEOs, seeks return to ‘very simple idea’

Chipotle Mexican Grill named founder Steve Ells as its sole CEO on Monday as the burrito chain keeps trying to recover from a series of food scares that has driven customers away.

Ells had been co-CEO with Monty Moran, who is stepping down from that position and from his seat on the board of directors, and will retire from the company in 2017. Ells, who founded the company more than 23 years ago, will remain chairman of the board of directors.

Moving to one chief executive is “about stripping away” things that are getting in the way of the business and, in general, complicating what is a “very simple idea,” Ells said.

The changes at the top come as Chipotle’s sales and customer traffic still have not recovered, more than a year after an E. coli outbreak first surfaced in 2015. Since then, activist investor Bill Ackman’s Pershing Square Capital has taken a nearly 10% stake in the chain.

Chipotle shares rose more than 2% in afternoon trading but have lost about 38% percent of their value since the E. coli outbreak surfaced.

The company has publicized changes to its food safety procedures, given away millions of free burritos, launched a temporary loyalty program and added chorizo to its menu, all to win back customers. But the worry is that customers may have simply gotten in the habit of going elsewhere.

At an analyst conference on Dec. 6, Ells noted that sales were still down 19% and have been recovering at a rate of about 1% per month over the past 10 months. Still, he noted sales were uneven and that it was difficult to predict.

“Consumers now have a plethora of fast-casual brands to choose from and Chipotle (perhaps) is no longer in the rotation for some consumers,” Canaccord Genuity restaurant analyst Lynne Collier wrote in a note to investors last week.

Chipotle has been working to improve its customer service, with better training for employees. In the last six months, Chipotle has said that it attracted 33 million new or onetime customers that had stopped coming to its restaurants.

Ells said he would work on tying employee incentives more closely with customer experience.