Chipotle stock fell as much as 10% in premarket trading Tuesday as the company announced CEO Brian Niccol would be leaving his role on Aug. 31 to become CEO of Starbucks.
Niccol began as Chipotle CEO in March 2018. Chipotle stock has risen more than 770% since since he took over.
Chipotle’s board named Chief Operating Officer Scott Boatwright as interim CEO. He’s been at the company since 2017. The board also announced that Chief Financial Officer Jack Hartung, who had announced his intention to retire, would stay with the company indefinitely and assist with the transition.
“What we saw with Brian was someone who’s, quite honestly, been there done that — through all sorts of market environments, all sorts of cycles,” Mellody Hobson, who was the board chair at Starbucks but stepped down to become lead independent director as part of Tuesday’s changes, said on CNBC’s Squawk Box. “When I talked to him I remember him saying, ‘I know what to do.'”
Chipotle has seen strong same-store sales growth and traffic while other restaurants have reported that consumers are pulling back on customer spending.
Chipotle reported second-quarter earnings in July that topped analyst estimates, with $2.97 billion in revenue. Net sales climbed 18.2% during the quarter, with same-store sales up 11.1%.
Niccol helped lead Chipotle through a foodborne illness scandal and oversaw the chain of restaurants during the pandemic.
Before taking over at Chipotle, Niccol was the CEO at Yum Brands’ Taco Bell.
Analyst Mark Kalinowski, chief executive of Kalinowski Equity Research, struck a cautious tone on the CEO change.
“While this will be viewed as bad for Chipotle in the short term, Mr. Niccol had been CEO there 6+ years, so perhaps the opportunity to bring some new thinking to that highly-respected company isn’t the worst thing in the world for the long run,” Kalinowski wrote in note on Tuesday.
— CNBC’s Amelia Lucas contributed to this report.
