Pitching Chipotle

Steve’s breakdown: Why did this take so long? Chipotle finally gets serious about PR by hiring their 1st CCO and we believe there’s going to be some opportunity here for your guys. Look into social media first.

DENVER, CO: Chipotle Mexican Grill Inc. — which has spent a lot of time battling hits to its image in recent years — now has a C-level executive to lead the charge.

The Denver-based food chain has hired Laurie Schalow as its first-ever chief communications officer.

She comes to Chipotle (NYSE: CMG) from Yum Brands Inc., parent of the Taco Bell, KFC, Pizza Hut and WingStreet food chains, where she was vice president of public affairs. Among her duties at Yum was crisis management.

Schalow will report directly to Chairman and CEO Steve Ells, overseeing all external and internal communication.

“We have been actively working to strengthen our leadership team to better prepare Chipotle for continued growth and success,” Ells said. “Laurie is an extremely talented executive, and I am confident that her broad expertise will help to strengthen our communications and better integrate all of our internal and external communications functions to amplify our messages.”

With Schalow’s arrival, PR director Chris Arnold — Chipotle’s most-often-quoted spokesman — will report to her instead of chief marketing and development officer Mark Crumpacker.

“Chipotle is a great brand and I have been a longtime admirer of the company and its mission,” Schalow said. “There is considerable opportunity ahead for Chipotle, and I am thrilled to join the company to help shape and strengthen its strategic communications in support of a very important vision to make great tasting food, made with real, whole ingredients available to everyone.”

The company described Schalow’s appointment as “part of a broader, ongoing effort from Chipotle to strengthen its leadership.” (See below for more.)

Chipotle had been making considerable progress in recapturing customers and business at its 2,300 restaurants following foodborne-illness outbreaks among customers in 2015.

In 2016, same-store sales at Chipotle locations open at least a year fell 20 percent from the previous year, overall revenue declined 20 percent, and net income plummeted 95 percent.

Chipotle got busy with a recovery effort. It invested heavily in a new food-safety program, switched lead ad agencies and, early this year, launched its first national broadcast-TV ad campaign.

And results for the first half of 2017 suggested that Chipotle was making progress. I n the first quarter of this year, same-store results were up 18 percent and revenue shot up 28 percent from the depressed numbers of a year earlier. In the second quarter, same-store sales rose 8 percent and revenue rose 17 percent year over year.

But that was before dozens of people were sickened with norovirus after eating at a Virginia Chipotle restaurant in July. Chipotle officials temporarily closed the eatery and blamed that outbreak on restaurant managers not following company protocol regarding sick employees.

Then came a social media video showing mice scurrying around a Chipotle location in Dallas. The company temporarily closed that restaurant, too.

Over the last two months, Chipotle shares have declined from $451.09 on June 16 to Wednesday’s opening price of $322.90. And that’s down from a high of $749 two years ago.

Schalow’s hiring comes three months after Chipotle named Arby’s Restaurant Group executive Scott Boatwright as its first “chief restaurant officer.”

Boatwright was brought in to help the company improve its “guest experience” — a key focus for Ells since he told investors last Decemberthat the chain had lost its focus on customers and that service was slipping at some restaurants.

Chipotle also shook up its board last December, adding four new members, including Robin Hickenlooper, the wife of Colorado Gov. John Hickenlooper.

In the board shakeup, Chipotle was appeasing activist shareholder William Ackman and his Pershing Square Capital Management LP, which bought about 10 percent of Chipotle’s shares in September. Ali Namvar, a Pershing Square partner, was among the new board appointees.


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