Chipotle Mexican Grill Inc. founder, Steve Ells, agreed to resign as CEO after struggling to emerge from a two-year depression, a jolt that sent stocks up the burrito chain.
Ells, who started the company in 1993, will hand over the reins once a new CEO is found, the Denver-based company said Wednesday. He will continue as head of the board, taking the title of executive president.
Chipotle has had problems recovering from an E. coli crisis in 2015 that made clients sick throughout the United States. The company had begun to restore its reputation in the past. year, but a norovirus incident in Virginia and a viral video of mice in a Dallas location generated a new round of negative headlines.
"It is clear that we have to move faster to make improvements," Ells said in a statement. "In a nutshell, we have to execute better to ensure our future success."
Investors applauded the measure, with the stock gaining up to 7.5 percent to $ 307.30 in early trading. It had dropped 24 percent this year until the close of Tuesday.
The Chipotle board formed a search committee that includes Robin Hickenlooper and Ali Namvar, two directors who were added in a review last year backed by investor Bill Ackman. Ells, 52, will also be on the committee, and said he would look for an experienced leader who can improve "customer experience, operations, marketing, technology, food safety and training"
& # 39; The Right Thing & # 39;
"Taking a new CEO is the right thing for all our stakeholders," he said. "It will allow me to focus on my strengths, which include bringing innovation to the way we stock and prepare our food."
Ells has been beaten for lacking the operational skills necessary to run a large chain of restaurants. Chipotle also suffered a data breach earlier this year, an incident that damaged its profits and contributed to another stock decline. This year's hurricanes also hit Chipotle. I had 425 restaurants on the direct path of the storms.
Ackman, a multimillion-dollar hedge fund manager, is Chipotle's biggest investor . His firm, Pershing Square Capital Management, won a 10 percent stake in the burrito chain last year. He described the company as an undervalued company with a "strong brand, differentiated offer, huge opportunity for growth and visionary leadership".
Chipotle director Neil Flanzraich said Wednesday that Ells' vision was key to creating and expanding the chain, which helped promote the use of fresher ingredients and more transparent menus. But the company now has more than 2,350 restaurants, and difficult problems.
Executive recruiting firm Spencer Stuart will help in the search for a new leader.
"Now is the right time to identify a new CEO who can reinvigorate the brand and help the company reach its potential," said Flanzraich. "We are committed to hiring a world-clbad CEO for this incredible opportunity."