Chipotle Mexican Grill's new CEO Brian Niccol rolled out his strategy to woo customers back to the troubled burrito chain with a focus on new menu items and faster mobile and online orders.
The company also plans to spend a lot more money on a new marketing campaign to build "love and loyalty" with its customers, he told analysts on a conference call announcing the plans Wednesday.
As part of the overhaul, Niccol is closing up to 65 underperforming locations and said he's bringing more discipline to the company. Shares fell 8 percent to $420.71 at 10:43 a.m. Thursday morning.
Niccol said he's trying to remake Chipotle into a lifestyle brand, instead of just a restaurant chain. Part of that requires changing its culture, making the company more nimble, fun and accountable to its customers, he said.
He's using much of the same playbook he used running Taco Bell. His appointment has breathed new life into Chipotle's stock, which has soared more than 80 percent since his role was announced in February. Investors now hope he can win back the confidence of Chipotle's diners.
The restructuring will cost the company between $115 million and $135 million, up to $60 million of which will be booked in the second quarter, CFO John Hartung said on the call. About $30 million of that is allocated to lease buyouts. Hartung said about half of the planned restaurant closures will be complete within the next 30 days with the rest closing over the next several quarters.
Niccol said the company is about halfway through an initiative he calls the "big fix," updating the lighting, painting and other fixtures as needed across the chain. The upgrades will be completed by the end of the year, he said. He's extending the restaurant's hours, opening earlier and closing later and looking at adding a "happy hour" with snack items and drinks in the afternoon and after 8 p.m., he said.
Niccol said a lack of discipline and accountability hampered Chipotle's ability to recover from a series of outbreaks of E. coli, salmonella and norovirus beginning in 2015 were tied to its restaurants. The food safety problems tanked sales and halved its market value.
"We were not sufficiently results focused which made us reactive and hampered execution. I found skills gaps in many areas and insufficient data for decision making that have held us back from reaching our potential," Niccol said during a special investor call on Wednesday.
Here's how he plans to win customers back: