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As I mentioned previously on HN, Niccols is literally the most successful CEO in the restaurant market today - having grown Chipotle's stock from $200 to $1300

As I mentioned previously on HN, Niccols is literally the most successful CEO in the restaurant market today - having grown Chipotle's stock from $200 to $1300 (before the stock split last year), and helped shepherd Chipotle in the aftermath of it's food safety scandal. With that kind of a CEO you have to bend over backwards to poach them (eg. Making them Chair and CEO - very rare for non-founder CEOs to be granted this role) Starbucks is simply extremely desperate to have good leadership after Laks didn't fit in well.

manuelmoreale 2y ago
Not going to disagree with your comment but I find it so socially interesting that “the most successful CEO in the restaurant market” is judged by something that has nothing to do with the quality of the food.
- xhkkffbf 2y ago
  I think you're foolish if you think that stock price "has nothing to do with the quality of the food." Repeat customers are a big part of the profitability for any business and they're a big part of the success of Chipotle. Unless you think that the quality of the food doesn't matter to the customers, I think the real challenge for any restaurant is to come up with an acceptable level of quality for an acceptable price. The stock price shows that he achieved that for an increasing number of customers.
- maronato 2y ago
  In theory, the stock price is at least partially tied to sales and brand perception, which in turn correlates with the perceived quality/price ratio by the public.
  - manuelmoreale 2y ago
    And in practice? Asking seriously, I never had Chipotle (because it’s not even a thing here) so has the product actually improved all that much under this guy’s guide?
    - alephnerd 2y ago
      > so has the product actually improved all that much under this guy’s guide Food Safety wise absolutely. Menu Diversity wise absolutely not. Pre-Niccols, Chipotle gave more leeway to restaurants to modify the menu in non-standard manners as well as play around with sizing and with limited corporate oversight. This was great for customers, but the limited oversight and lack of standardization lead to an E Coli and Salmonella breakout at a handful of Chipotle branches, which collapsed customer confidence, the Chipotle stock, and became a massive PR nightmare. When Niccols was brought in, corporate cracked down on customer option and diversity in order to better manage the risk profile. Standardization is great for margins by minimizing risk and overhead, but this comes at the expensive of diversity (every consumer likes a high touch sales cycle).
- alephnerd 2y ago
  > I find it so socially interesting that “the most successful CEO in the restaurant market” is judged by something that has nothing to do with the quality of the food. Great observation! Different industries have different margins. High margin industries give breathing room for stronger Product-Market Fit to emerge. PMF forces companies to try and optimize for customer satisfaction, and protects against commodification by keeping customers happy. On the other hand, in industries with low margins (eg. Restaurants), commodification is extremely high so penny pinching is critical in order to manage your operating costs. Furthermore, you will be dependent on outside investors to raise capital, so Investor Relations becomes critical.
tzs 2y ago
> With that kind of a CEO you have to bend over backwards to poach them (eg. Making them Chair and CEO - very rare for non-founder CEOs to be granted this role) According to the article roughly half of public companies have the same person as Chair and CEO. They cite this [1] to support that. I don't think there are enough CEO founders to account for a majority of those. [1] https://corpgov.law.harvard.edu/2024/01/18/2023-disclosure-practices-on-board-leadership-and-structure/ https://corpgov.law.harvard.edu/2024/01/18/2023-disclosure-p...
- alephnerd 2y ago
  Starbucks never clubbed the chair and CEO position before and only did it for Niccols because he negotiated the same deal at Chipotle after he was poached from Taco Bell. Also, the CorpGov blog (love it btw - highly recommend RSSing it) also shows the same trend over the past several years - that companies increasingly split the CEO position and Chair position. And as an investor, I tend to demand that unless the CEO is an absolute rainmaker due to conflict of interest, and Sbux's closest competitors (Dunkin's and RBI) do the same split.

manuelmoreale 2y ago

Not going to disagree with your comment but I find it so socially interesting that “the most successful CEO in the restaurant market” is judged by something that has nothing to do with the quality of the food.

xhkkffbf 2y ago
I think you're foolish if you think that stock price "has nothing to do with the quality of the food." Repeat customers are a big part of the profitability for any business and they're a big part of the success of Chipotle. Unless you think that the quality of the food doesn't matter to the customers, I think the real challenge for any restaurant is to come up with an acceptable level of quality for an acceptable price. The stock price shows that he achieved that for an increasing number of customers.
maronato 2y ago
In theory, the stock price is at least partially tied to sales and brand perception, which in turn correlates with the perceived quality/price ratio by the public.
- manuelmoreale 2y ago
  And in practice? Asking seriously, I never had Chipotle (because it’s not even a thing here) so has the product actually improved all that much under this guy’s guide?
  - alephnerd 2y ago
    > so has the product actually improved all that much under this guy’s guide Food Safety wise absolutely. Menu Diversity wise absolutely not. Pre-Niccols, Chipotle gave more leeway to restaurants to modify the menu in non-standard manners as well as play around with sizing and with limited corporate oversight. This was great for customers, but the limited oversight and lack of standardization lead to an E Coli and Salmonella breakout at a handful of Chipotle branches, which collapsed customer confidence, the Chipotle stock, and became a massive PR nightmare. When Niccols was brought in, corporate cracked down on customer option and diversity in order to better manage the risk profile. Standardization is great for margins by minimizing risk and overhead, but this comes at the expensive of diversity (every consumer likes a high touch sales cycle).
alephnerd 2y ago
> I find it so socially interesting that “the most successful CEO in the restaurant market” is judged by something that has nothing to do with the quality of the food. Great observation! Different industries have different margins. High margin industries give breathing room for stronger Product-Market Fit to emerge. PMF forces companies to try and optimize for customer satisfaction, and protects against commodification by keeping customers happy. On the other hand, in industries with low margins (eg. Restaurants), commodification is extremely high so penny pinching is critical in order to manage your operating costs. Furthermore, you will be dependent on outside investors to raise capital, so Investor Relations becomes critical.

tzs 2y ago

> With that kind of a CEO you have to bend over backwards to poach them (eg. Making them Chair and CEO - very rare for non-founder CEOs to be granted this role) According to the article roughly half of public companies have the same person as Chair and CEO. They cite this [1] to support that. I don't think there are enough CEO founders to account for a majority of those. [1] https://corpgov.law.harvard.edu/2024/01/18/2023-disclosure-practices-on-board-leadership-and-structure/ https://corpgov.law.harvard.edu/2024/01/18/2023-disclosure-p...

alephnerd 2y ago
Starbucks never clubbed the chair and CEO position before and only did it for Niccols because he negotiated the same deal at Chipotle after he was poached from Taco Bell. Also, the CorpGov blog (love it btw - highly recommend RSSing it) also shows the same trend over the past several years - that companies increasingly split the CEO position and Chair position. And as an investor, I tend to demand that unless the CEO is an absolute rainmaker due to conflict of interest, and Sbux's closest competitors (Dunkin's and RBI) do the same split.