Good morning. Just last month, Chipotle Mexican Grill, Inc. announced that its longtime CFO Jack Hartung would retire in March 2025. But the departure of its CEO is changing that plan.
In a Tuesday morning surprise, Starbucks announced that Chipotle CEO Brian Niccol is the coffee giant’s new chief executive, replacing Laxman Narasimhan. Niccol will start his new role on Sept. 9. Starbucks CFO, Rachel Ruggeri, will serve as interim CEO until that time.
Chipotle, the popular fast-casual restaurant chain, also announced on Tuesday that Niccol, CEO since 2018, will leave the company on Aug. 31. Scott Boatwright, who joined Chipotle in 2017, and serves as chief operating officer, was appointed interim CEO. The board will also conduct an external search for a CEO as a matter of good governance, Chipotle confirmed in an email.
Hartung has agreed to take on a new role at the company indefinitely as president of strategy, finance, and supply chain. Adam Rymer, VP of finance and incoming CFO, will be among those who report to Hartung.
As CFO of Chipotle since 2002, Hartung’s vast knowledge of the company extends right down to appreciating the special seasonings. Last year, when Chipotle, founded by Steve Ells, celebrated its 30th year in business, I talked with Hartung about his first impressions of the company.
“I’d be lying if I said I knew that we’d be exactly where we are today,” he told me. “But I was bullish when I joined Chipotle. It kind of blew my mind that you’ve got a young chef, who started this fast-casual restaurant company based on what fine dining restaurants do.”
When tasting a Chipotle burrito for the first time, he savored the ingredients, like rice. “I used to think rice was kind of bland and didn’t have much flavor,” Hartung told me. “But not if you make it right. If you cook it where it’s not too starchy, not too sticky, you season it correctly with the right amount of citrus and cilantro, it’s delicious.”
‘In good hands’
Chipotle reported its Q2 earnings on July 24. Total revenue increased 18.2% year over year to $3 billion, and comparable restaurant sales increased 11.1%. During the quarter, Chipotle opened 52 new company-operated restaurants. Following Tuesday morning’s announcement of Niccol’s departure, shares of Chipotle, which trades under the CMG ticker, were down about 8% at market close.
Chipotle is “both in a good place and in good hands” with Boatwright serving as interim CEO, and Hartung postponing his retirement and staying on in his new role, Nick Setyan, an equity research analyst at Wedbush Securities, wrote in a Tuesday note. “We credit both leaders with CMG’s turnaround, in addition to Brian Niccol.”
Michael Halen, a senior consumer products analyst at Bloomberg Intelligence, and contributing analyst Amir Islam wrote in a note that Chipotle appeared well-positioned to handle Niccol’s departure, Fortune reported.
Hartung and Niccol have been a “key part of the executive team credited with creating an immense amount of shareholder value,” Scott W. Simmons, co-managing partner of executive search firm Crist Kolder Associates, told me. “The board certainly doesn’t want to lose both Niccol and Hartung in rapid succession,” Simmons said.
“I think Chipotle needs a CEO with extensive QSR [quick-service restaurant] experience and a proven track record of driving sustainable growth, which is so difficult to achieve in the QSR space,” Simmons added. “I think it would be a mistake to hire a CEO who wants to deviate too much from the current strategy.”
And Hartung will help steer Chipotle’s strategy.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Elias Olmeta was appointed CFO of MeridianLink, a software provider for financial institutions and consumer reporting agencies, effective Aug. 26. He will succeed current CFO Larry Katz, who has been promoted to president of the company. Olmeta most recently served as CFO of Mitchell International, a SaaS provider to the automative and insurance industry, and currently serves on the board of AutoCanada, Canda’s largest automotive dealer group.
Chris Sands was appointed CFO of digital payment company InvoiceCloud. Sands previously served in the same role at digital healthcare company IntelyCare and MineralTree, another software and payments business.
Big Deal
Global private equity and venture capital deal value amounted to $369.51 billion in the first half of 2024, a 26% increase from last year, according to data from S&P Global Market Intelligence. Despite recession fears and concerns over high interest rates, transaction value in July came in at $59.26 billion, up 33% and 44% from the same month last year and in 2022, respectively.
The largest deal in July was Sixth Street Partners’ agreement to take reinsurance company Enstar Group private for $5.1 billion. Overall, the technology, media and telecom sector had the most deal activity, accounting for 380 PE-backed transactions.
Going deeper
“Salary budgets for pay increases will decline in 2025,” is a new report from compensation software provider Payscale. U.S. employers plan on a 3.5% salary budget increase for next year, down 10 basis points from the year before, according to the annual survey of over 1,500 clients. The report noted base pay increases remain higher than the 3% mark, which was average before the COVID-19 pandemic.
Overheard
“Starbucks’ decision to replace CEO Laxman Narasimhan with Brian Niccol is a no-brainer, in our view. Niccol authored Chipotle’s robust turnaround and is arguably the top public restaurant CEO in the U.S.”
— Michael Halen, senior consumer products analyst at Bloomberg Intelligence, and contributing analyst Amir Islam wrote in a note shortly after Niccol’s hire, Fortune reported.