New Chipotle CEO addresses crucial question: Free guac?

Senior Writer
Yahoo Finance

Since taking the helm of Chipotle (CMG), Brian Niccol has had a lot on his plate. On March 5, the former Taco Bell CEO took over from founder Steve Ells after a months-long search for an executive with turnaround expertise.

Niccol emphasized food innovation, including new menu offerings and seamless digital ordering, as his top priority in an interview with Yahoo Finance. This week, the company announced a delivery partnership with startup DoorDash. But when it comes to its menu, the offerings are fairly standard. Chipotle rolled out its highly-anticipated Queso last fall, but the offering has not been as popular as it had hoped. Chipotle’s staple and customer favorite is still guacamole.

In fact, Yahoo Finance managing editor Sam Ro has repeatedly suggested Chipotle implement a free guacamole strategy to lure in more customers. “Everyone loves guacamole. Everyone also loves the perception of value. And not many people like paying extra for add-ons. If Chipotle is looking to boost traffic to stores, why not offer guacamole for free? People would love that. And Chipotle could offset some of the cost by raising the price of burritos, bowls and salads by a couple of nickels (since not everyone likes guacamole),” Ro explained.

Yahoo Finance Managing Editor Sam Ro recommends free guacamole as an idea for new Chipotle CEO Brian Niccol.
Yahoo Finance Managing Editor Sam Ro recommends free guacamole as an idea for new Chipotle CEO Brian Niccol.

Niccol responded to Ro’s request, and while free guac won’t be a reality in the foreseeable future, Ro may get some preferential treatment.

“I can understand why [he would suggest free guacamole]. Our guacamole’s outstanding. I think it’s one of the best. And it goes really great with our chips and everything else. There’s always opportunities where if we need to get him some experiences into the Chipotle brand, tell him to give me a call — I’m sure I can hook him up,” he told Yahoo Finance.

Currently, Chipotle charges customers $2.45 to add guac to tacos and burrito bowls. Millennials are obsessed with avocados — adding it to their BLTs, brownies and everything in between. Of course, as various blogs have pointed out, the best way to get avocado for ‘free’ is to go protein-free. Unfortunately, universal free guac is not part of Chipotle’s masterplan.

And it may not have to be. Last week the company reported upbeat first-quarter results, with earnings per share buoyed by price hikes implemented over the past year. Same-store sales increased by 2.2% and the average check size rose 4.9%, but store traffic did decrease as Chipotle has been recovering from two separate outbreaks of E. Coli — and eroding customer trust — that has been plaguing the company since 2015.

Niccol said this chapter of Chipotle is making the brand more accessible and regaining consumer trust.

“You’re going to see us innovating on the menu so that we continue to have relevance. And then you will really see us being creative and culturally connected to how people want to access their eating experiences and make sure the menu provides the food experiences that people want today and in the future.”

Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.

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