Why Investors Can Be Optimistic Following Chipotle's CMO Resignation

Chipotle Mexican Grill, Inc. (NYSE: CMG) announced Wednesday the resignation of Mark Crumpacker, the company's chief marketing and strategy officer.

Considering the fast-casual chain’s underwhelming marketing efforts, the resignation isn't surprising.

Last year, Bernstein analyst Sara Senatore argued that if a company wants to drive traffic to its stores through marketing, it needs to show pictures of its food, which Chipotle failed to do so in its campaign during the first quarter of 2017.

“The announcement is consistent with our expectations that new CEO Brian Niccol would begin his role by evaluating the operating structure and leadership of CMG,” sSenatore said in a note out Thursday.

Niccol may breathe some new life into the company’s marketing efforts. At his previous role as the head of Taco Bell, Niccol was known for his innovative and effective marketing campaigns. Senatore argues that the fast-casual industry is one where consistent media presence is critical, and believes under Niccol’s leadership, marketing will be a meaningful driver for the company moving forward.

“New management is the first play in our Turnaround Playbook; new perspectives are helpful in identifying problems and finding solutions,” Senatore said.

The analyst maintains an Outperform rating on Chipotle with a $500 price target.

Shares of Chipotle closed Thursday at $318.91.

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Image credit: Chis Potter, Flickr