CAN CHIPOTLE STILL MIX IT UP?

Chipotle has been one of the hottest chain restaurants of the past five years under CEO Brian Niccol. Now it wants to double its empire. That will mean working new ingredients into its business recipe-and changing the way thousands of employees do their jobs.

- Phil Wahba

THE GARLIC Guajillo Steak has already been off the market for a few weeks when Fortune visits the headquarters of Chipotle Mexican Grill in Newport Beach, Calif. But the so-so performance of the entrée is still nagging at CEO Brian Niccol. "It didn't go off the way we had thought it would," Niccol says with a slight shrug.

Chipotle rolls out "LTOS" (limited-time offers) like the steak two or three times a year, hoping they'll bring in new customers and get existing ones to spend more. Niccol, the author of the burrito chain's stunning turnaround since he became CEO in 2018, is an LTO mastermind and until now, he'd had a long winning streak. Chipotle went all out promoting the steak (which gets its name from guajillo chili peppers). It partnered with gaming site Roblox to offer free coupons for the dish in the metaverse and gave early access to members of its huge loyalty program.

But customers didn't warm to the steak the way they did to, say, the beloved brisket LTO of 2021. And the reasons why hint at the challenges that Niccol needs to contend with if he wants Chipotle's next five years to be as successful as the last five.

Higher-than-anticipated inflation meant Chipotle wound up charging more for the dish than some customers would pay, Niccol explains. And in a chain restaurant kitchen where new employees come and go constantly the steak was a challenging dish to consistently prepare well. "The combination of a lot of turnover, and then frankly, the amount of inflation that was going on out there," says the 49-year-old Niccol, meant "it just ended up being a little bit harder to execute."