Aug 14 (Reuters) - When burrito maker Chipotle came

under fire on social media for supposedly shrinking portion

sizes earlier this year, CEO Brian Niccol made a striking

admission: the company's critics had a point.

He told investors on the brand's recent earnings call that

Chipotle had identified "outlier" stores skimping on portion

sizes, and would retrain them. In doing so, he generated dozens

of media stories that reprinted his comments emphasizing

Chipotle's brand as a purveyor of "generous portions" -

effectively turning a public relations fiasco into good press.

That is the magic trick that Starbucks ( SBUX ), faced with sagging

sales in the U.S. and abroad, may be looking for.

On Tuesday, Starbucks' ( SBUX ) shock decision to name Niccol as

the battered brand's new top executive electrified Wall Street,

which added $21 billion to Starbucks' ( SBUX ) stock market value in a

single day, while Chipotle lost nearly $6 billion in value the

same day.

Directly confronting speculation about Chipotle's portion

sizes, which other executives may have dismissed as viral

misinformation, gave investors a reminder of Niccol's reputation

within the fast food industry as a brand-centered executive who

wades into crises with his sleeves rolled up.

"If you aren't walking the talk on what you're promising to

the customer, you're not going to win," Niccol said in a 2022

interview with Madhav Rajan, dean of the University of Chicago's

Booth School of Business, Niccol's alma mater.

Niccol brings to the job a resume heavy on marketing

experience, particularly for brands in crisis.

Niccol spent ten years at Procter & Gamble managing brands

such as Scope mouthwash and Pringles potato chips, before

spending more than ten years at Yum Brands. He served as the top

marketing executive at Pizza Hut and Taco Bell - where he

spearheaded the brand's "Live Más" tagline - and capped off his

time at the company with a three-year stint as Taco Bell's CEO.

Niccol took the reins as Chipotle's top executive in 2018,

after repeated E.coli breakouts three years earlier sent the

brand into a tailspin. It was struggling to win back customers

despite pouring millions of dollars into free food giveaways.

"It is mission one to make this brand visible," Niccol told

investors on his first earnings call soon after his appointment.

"This brand needs to be leading culture, not reacting to it."

Under Niccol, the brand moved away from promotions to

advertising fresh ingredients and restaurant-style food prep

techniques that few other fast casual chains were using. It

launched an ad campaign emphasizing "radical ingredient

transparency."

During Niccol's tenure, Chipotle sales doubled to about $10

billion in fiscal 2023, while the chain's stock has more than

tripled in value over the last five years.

Under his helm, the burrito and rice bowl maker added more

than 1,000 new stores globally. The company also started testing

automated avocado processors and dual-sided grills to speed up

cooking. Those efforts parallel Starbucks' ( SBUX ) "Siren System," which

is meant to help automate making complicated coffee drinks.

At Chipotle, Niccol also focused on modernizing the burrito

chain's digital and mobile ordering platforms, and pushed

through a store layout redesign that allowed for digital order

pick-up lanes called "Chipotlanes."

Niccol also moved Chipotle's headquarters from Colorado to

Newport Beach, California. "I'm usually out every week and

connecting with suppliers," Niccol said in his 2022 interview

with the college dean.

It remains to be seen how Niccol will address Starbucks

Workers United - the union trying to organize the coffee chain's

U.S. workforce that has already unionized around 475 stores.

Starbucks ( SBUX ) founder Howard Schultz took a hard stance against

the union, while now-former CEO Laxman Narasimhan oversaw a

thawing of relations earlier this year, when the coffee giant

and the union jointly announced they would begin working toward

a labor contract.

Niccol's Chipotle last year agreed to pay $240,000 to two

dozen former employees at a store in Maine it closed after the

workers filed a petition for a union election. The payment was

part of a settlement with the National Labor Relations Board,

which said the closure was illegal.

Lynne Fox, president of Workers United, released a statement

in response to Niccol's hiring without mentioning him. "The

constructive relationship we continue to build with Starbucks ( SBUX ) is

important, including dozens of tentative agreements and hundreds

of hours of productive bargaining," the statement said.

Wall Street analysts and restaurant consultants have high

praise for Niccol.

Andrew Charles at TD Cowen said Niccol was a "hall-of-fame

restaurant CEO," and that his appointment suggests "a new era is

underway," drawing parallels between Chipotle's challenges in

previous years and Starbucks' ( SBUX ) challenges today.

Niccol's appointment will "get Starbucks ( SBUX ) out of this

conservative mode, which is unfortunately Laxman (Narasimhan's)

legacy," said John Gordon, founder of Pacific Management

Consulting Group, a restaurant consulting company.