Starbucks Corporation has announced a significant leadership change, appointing Brian Niccol, the current head of Chipotle Mexican Grill, as its new chairman and chief executive. This move comes in response to declining sales and mounting pressure from investors. Niccol will officially take over next month, succeeding Laxman Narasimhan, who is stepping down immediately after just over a year in the role.
The announcement had an immediate positive impact on Starbucks’ stock, which surged by 24.5%, closing at $95.90 in New York. Narasimhan, who took the helm in March 2023, had previously served as the chief executive of Reckitt Benckiser and spent six months working as a barista to better understand Starbucks’ operations. Despite these efforts, the company’s shares have dropped by about a quarter since he took over, with sales growth reversing since 2020. Last month, Starbucks reported a decline in sales for the second consecutive quarter, citing reduced demand in both the U.S. and China.
Howard Schultz, the former CEO who transformed Starbucks into the world’s largest coffee chain, has criticized the company’s recent leadership for losing focus on customer experience amid aggressive expansion plans. Additionally, Elliott Investment Management, an activist investor, has been pressuring Starbucks to enhance its performance and stock price.
Under Niccol’s leadership, Chipotle has demonstrated resilience against weak consumer sentiment, reporting higher sales and profits. Since he became CEO in 2018, Chipotle’s revenue has nearly doubled, and its stock price has soared by almost 800%. However, news of Niccol’s departure negatively impacted Chipotle’s shares, which fell by 7.5% to close at $51.68.
Rachel Ruggeri, Starbucks’ chief financial officer, will serve as interim CEO until Niccol assumes his new role on September 9. Mellody Hobson, Starbucks’ chairwoman, will become the lead independent director. Hobson expressed enthusiasm for Niccol’s appointment, highlighting his proven track record of driving innovation and growth, as well as his understanding of the importance of a remarkable customer experience.
In a statement, Starbucks acknowledged Narasimhan’s contributions, including improvements in partner experience, supply chain innovation, and store operations. Despite facing challenging headwinds, Narasimhan remained focused on enhancing the business to meet customer and partner needs. Chipotle has appointed Scott Boatwright, its chief operating officer, as interim CEO.
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