In a surprise leadership shake-up, Starbucks has announced the immediate departure of CEO Laxman Narasimhan, replacing him with Chipotle CEO Brian Niccol.
The coffee giant's decision marks a pivotal moment as it navigates sluggish sales and increasing pressure from activist investors.
Niccol, who will officially assume his role on 9 September 2024, will also take on the position of board chair.
In the interim, Starbucks CFO Rachel Ruggeri will serve as acting CEO.
Niccol's appointment comes after a transformative tenure at Chipotle, where he drove substantial growth, nearly doubling revenue and boosting the company's stock price by approximately 800% since 2018.
Under his leadership, Chipotle successfully recovered from a series of food safety crises and emerged as a leader in digital innovation and operational excellence.
Niccol’s experience and proven track record in the fast-casual dining sector have been highlighted as critical to his new role at Starbucks.
Mellody Hobson, who will transition from board chair to lead independent director, expressed confidence in Niccol’s ability to steer Starbucks through its current challenges:
“His phenomenal career speaks for itself. Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth. Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience.
“Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.”
The leadership change follows a tumultuous period for Starbucks under Narasimhan, who took the helm in March 2023.
Despite efforts to enhance store operations and supply chain efficiency, Starbucks struggled with declining sales, particularly in key markets such as the US and China.
During his 16-month tenure, Starbucks shares dropped over 20%, contrasting sharply with a broader market upswing.
Narasimhan, who lacked prior experience in the dining industry, faced criticism from former CEO Howard Schultz and growing scrutiny from activist investors, including Elliott Management and Starboard Value.
In contrast, Niccol’s appointment has been well-received by investors, with Starbucks shares soaring 25% following the announcement - the largest single-day increase since the company’s 1992 initial public offering.
Starbucks' board, which reportedly began discussions about a leadership change two months ago, opted to recruit Niccol independently of activist pressures.
Nevertheless, Elliott Management praised the move as a "transformational step forward", signalling continued investor engagement in shaping Starbucks' future.
As Niccol prepares to take over, industry analysts acknowledge that he inherits a complex and challenging situation at Starbucks, with deep-rooted issues that may require more than just operational fixes.
His success will be measured not only by financial performance but also by his ability to restore stability and confidence in the brand.
