Chipotle CEO to take reins of Starbucks
Starbucks has ousted its chief executive after less than two years on the job as the chain struggles with slumping sales.
The company, whose store traffic was down 3% in the January through March period, said that Laxman Narasimha, who took the reins in March 2023, is stepping down from his role as CEO and as a board member “with immediate effect.” Starbucks named Brian Niccol, CEO and chairman of Chipotle Mexican Grill, as its new chairman and CEO, effective Sept. 9. His appointment sent Starbucks' stock soaring nearly 25%, while Chipotle shares fell over 7%.
Starbucks CFO Rachel Ruggeri will serve as interim chief until Niccol joins the company in September. Mellody Hobson, Starbucks board chair, will become lead independent director.
Niccol, who has served as CEO of Chipotle since 2018, is credited with transforming Chipotle into a quick-service giant. Under his watch, revenue has nearly doubled, profits have increased nearly sevenfold, and the stock price has increased by nearly 800%. Chipotle said that its COO, Scott Boatwright, will serve as interim CEO among other announced leadership moves.
READ MORE: Chipotle names interim chief
“Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact,” said Howard Schultz, Starbucks founder and chairman emeritus. “His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture and values driven enterprise. I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support.”
Prior to joining Starbucks, Narasimhan served as the CEO of Reckitt, a multinational consumer health, hygiene and nutrition company. Prior to that, he held various leadership roles at PepsiCo. His appointment as Starbucks chief surprised the industry.
In May, Schultz, who played a key role in the hiring of Narasimha, wrote a post on his LinkedIn page in which he offered advice for the chain’s current leadership without naming anyone specifically. He wrote the post days after Starbucks reported disappointing second quarter same-store sales and traffic fell across all its regions. The company also lowered its revenue and earnings growth for the full year.
“The company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace,” Schultz wrote. “The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores.”
More recently, activist firm Elliott Investment Management, which has a significant stake in Starbucks, started talking about a change in leadership with Starbucks' board. In a statement on Tuesday, Elliot said said it view the announcement regarding Niccol "as a transformational step forward for the company."
"We welcome the appointment of Brian Niccol and we look forward to continuing our engagement with the board as it works toward the realization of Starbucks' full potential," Elliott managing partners Jesse Cohn and Marc Steinberg said in a joint statement
Before joining Chipotle, Niccol served as chief executive of Taco Bell. He currently serves on the board of directors of Walmart Inc.
"Brian Niccol has earned the reputation as one of the top innovators in the restaurant industry today," commented R.J. Hottovy, head of analytical research at Placer.ai. "Niccol’s ability to drive visits was apparent during his time at both Taco Bell and Chipotle, spurred by new menu innovations, engaging marketing campaigns, and improved restaurant operations. Chipotle has outperformed the quick-service restaurant space the past several years, and we’d expect new products and advertising campaigns to be a focus early in his tenure at Starbucks.”
In a statement, Starbucks' Hobson said that Niccol's "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," she said. "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.”
