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Starbucks CEO Laxman Narasimhan out, Chipotle's Brian Niccol in
Starbucks' stock rises 13% in premarket trading as Chipotle CEO Brian Niccol named new CEO.
Coffee chain giant Starbucks CEO Laxman Narasimhan is stepping down effective immediately after just one year in the role.
The company has announced that Chipotle CEO Brian Niccol will take over as chairman and CEO starting September 9.
The news sent Starbucks' stock soaring over 13% in premarket trading, while Chipotle's stock dipped 8%. Niccol has been at the helm of Chipotle since 2018 and has achieved impressive results.
Starbucks highlighted that he has “set new standards in the industry and driven significant growth and value creation,” and during his tenure, Chipotle's revenue has grown nearly 800%.
Mellody Hobson, Starbucks' new lead independent director, praises, “Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth.”
“Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.”
Narasimhan out after just 6 months amid sales slump
Since taking over in March 2023, Narasimhan has overseen a period of declining sales and customer dissatisfaction. Most notably, the coffee giant reported a 3% drop in global sales at stores open for at least a year, including a 2% decline in its key North American market.
Plus, Starbucks has been grappling with changes in its business model, shifting from predominantly sit-down coffee shops to a focus on drive-thru and mobile takeout services, which has altered the customer experience.
“In the face of some challenging headwinds, Laxman has been laser-focused on improving the business to meet the needs of our customers and partners. We all wish him the very best and know he will do great things in the future,” Hobson remarked.
The sudden leadership change comes amid a period of declining stock performance, with Starbucks' shares down 17% for the year, and ongoing negotiations with activist investor Elliott Investment Management.
Retail analyst Neil Saunders, managing director at GlobalData Retail, noted that while some of Starbucks’ recent struggles can be attributed to a more cautious consumer base, much of the downturn is due to a “worsening store experience and a lack of innovation in areas like food.”
Saunders added, “Because of this, Starbucks has been losing share to smaller, independent coffee shops and other rivals for a while, and the failure of Narasimhan to address this convincingly has irked investors,” and that's why they parted ways with Narasimhan.
