Starbucks announced a major leadership change on Tuesday, appointing Brian Niccol, current CEO of Chipotle, as its new CEO, effective September 9. This move sent Starbucks’ stock soaring by 24.5%, marking its best trading day in history, while Chipotle’s stock declined by over 10% following news of Niccol’s departure.
The leadership change comes amid a challenging period for Starbucks. Laxman Narasimhan, who assumed the CEO role in March 2023, has faced difficulties in driving growth, particularly in the U.S. and China, Starbucks’ two largest markets. During his tenure, the company reported a 3% decline in same-store sales, prompting concerns about its ability to sustain traffic in its stores. Narasimhan’s departure is effective immediately, with CFO Rachel Ruggeri stepping in as interim CEO until Niccol officially takes over.
Narasimhan’s brief tenure was marked by significant challenges, including pressure from activist investors like Elliott Management and Starboard Value, both of whom had acquired stakes in Starbucks. Elliott Management’s managing partner, Jesse Cohn, and partner Marc Steinberg, expressed support for Niccol’s appointment, viewing it as a positive step toward realizing Starbucks’ potential.
Former CEO Howard Schultz, who initially selected Narasimhan as his successor, also endorsed Niccol, citing his proven leadership at Chipotle, where he led the company through a significant turnaround and pandemic-related challenges.
Mellody Hobson, who stepped down as Starbucks chair to become lead independent director, acknowledged that the board had been considering a leadership change for several months. She praised Niccol’s industry expertise, highlighting his successful track record at Chipotle, Taco Bell, and Pizza Hut.
Under Niccol’s leadership, Chipotle saw significant growth, driven in part by innovations such as mobile ordering and digital-focused initiatives. Starbucks, which has faced criticism for its mobile app’s impact on customer experience, will look to leverage Niccol’s experience to revitalize its business.
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