Business
Starbucks Replaces Its CEO, Names Chipotle Chief To Head The Company, Sept 9th
Starbucks, which is battling with sluggish demand and dissatisfied investors, announced on Tuesday that CEO Laxman Narasimhan will be replaced by Brian Niccol, the chairman and CEO of Chipotle.
The Seattle coffee giant announced that Narasimhan, who has been CEO of Starbucks for a little more than a year, will stand down immediately. Niccol will become chairman and CEO on September 9. Rachel Ruggeri, Chief Financial Officer, will act as interim CEO until then.
Starbucks | AP news Image
Starbucks Replaces Its CEO, Names Chipotle Chief To Head The Company
Starbucks jumped more than 21% in earnings trading on Tuesday.
Narasimhan, a long-time PepsiCo executive who previously led Reckitt, a consumer health firm based in the United Kingdom, took over as CEO in March 2023. He succeeded Howard Schultz, Starbucks’ long-time leader and chairman emeritus, who retired in 2022 to serve as interim CEO.
However, investors and Starbucks’ board swiftly soured on Narasimhan as the company’s sales fell and it faced several challenges, including competition from lower-cost Chinese competitors and boycotts in the Middle East and elsewhere owing to its perceived support for Israel.
Starbucks’ revenue fell 2% in January-March, marking the company’s first quarterly sales decrease since the end of 2020. The loss drew criticism from founder and Chairman Emeritus Howard Schultz, who wrote in a May LinkedIn post that corporate officials should spend more time in stores and focus on coffee drinks to boost sales.
Revenue declined again during the April-June period. A new summer drink with boba-like raspberry “pearls” spurred good U.S. sales, but the company had to reduce marketing after running short of ingredients, Narasimhan said on a recent conference call with investors. Meanwhile, Starbucks shares have slumped 18% this year.
Elliott Investment Management, an activist fund with a major interest in Starbucks, claimed it began discussing leadership changes with the company’s board two months ago. In a statement, the company said Tuesday’s news represents a “transformational step forward.”
“We welcome Brian Niccol’s appointment and look forward to continuing to engage with the board as it works to realise Starbucks’ full potential,” Elliott Managing Partner Jesse Cohn and Partner Marc Steinberg said in a joint statement.
Chairwoman Mellody Hobson, who will become the lead independent director once Niccol is appointed chairman, stated that Niccol had revolutionized Chipotle since becoming CEO in 2018 by focussing on menu innovation, operational excellence, and digital transformation.
“Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth,” Hobson told reporters. “Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience.”
Schultz stated that he had long admired Niccol.
“I believe he is the leader Starbucks needs at this critical juncture in its history. “He has my complete respect and support,” Schultz stated.
Starbucks Replaces Its CEO, Names Chipotle Chief To Head The Company
Chipotle has continued to thrive despite a bigger decline in U.S. fast food sales. Lower-income customers, in particular, eat more meals at home or seek better value. Chipotle’s revenue grew 18% from April to June, while same-store sales rose 11%.
The Newport Beach, California-based restaurant has enticed customers with popular limited-time specials and generous quantities.
Chipotle’s stock has increased more than 20% this year, but plunged 12% Tuesday morning following news of Niccol’s departure.
SOURCE | AP
