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Starbucks announced Brian Niccol, CEO of Chipotle, as its new chief executive, replacing Laxman Narasimhan, who steps down immediately from both the CEO role and the board.
Starbucks announced Brian Niccol, CEO of Chipotle, as its new chief executive, replacing Laxman Narasimhan, who steps down immediately from both the CEO role and the board. This decision comes just over a year after Narasimhan’s appointment.
Following the announcement, Starbucks shares rose approximately 21%, while Chipotle Mexican Grill’s shares dropped around 8%. The leadership changes at Starbucks occur amid efforts to revitalize the business, which has faced broad sales declines in recent financial results.
The company’s April earnings report was particularly damaging, leading Narasimhan to pledge a reset. Starbucks attributed its struggles to weakening consumer sentiment and challenging market conditions in China.
Starbucks has also faced pressure from activist fund Elliott Investment Management, which has taken a stake in the company and is pushing to boost the share price. The company is also working on finalizing contracts with unionized stores.
Lynne Fox, president of the Workers United Union, expressed a desire to resolve ongoing litigation and reach fair collective bargaining agreements. Neil Saunders, managing director at GlobalData, noted that the CEO change reflects growing dissatisfaction, especially from activist investors, over the company’s management.
Neil Saunders added that the slowdown is partly due to a more cautious consumer but also stems from a deteriorating store experience and a lack of innovation in areas such as food. Investors may be looking for improvements in daily operations with Brian Niccol’s appointment.
Starbucks board chair Mellody Hobson praised Niccol as a “culture carrier” with extensive experience and a proven record of driving innovation and growth. Niccol has been Chipotle’s CEO since 2018.
