Starbucks confirms massive change effective from August 13 and promises ‘transformative’ future of coffee giant
STARBUCKS is shaking up its leadership in a shocking announcement.
CEO Laxman Narasimhan is resigning immediately after only a year and will be handing the job to Chipotle CEO Brian Niccol.
In an August 13, 2024 , Starbucks announced that CEO Laxman Narasimhan is stepping down immediately and will be replaced by Chipotle CEO Brian Niccol come September 9.
Narasimhan — who took on the role in March 2023 — is also exiting the board, reported.
Niccol, who has led the Mexican-inspired restaurant chain since 2018, will also serve as chairman of the coffeehouse giant.
Starbucks has struggled under Narasimhan's leadership, with sales declining 3% globally at stores open for at least a year, including a 2% decrease in the North American market, per the outlet.
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Starbucks said Niccol has set "new standards in the industry and driven significant growth and value creation," pointing to Chipotle's revenue increasing almost 800% during his leadership, according to the press release.
"Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth," Starbucks’ new lead independent director, Mellody Hobson, said in the release.
"Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world."
Starbucks' challenges have come following years of high costs at food chains, restaurants, and stores, per CNN.
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The struggles also shine a light on issues with the coffeehouse chain's business model.
While Starbucks used to be a mostly sit-down coffee shop, it is now mainly a drive-thru and mobile takeout chain, with customer demand pushing it to change.
"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," Hobson said.
"We all wish him the very best and know he will do great things in the future."
Narasimhan's exit comes during a sliding stock — which is down 17% for the year — and continuing negotiations with activist investor Elliott Investment Management, according to CNN.
"While some of the slowdown can be attributed to a more sluggish consumer cutting back, much is also the result of a worsening store experience and a lack of innovation in areas like food," Neil Saunders, retail analyst and managing director at GlobalData Retail, said in a note, per the outlet.
Brian Niccol's background
Brian Niccol will become Starbucks' new CEO on September 9, 2024.
The new leader has an extensive background in the fast-food industry.
Niccol has served as the CEO of Chipotle since February 2018 and was the CEO of Taco Bell from January 2015 to February 2018, per his LinkedIn .
His other past roles include:
- May 2013 - January 2015: President of Yum! Brands, Taco Bell
- October 2011 - May 2013: Chief Marketing and Innovation Officer at Yum! Brands, Taco Bell
- February 2011 - October 2011: General Manager - Pizza Hut USA, Yum! Brands
- 2007 - February 2011: Chief Marketing Officer - Pizza Hut, Yum! Brands
- November 2005 - September 2007: Vice President of Yum! Brands
Niccol also worked at Proctor &; Gamble for nearly 10 years.
He earned his MBA in Finance & Strategy from The University of Chicago Booth School of Business and his Bachelor's in Engineering from Miami University.
According to Saunders, Narasimhan's response has bothered investors.
"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," he said.
Per Saunders, Niccol's "deep food service experience will be useful as Starbucks navigates a cocktail of challenges including increased costs, labor issues, operational inefficiency, and a growing dissatisfaction among customers."
Narasimhan also seemed to face criticism from former Starbucks CEO Howard Schultz.
Schultz addressed the coffeehouse's shortcomings in a May 2024 LinkedIn .
"I have emphasized that the company's fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace," he wrote, in part.
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"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," he continued.
Schultz told the that Niccol has his "respect and full support."
