Starbucks, struggling with\u00a0fading sales\u00a0and disgruntled investors, said Tuesday it\u2019s replacing CEO Laxman Narasimhan with Brian Niccol, the chairman and CEO of Chipotle.<\/p>\n\n\n\n
Narasimhan, who spent a little more than a year leading Starbucks, will step down immediately, the Seattle coffee giant said. Niccol will become Starbucks\u2019 chairman and CEO on Sept. 9. Chief Financial Officer Rachel Ruggeri will serve as interim CEO until that time.<\/p>\n\n\n\n
Shares of Starbucks Corp. soared more than 21% in early trading Tuesday.<\/p>\n\n\n\n
Narasimhan, a longtime PepsiCo executive who has also served as the CEO of Reckitt, a U.K. consumer health company,\u00a0became Starbucks\u2019 CEO\u00a0in March 2023. He succeeded Howard Schultz, the longtime Starbucks leader and chairman emeritus who came out of retirement in 2022 to serve as the company\u2019s interim CEO.<\/p>\n\n\n\n
But investors and the company board quickly soured on Narasimhan as sales weakened and Starbucks dealt with multiple issues, including inroads by lower-cost competitors in China and\u00a0boycotts in the Middle East and elsewhere\u00a0related to\u00a0the Israel-Hamas war.<\/p>\n\n\n\n
Starbucks\u2019\u00a0revenue dropped 2%\u00a0in the first three months of this year, the first quarterly sales decline for the company since the end of 2020. The decline prompted a rebuke from Schultz, Starbucks\u2019 founder and Chairman Emeritus, who wrote in a LinkedIn post this spring that company leaders should\u00a0spend more time in stores\u00a0and focus on coffee drinks to turn around flagging sales.<\/p>\n\n\n\n
Revenue fell again the next quarter. A new summer drink with boba-like raspberry \u201cpearls\u201d drove strong U.S. sales, but the company had to pull back on marketing after it ran out of ingredients, Narasimhan said during a recent conference call with investors.<\/p>\n\n\n\n
Starbucks\u2019s shares had tumbled more than 20% this year. On Tuesday, with the appointment of Niccol, shares are close to recovering all of their losses for 2024.<\/p>\n\n\n\n
Elliott Investment Management, an activist firm with a significant stake in Starbucks, said it began talking about a change in leadership with Starbucks\u2019 board two months ago. In a statement Tuesday, the firm called Niccol\u2019s appointment a, \u201ctransformational step forward.\u201d<\/p>\n\n\n\n
\u201cWe welcome the appointment of Brian Niccol and we look forward to continuing our engagement with the board as it works toward the realization of Starbucks\u2019 full potential,\u201d Elliott Managing Partner Jesse Cohn and Partner Marc Steinberg said in a joint statement.<\/p>\n\n\n\n
Starbucks Chairwoman Mellody Hobson \u2014 who will transition to lead independent director once Niccol becomes chairman \u2014 said he had transformed Chipotle since becoming its CEO in 2018 by focusing on menu innovation, operational excellence and digital transformation.<\/p>\n\n\n\n
\u201cBrian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth,\u201d Hobson said in a statement. \u201cLike all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience.\u201d<\/p>\n\n\n\n
Schultz said he has long admired Niccol.<\/p>\n\n\n\n
\u201cI believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support,\u201d Schultz said in a prepared statement.<\/p>\n\n\n\n
Chipotle has continued to grow despite a larger slowdown in U.S. fast food sales as lower-income customers, in particular, eat more meals at home or look for better value. In the April-June period, Chipotle\u2019s revenue increased 18% while its same-store sales \u2014 or sales at stores open at least a year \u2014 rose 11%.<\/p>\n\n\n\n
The Newport Beach, California-based chain has lured customers with popular limited-time offerings and large portions.<\/p>\n\n\n\n
Chipotle\u2019s shares have risen more than 20% so far this year, although they fell 12% Tuesday morning on word of Niccol\u2019s departure.<\/p>\n\n\n\n
Chipotle said Tuesday that Scott Boatwright, the company\u2019s chief operating officer, will become its interim CEO.<\/p>\n","protected":false},"excerpt":{"rendered":"
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