Starbucks is making a change at the top of its leadership.
CEO Laxman Narasimhan is out and he will be replaced with Chipotle CEO Brian Niccol, former president of Yum! Brands and former executive at Plano-based Pizza Hut. Narasimhan’s exit is effective immediately and he will be temporary replaced by Starbucks CFO Rachel Ruggeri until Sept. 9.
Starbucks chairperson Mellody Hobson told CNBC Tuesday that Niccol also met with former Starbucks CEO Howard Schultz. The markets have also responded positively to the move as shares of the Seattle-based coffee chain are up more than 20% since the announcement. Meanwhile, Chipotle’s stock has dipped by over 10%.
“Brian is uniquely qualified to be the next leader of Starbucks. We believe this represents a very positive outcome for partners, shareholders, and customers,” activist investor Starboard Value said in a statement Tuesday, according to CNBC.
Schultz has also publicly called on Starbucks in a LinkedIn post to re-examine the company’s strategy, saying that the company needs to improve customer experiences at the chain.
Dropping Narasimhan, Schultz’s former hand-picked successor, comes at a critical time for Starbucks. In the past year, the company has been struggling with a decline in sales, battles with unions across the country and fending off its activist investors, Elliott Investment Management and Starboard.
The company’s sales have dropped 3% globally in the past year and, in Texas, the company’s unions have been gaining momentum. Denton baristas voted in March to become the 20th store in Texas to unionize, taking the total number of unionized stores to over 400 across the U.S.
Niccol, former executive at Plano-based Pizza Hut, might be the man up to the task of helping Starbucks recover in what has been a tricky 2024. He famously helped introduce breakfast and overhauled cooking equipment and dining rooms to Taco Bell when he was CEO of the company.
Perhaps more importantly to Starbucks, during Niccol’s time at Chipotle, company stock rose over 800%, according to Starbucks. He also helped navigate the company through some tumultuous times, like its E. coli outbreak in 2018 and recent backlash on social media over portion sizes.
Still, Schultz said he believes Niccol’s is ready to help bring change to Starbucks.
“Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact,” Schultz said in a statement, according to Yahoo Finance. “I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support.”
