Starbucks will replace chief executive Laxman Narasimhan with current Chipotle CEO Brian Niccol, as activist investor Elliott Management pushes for transformation at the coffee giant.
Narasimhan will step down effective immediately and Starbucks’ chief financial officer, Rachel Ruggeri, will take over until Niccol assumes the role on Sept. 9, the company announced Tuesday. Starbucks touted Niccol’s “focus on people and culture, brand, menu innovation, operational excellence, and digital transformation,” as the coffee chain struggles amid a changing food landscape.
We are thrilled to welcome Brian to Starbucks. His phenomenal career speaks for itself,” Starbucks board chair Mellody Hobson said. “Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth.”
Since 2018, when Niccol took over at Chipotle, “revenue has nearly doubled, profits have increased nearly sevenfold, and the stock price has increased by nearly 800%,” Starbucks said.
Niccol is a veteran in the food industry. Prior to his stint at Chipotle, Niccol served as Taco Bell CEO and in other C-suite positions at the brand, and had previously held leadership positions at Pizza Hut. He launched his career at consumer goods giant Procter & Gamble.
Starbucks stock jumped 13% in pre-market trading Tuesday. The company’s shares have fallen nearly 18% this year so far, as its performance has foundered across markets.
The move follows reports that Elliott and Starbucks’ board met last week to discuss a settlement that would make Elliott Managing Partner Jesse Cohn a director. Elliott built a “sizable stake” in the Seattle-based chain, and had been in talks with leadership to help stage a turnaround of its stock price and business performance, The Wall Street Journal reported in July.
Starbucks has had a string of disappointing performances in recent quarters, as it struggles to reach consumers domestically and abroad. U.S. sales slipped 6%; international markets sales declined 7%; and sales in China, the chain’s second-biggest market, slid 14%.
“As I embark upon this journey, I am energized by the tremendous potential to drive growth and further enhance the Starbucks experience for our customers and partners, while staying true to our mission and values,” Niccol said.
In a separate statement, Chipotle announced Niccol’s departure and appointed Scott Boatwright, the company’s chief operating officer, as its interim CEO. Niccol will step down as Chipotle CEO on Aug. 31.
“Thanks to our robust talent planning process, we are well-prepared for events like this due to the deep bench within the organization,” said Scott Maw, Chipotle’s chairman of the board. “The board is excited to see other strong leaders expand their roles and provide growth and development for more people in the organization.”
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