Starbucks shares spiked 24% after announcing that Brian Niccol is replacing Laxman Narasimhan as CEO, effective September 9. The company is relying on Niccol’s considerable success as CEO of Chipotle and experience weathering many storms to return the coffee giant to its former glory.
During Narasimhan’s short tenure as Starbucks CEO, just seventeen months, profits decreased by 3% and 11% in its largest markets, the US and China. Global sales declined 3% at stores open for a year or more, and stock market shares dropped by 20%.
Competition from lower-cost coffee brands, boycotts over alleged support for Israel, and poor public image issues resulting from multiple lawsuits and labor disputes have investors calling for drastic changes.
As CEO of Chipotle, Niccol dealt with his fair share of company scandals and lagging sales. In 2018, amidst shocking food poisoning outbreaks and plummeting profits, Chipotle turned to Niccol to help save the company from disaster, which he did with an outrageous amount of success.
By introducing innovative menu items, a popular loyalty program, and seamlessly integrating mobile app orders with streamlined production and pick-up lanes, Niccol increased revenue from $4.9 billion in 2018 to $9.9 billion in 2023. Since taking over in 2018, Chipotle’s stock has skyrocketed by 773%, making it one of the best performers on the S&P 500. While other fast-food companies suffer from decreasing sales and inflation-wary consumers, Chipotle’s profits continue to climb.
However, according to former CEO Howard Schulz, it’s not just Nicol’s profit-producing abilities that attracted Starbucks’ attention.
“Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact. His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture and values-driven enterprise. I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support,” said Schultz.
Other statements made by Starbucks board chair Mellody Hobson clearly indicate they’re looking for someone to “strengthen company culture” and restore focus and value to its partners in green.
“I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners,” said Niccol. “I have long-admired Starbucks iconic brand, unique culture and commitment to enhancing human connections around the globe. 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.”
Over the last six years at Chipotle, Niccol raised wages and expanded employee benefits, such as paying for college tuition.
Niccol’s ability to focus on driving growth while innovating menu items, streamlining operational performance, enhancing brand values and image, and strengthening company culture simultaneously may be Starbucks’ saving grace. The question is, can he do it across 38,000 stores worldwide?