Apparently two straight quarters of negative same-store sales growth was two too many for Starbucks’ investors. The company announced today it has named Brian Niccol as its new chief executive officer, replacing Laxman Narasimhan after just about a year and a half in the role.
Starbucks chief financial officer Rachel Ruggeri, will lead the company in the interim until Niccol takes over as CEO and executive chairman of the Starbucks board on Sept. 9. Mellody Hobson, Starbucks board chair, will transition to serve as lead independent director when Niccol assumes his role.
The surprising announcement comes as Starbucks grapples not only with declining sales performance – going negative for the first time since the pandemic in Q2 – but also declining share prices. Starbucks’ shares were nearly $40 higher a year ago. The performance incited two activist investors to get involved recently: Elliott Management and now, allegedly, Starboard Value.
Starbucks’ increasingly complicated menu has led to slower service times and other operational issues, while the chain has also contended with a major influx in coffee and specialty beverage startups, like Dutch Bros, 7 Brew, Scooter’s, and Ziggi’s. Narasimhan was named CEO in September 2022, replacing interim CEO Howard Schultz, who came on in April 2022 after Kevin Johnson left the company.
Narasimhan officially took over in March 2023 after spending six months as a barista learning the business from the frontlines. But his honeymoon period was short lived. In May, Schultz wrote a lengthy post on LinkedIn urging fixes to the company after it missed expectations. The activist investor activity seems to have been the final nail and Narasimhan will step down as CEO and board director immediately. In a statement, Starbucks noted that the process was led by the board and all decisions were made by the board.
“It is a change designed for the long-term future of the company at a time where we will also be focused on navigating near-term headwinds,” the company said.
“On behalf of the board, I want to sincerely thank Laxman for his contributions to Starbucks, and his dedication to our people and brand,” Hobson said in a statement. “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. We all wish him the very best and know he will do great things in the future.”
Niccol has served as Chipotle’s CEO since 2018. Since, Chipotle’s sales and stock performance have skyrocketed, while its footprint has grown by over 1,000 locations.
“We are thrilled to welcome Brian to Starbucks. His phenomenal career speaks for itself. Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth. Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience,” Hobson said in a statement. “Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.”
Before joining Chipotle, Niccol served as CEO of Taco Bell. Before becoming CEO, he held roles including chief marketing and innovation officer, and president. He also served in leadership roles at Pizza Hut, another division of Yum! Brands. He began his career in brand management at Procter and Gamble.
“I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners,” Niccol said in a statement. “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.”
Niccol currently serves on the board of directors of Walmart Inc. He previously served on the board of KB Home and Harley-Davidson. Niccol holds an undergraduate degree from Miami University and an MBA from the University of Chicago Booth School of Business.
Contact Alicia Kelso at [email protected]
