Starbucks is making a change at the very top of the company, announcing Tuesday that it is replacing CEO Laxman Narasimhan with Brian Niccol, the current chairman and CEO of Chipotle.
The coffee powerhouse has reportedly been grappling with declining sales and pressure from investors, as it’s turning to the man credited with transforming the fast casual Mexican chain since he took the top job in 2018.
In the hours following the announcement, Starbucks stock surged more than 20%, while the burrito chain’s fell roughly 12% in response to Niccol’s departure.
For now, Starbucks’ Chief Financial Officer Rachel Ruggeri will be stepping in as interim CEO until Niccol officially assumes the role on September 9.
Narasimhan, who has served as CEO since only March 2023, will step down immediately. As Niccol prepares to exit, Chipotle’s Chief Operating Officer Scott Boatwright is expected to fill his shoes in the interim.
During Narasimhan’s brief tenure, Starbucks saw a drop in sales both in the U.S. and China, as well as growing customer complaints about rising prices and service quality.
The company’s stock had dipped 20% this year, and activist investors like Elliott Investment Management were reportedly pushing strongly for a major leadership change.
Niccol on the other hand, has been credited with transforming Chipotle with a focus on menu innovation and digital transformation that led to a stock growth of nearly 800% during his tenure.
“His focus on people and culture, brand, menu innovation, operational excellence, and digital transformation have set new standards in the industry and driven significant growth and value creation … all while increasing wages for retail team members, expanding benefits, and strengthening the culture,” Starbucks said in a press release.
Mellody Hobson, a Starbucks chairwoman who is overseeing the transition, told CNBC that Niccol is “one of the biggest names in the industry, someone whose track record is just clearly proven,” citing his previous work at Pizza Hut and Taco Bell.
“He knows this industry, and we thought he would be the right leader for this moment,” she added.
With News Wire Services
