Starbucks, struggling with weak demand and disgruntled investors, said Tuesday that CEO Laxman Narasimhan is stepping down after a little more than a year in the job.
The Seattle coffee giant said Brian Niccol, the chairman and CEO of Chipotle, will become Starbucks’s chairman and CEO on Sept. 9. Starbucks shares jumped more than 13 per cent before the market opened.
Narasimhan, a longtime PepsiCo executive who has also served as the CEO of Reckitt, a U.K.-based consumer health company, became Starbucks’s CEO in March 2023. He succeeded Howard Schultz, the longtime Starbucks leader and chairman emeritus who came out of retirement in 2022 to serve as the company’s interim CEO.
But the company’s sales have weakened and it has dealt with multiple issues, including competition from lower-cost competitors in China and boycotts in the Middle East and elsewhere due to its perceived support for Israel.
Starbucks stock has lost roughly 20 per cent of its value over the last five years as the broad-market S&P 500 has gained more than 80 per cent. In July, the company fell short of sales expectations due to weakening demand in the United States and China.
In May, days after Starbucks cut its annual sales forecast, Schultz wrote on his LinkedIn account that its U.S. operations were the “primary reason for its fall from grace,” and that senior leaders need to spend more time with workers.
Activist investor Elliott Investment Management had pushed for major changes, but Mellody Hobson, the chair of Starbucks’s board of directors, told CNBC on Tuesday that Elliott was not consulted about the shakeup.
Hobson said in a statement that Niccol has transformed Chipotle since becoming its CEO in 2018 by focusing on menu innovation, operational excellence and digital transformation. Prior to that, Niccol was the CEO for Taco Bell.
“Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth,” Hobson said in a statement. “Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience.”
Chipotle named Scott Boatwright, chief operating officer, as interim CEO.
