Starbucks Seeks a Fix-It Man: Chipotle CEO to Take Helm as Coffee Giant Struggles

The Starbucks CEO revolving door continues to spin, with Laxman Narasimhan stepping down after just one year in the role, CNN reports.

The coffee giant announced on Tuesday that Brian Niccol, CEO of Chipotle Mexican Grill, will take the helm as chairman and CEO, effective September 9.

Niccol, who will be Starbucks’ fourth CEO in two years, has been lauded for his success at Chipotle, where he has led the company since 2018. Under his guidance, Chipotle has seen revenue soar nearly 800%, prompting Starbucks to praise his “proven track record of driving innovation and growth.”

Starbucks’ stock surged nearly 19% at the open following the announcement, erasing its year-to-date losses and setting the company on track for its biggest one-day gain since its 1992 IPO.

Narasimhan’s tenure at Starbucks, which began in March 2023, was marked by challenges, including a recent 3% drop in global sales at stores open for at least a year. This decline includes a 2% drop in the North American market.

Analysts attribute Starbucks’ struggles to a combination of factors, including consumer fatigue with high prices, a shift in customer demand towards drive-thru and mobile ordering, and a declining in-store experience.

Retail analyst Neil Saunders notes that Starbucks has been losing market share to smaller, independent coffee shops and other competitors, and Narasimhan’s inability to address these challenges has frustrated investors.

Niccol, a veteran of the fast-food industry, brings a wealth of experience to the role. He joined Chipotle in 2018, helping to turn around the chain after a series of E. coli outbreaks. Under his leadership, Chipotle expanded its menu, improved its digital ordering system and rewards program, and saw its stock price rise over 800%.

Prior to Chipotle, Niccol held CEO positions at Taco Bell and Pizza Hut. Analysts believe his expertise in driving customer traffic and his background in managing operational challenges will be key to Starbucks’ success.

The leadership change comes amid a decline in Starbucks’ stock price and ongoing negotiations with activist investor Elliott Investment Management. The company’s struggles are further compounded by the increasing competition from low-cost rivals like Luckin Coffee in China, its second-largest market.