Starbucks Shakes Things Up, Appointing Chipotle’s Niccol as New CEO

In a surprising move, Starbucks announced Tuesday that Brian Niccol, the current CEO of Chipotle Mexican Grill, will be taking the helm as its new Chief Executive Officer. This news sent Starbucks shares soaring 10% in premarket trading, while Chipotle’s stock tumbled 10%.

Laxman Narasimhan, who only took over as Starbucks CEO in March 2023, is stepping down effective immediately. His brief tenure was marked by struggling sales in key markets like the U.S. and China, leading to a 21% decline in the company’s share price. Former CEO Howard Schultz, who hand-picked Narasimhan as his successor, publicly expressed concerns about the company’s performance in May, and activist investor Elliott Management recently acquired a stake in Starbucks.

Starbucks CFO Rachel Ruggeri will serve as interim CEO until September 9th, when Niccol officially assumes his new role. Niccol brings a strong track record of success from Chipotle, where he has served as CEO since 2018. He is credited with revitalizing the chain after a foodborne illness scandal and skillfully navigating the challenges of the pandemic. Under his leadership, Chipotle defied industry trends, reporting strong sales and traffic growth even as other restaurants faced a decline in consumer spending.

Chipotle’s COO, Scott Boatwright, will step in as interim CEO, while CFO Jack Hartung, who had planned to retire next year, will remain as President of Strategy, Finance, and Supply Chain.

Niccol’s impressive resume includes leadership positions at Taco Bell and Pizza Hut, both part of Yum! Brands, and he started his career at Procter & Gamble. Starbucks Chair Mellody Hobson expressed confidence in Niccol’s ability to embrace and uphold the company’s culture, mission, and values.

This unexpected leadership change signals a significant shift for Starbucks as it seeks to reignite growth and address its recent challenges. The market’s positive reaction suggests optimism for Niccol’s potential to replicate his Chipotle success at the coffee giant. However, the move also raises questions about Chipotle’s future without its highly successful leader. The coming months will be crucial in determining how both companies adapt to these significant changes.