In a surprising shake-up, Starbucks has announced that Laxman Narasimhan will step down from his role as CEO, effective immediately. The change comes after a tumultuous year for the coffee giant, marked by declining sales and shifting business dynamics. Brian Niccol, the current CEO of Chipotle, will step in as Starbucks’ new chairman and CEO starting September 9.
Narasimhan’s departure follows a brief tenure of just one year, making him the latest in a series of CEOs for Starbucks, which has seen four leaders in just two years. Niccol, who has led Chipotle since 2018, has been credited with revolutionizing the Mexican fast-casual chain. Under his leadership, Chipotle’s revenue surged nearly 800%, setting new benchmarks in the industry.
Mellody Hobson, Starbucks’ newly appointed lead independent director, praised Niccol’s extensive experience and success in driving innovation and growth. “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. “Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.”
The announcement had an immediate impact on the stock market. Starbucks’ stock soared nearly 19% at the open, erasing its year-to-date losses and marking one of the largest one-day percentage gains since the company’s IPO in 1992. Conversely, Chipotle’s stock experienced a 9% decline following the news.
Narasimhan, who also resigned from Starbucks’ board, assumed the CEO role in March 2023. His tenure has been characterized by challenges, including a 3% drop in global sales at stores open for at least a year, with a notable 2% decrease in North America.
Starbucks’ ongoing struggles highlight broader issues within the food and beverage sector, where consumer fatigue from consecutive price hikes has become evident. Additionally, the company’s shift from a traditional sit-down coffee shop model to a focus on drive-thru and mobile takeout options has exposed vulnerabilities in its business model.