Starbucks has unexpectedly replaced its CEO Laxman Narasimhan with Brian Niccol, the current head of the burrito chain Chipotle Mexican Grill. The decision, announced on Tuesday, caused a strong increase in Starbucks' stock by 24.5 percent, while Chipotle's stock fell by 7.5 percent.
Narasimhan, who came to Starbucks from the British company Reckitt Benckiser less than two years ago, resigned with immediate effect. Niccol will assume his new position at Starbucks on September 9. In the meantime, Chief Financial Officer Rachel Ruggeri will manage the business.
The change at the top of the company comes at a time when Starbucks is under significant pressure. In addition to declining sales figures, the company is struggling with the influence of activist investor Elliott Management as well as ongoing conflicts with the baristas' union. Former Starbucks CEO Howard Schultz, who has significantly shaped the company, has also publicly criticized the management's strategy.
Under Narasimhan, Starbucks experienced the first decline in comparable sales since 2020, leading to growing discontent. Schultz, who remains an influential shareholder of the company, had privately opposed a settlement with Elliott, which among other things, demanded representation on the board.
The decision in favor of Niccol was initiated by Mellody Hobson, the company's longtime director. Hobson explained in an interview that discussions about a leadership change had begun months ago.
Brian Niccol, who has led Chipotle since 2018, has nearly doubled the revenue there and increased the stock price by almost 800 percent. Starbucks hopes that Niccol can achieve similar successes with the coffee giant. Under his leadership, Starbucks is expected to overcome recent challenges and return to a path of growth.
The investors reacted positively to the news, causing the stock price to rise sharply. Under Narasimhan, the stock had lost about a fifth of its value, primarily due to declining sales figures and challenging market conditions in China.
