Starbucks’ New Leadership:Starbucks Corporation has named Brian Niccol, chief executive of Chipotle Mexican Grill Inc., as its new chief executive officer and president, replacing Laxman Narasimhan, who has served in the role for just over a year. Niccol is scheduled to begin his new role on Sept. 9, and until then the current chief financial officer will lead the company.
Following the announcement, Starbucks shares rose 15 percent in premarket trading, while Chipotle shares fell 8.3 percent. The sudden change in leadership comes amid reports that activist investors including Elliott Investment Management and Starboard Value have taken stakes in the coffee chain. Starbucks shares had fallen 20 percent this year, following two straight quarters of declining comparable sales.
Board Chair Mellody Hobson said in an interview with CNBC on Monday that the board had begun discussions about the company’s leadership several months ago, downplaying Elliott Investment’s influence. “Sometimes you have to make tough decisions, and tough decisions are the right thing to do,” Hobson said. “It’s not necessarily due to outside forces.”
Hobson stressed that the board fully recognizes the challenges facing Starbucks and is committed to addressing them quickly. “We take ownership of the results,” he said. “We are not passing the buck to others; we understand that we have a job to do and we are doing it.”
While former CEO Howard Schultz does not hold a board seat or formal role within the company, he expressed support for the new CEO in a statement. Hobson said he informed Schultz of the decision a week ago, to which he responded: “Mellody, that’s a resounding success.”
Hobson added that the board has not yet outlined a specific recovery strategy, and urged patience. “He is not in office yet; let him do that and then come up with the plans,” he said. “He will be the one to drive the strategy and the board will govern it. I imagine he will look at everything accordingly.”
Niccol, who joined Chipotle as CEO in 2018 and became chairman of its board in 2020, has led the company to outperform its competitors in recent quarters. Despite an overall decline in demand, Chipotle shares were up more than 20 percent this year through Monday’s close. Prior to his role at Chipotle, Niccol served as CEO of Taco Bell.
In response to Niccol’s departure, Chipotle announced that Chief Operating Officer Scott Boatwright would take on the role of interim CEO. Additionally, Chief Financial Officer Jack Hartung, who was scheduled to retire in 2025, has agreed to stay on indefinitely as President of Strategy, Finance and Supply Chain to ensure a smooth transition, according to a statement.
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