Starbucks, struggling with fading sales and disgruntled investors, said Tuesday it’s replacing CEO Laxman Narasimhan with Brian Niccol, the chairman and CEO of Chipotle. Narasimhan, who spent a little more than a year leading Starbucks, will step down immediately, the Seattle coffee giant said.
Chipotle’s shares dropped by more than 10% following the announcement of Niccol’s departure, despite his successful leadership at the burrito chain.
Narasimhan is stepping down with immediate effect. Starbucks CFO Rachel Ruggeri will serve as interim CEO until Sept. 9, when Niccol will officially take over.
Narasimhan assumed the role of CEO in March 2023. Starbucks has faced challenges this year due to sluggish sales in the U.S. and China, its key markets. In the most recent quarter, Starbucks recorded a 3% drop in same-store sales.
The company faced increasing pressure as it grappled with boosting foot traffic in its stores. Former CEO Howard Schultz, who personally selected Narasimhan as his replacement, penned a public letter in May addressing the company’s challenges and providing guidance without directly mentioning Narasimhan. Additionally, activist investor Elliott Management had purchased a stake in the company in the past few weeks.
“Elliott has been in discussions with Starbucks’ Board for the past two months regarding our viewpoints on the Company’s critical issues, and we see today’s announcement as a significant step forward for the Company,” stated Elliott managing partner Jesse Cohn and partner Marc Steinberg in a joint statement. “We support the selection of Brian Niccol and anticipate further collaboration with the Board as they strive to unlock Starbucks’ full potential.”
Schultz, now the company’s chairman emeritus, also endorsed Niccol as the new CEO.
