Why Starbucks Replaces CEO Laxman Narasimhan with Chipotle’s Brian Niccol
Starbucks announced on Tuesday that it is replacing CEO Laxman Narasimhan with Brian Niccol, the current chairman and CEO of Chipotle Mexican Grill, as the company grapples with declining sales.
Niccol is set to assume the role on September 9, while Narasimhan is stepping down immediately, the company stated. The leadership change follows a significant downturn in sales for the US-based coffeehouse chain, which has experienced two consecutive quarters of declining revenue, including decreased demand in its largest markets, the US and China.
According to the company’s financial results released on July 30, North American store sales dipped by 2% during the April-June quarter of 2024, with US sales also dropping by 2%. Stores in the US and China accounted for 61% of Starbucks’ global portfolio by the end of that period. The financial report also revealed that while North American revenue saw a modest 1% increase, international revenue declined by nearly 7%, falling from $1.97 billion to $1.84 billion year-on-year.
Following the announcement of the CEO transition, Starbucks shares rose approximately 21.4% on the Nasdaq as of 10:53 a.m. EDT (1453 GMT).
Starbucks has also been facing pressure from a boycott targeting international companies perceived as supporting Israel. The company has been caught in the crossfire of backlash related to Israel’s actions in Gaza, leading to weakened financial performance over the past two quarters.
In the first quarter of the year (January-March), Starbucks reported a 2% decline in revenue, with global sales marking their first drop since late 2020, decreasing by 4%. The trend continued into the April-June quarter, where the company saw an additional 0.6% revenue decline and a 3% decrease in global sales.
Before joining Chipotle as CEO, Brian Niccol held leadership positions at Taco Bell, another American fast-food chain, and served in executive roles at Pizza Hut, which is part of Yum! Brands. Niccol also sits on the board of directors for retail giant Walmart.
