Starbucks is bringing in more than just Pumpkin Spice Lattes this fall: it’s also got a new CEO to get the company back on track.
What happened: Laxman Narasimhan is stepping down as CEO of Starbucks only 17 months after taking over the chain’s C-suite as Howard Schultz’s handpicked successor. He’s being replaced by Chipotle CEO Brian Niccol, who will take over starting September 9.
- We half expected Schultz to come back, but Niccol is a logical choice. Under his six-year reign, Chipotle’s valuation increased from US$8.9 billion to $76.5 billion.
Why it’s happening: Shares have declined ~22% since Narasimhan took over, prompting activist investor Elliott Investment Management to build a stake and push for changes. Activist investor Starboard Value has also taken a stake to tighten the screws on Starbs.
Big picture: Starbucks has 99 problems and a mid CEO was just one of them. The chain is slumping like us during an afternoon caffeine crash, posting consecutive quarterly same-store sales drops due to competition in China, spending pullbacks, and boycotts.
Why it matters: Starbucks is learning the hard way that offering meal deals and making drinks slightly faster can stoke only so much demand. By giving Lax the axe, the chain has signalled it’s willing to make serious changes to right the ship.—QH