Just in time for pumpkin spice latte season, Starbucks is getting a new chief executive. The coffeehouse announced that Brian Niccol, who has led Mexican fast-food chain Chipotle since 2018, will take over as chair and CEO on Sept. 9.
Niccol will replace Laxman Narasimhan, who served as CEO starting in 2023. The transition comes as the world's largest coffeehouse chain faces an uphill battle. Starbucks has seen two straight quarters of declining same-store sales, and the company's overall revenue declined in the first quarter of this year for the first time since 2020. But Niccol had significant success at Chipotle, and some hope he will translate that success to the coffee world.
What did the commentators say? All food service companies have faced recent challenges, but unlike Narasimhan, who was often criticized as "moving too slowly with his turnaround plans for Starbucks," Niccol is "expected to hit the ground running with a track record of matching fast-food sector challenges," said Fortune.
While at Chipotle, Niccol helped "highlight the premium-quality freshness of the chain's 'food with integrity,'" which was a shift from prior CEOs, said Fortune. Taking this "approach to Starbucks would match investors' hopes of a premiumization-based turnaround," and it's why Niccol "may well be the messiah Starbucks" has needed.
Starbucks is also notably replacing Narasimhan with a "leader who has a resume filled with food industry experience," said The Seattle Times. Narasimhan, on the other hand, required on-the-job chief executive training upon taking over.
What next? There are still challenges for Starbucks and Niccol, as Starbucks is a "much more complicated model than Chipotle, with company and licensed stores, domestic and international locations, and a significant presence in struggling China," BTIG analyst Peter Saleh said in a financial analysis, per CNBC.
"Once the initial excitement fades, Niccol will face the realities of the significant issues Starbucks must address," said Forbes. Niccol's "primary challenge will be revamping" the customer experience, but "while surface-level tactics" can make a dent, it still requires "fundamental improvements foundationally, beginning with employee well-being." Niccol must realize that "revitalizing company growth, sales and customer experience is not an overnight endeavor." To "recapture the brand's former glory, reinvigorating the people within the organization must be the top priority." |