Starbucks named Brian Niccol chairman and CEO on Tuesday amid mounting sales concern and growing interest from activist investors.
Laxman Narasimhan, who has only been in the job for 16 months, is stepping down from his role effective immediately. Rachel Ruggeri, Starbucks’ chief financial officer, will step in as interim chief executive for the next month.
Niccol, currently the CEO of Chipotle Mexican Grill, will take the helm at Starbucks on Sept. 9.
In Niccol, Starbucks gets arguably the biggest name among industry executives, one experienced at turning around difficult challenges. Niccol was named CEO of Chipotle in 2018 and helped stabilize that chain as it struggled to regain its footing following a series of food safety issues that started in 2015.
“His phenomenal career speaks for itself,” Mellody Hobson, Starbucks board chair, who will become lead independent director as part of Niccol’s hiring, said in a statement. “Brian is a culture carrier who brings a wealth of experience and a proven track record driving innovation and growth.”
Chipotle on Tuesday acknowledged the departure of Niccol and said that Scott Boatwright, who has been chief operating officer since 2017, will take over as interim CEO of the chain. Jack Hartung, who is retiring from Chipotle next year, will remain with the Mexican fast-casual chain as president of strategy, finance and supply chain “to ensure a smooth transition.”
The news sent Starbucks' stock up more than 20% in early trading Tuesday. Chipotle stock was down 13%.
Niccol takes over at Starbucks at one of the most crucial times in its history. The chain developed a major reinvention plan to improve operations in 2022 and then named Narasimhan CEO. The former chief executive of the Lysol maker Reckitt spent six months in an “immersion” before taking the top job.
But his tenure became tenuous before the end of 2023, when sales turned starkly south and various efforts, including the chain’s first real value offer coupled with popular beverage lines like its Lavender drinks, could not reverse them.
With Starbucks’ stock languishing, and former CEO Howard Schultz offering his own take on the company’s problems, activist investors began hovering overhead. Elliott Management and, reportedly, Starboard Value both took stakes in the company.
Hobson told CNBC on Tuesday that the board began to “engage in a conversation about the leadership of the company” and approached Niccol about the prospect of him taking the job.
“I made an overture, and he took the call,” Hobson said.
Niccol takes over one of the most difficult but financially rewarding jobs in the restaurant industry, as well as one of the most recognizable brands in the world.
“I have long admired Starbucks’ iconic brand, unique culture and commitment to enhancing human connections around the globe,” Niccol said in a statement.
Niccol was the CEO of Taco Bell before he took over at Chipotle. Under his leadership, the burrito chain overhauled the corporate structure, even moving its headquarters to California. The company overhauled marketing, which helped drive strong sales growth, including 11% same-store sales growth in the second quarter. Starbucks’ same-store sales fell 2% over the same period.
Elliott in a statement said that it welcomes Niccol’s arrival. “We view today’s announcement as a transformational step forward for the company,” the West Palm Beach, Florida-based investment firm said. “We welcome the appointment of Brian Niccol, and we look forward to continuing our engagement with the board as it works toward the realization of Starbucks’ full potential.”
UPDATE: This story has been updated to add comment from Elliott and Mellody Hobson and stock price information.
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