Starbucks’ stock shot up more than 22% on Tuesday, Aug. 13, when the company announced it is swapping out CEOs. Laxman Narasimhan is out effective immediately, while the coffee giant poached Chipotle CEO Brian Niccol to turn things around like he did for the burrito business.
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Niccol has been CEO of Chipotle since 2018. He will take over at Starbucks on Sept. 9.
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Less than two years ago, Starbucks thought it had the right person for the job in Narasimhan, who took over for longtime CEO and Chairman Howard Schultz in March 2023.
“It’s a great day for Starbucks,” Schultz said when they announced Narasimhan in 2022, several months before he was set to take the reins. “I feel like we have a No. 1 draft choice.”
But sometimes first-rounders do not pan out. In the 17 months Narasimhan led Starbucks, the stock dropped nearly 23%.
By comparison, over the same time, Niccol and Chipotle saw the company share price rise more than 73%. Under Niccol’s tutelage, Chipotle’s stock soared more than 700% since 2018.
On news it was losing its CEO, Chipotle was down more than 12% Tuesday morning. COO Scott Boatwright was named interim CEO.
What’s souring Starbucks?
Starbucks has been struggling with store sales in and out of the U.S. Traffic and sales are huge disappointments in the U.S. and China. For both countries, customers seem to be gravitating toward cheaper options.
After a big earnings miss, Schultz, who is no longer officially affiliated with the company, wrote in an open letter.
“I have emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace,” Schultz wrote. “The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores.“
Just a couple of weeks ago, Brian Niccol spoke with CNBC about how Chipotle was increasing growth while other companies lost customers to the value-meal route.
“And that’s really a testament to our operators executing great throughout, our restaurants being staffed correctly, being deployed correctly,” Niccol said. “And then our marketing really hit with some terrific menu news around chicken al pastor. The value proposition of Chipotle really hinges on great culinary: Providing great customization with terrific speed. And one of our key equities is these generous portions we provide. And I think our teams have done a fabulous job of doing that.”
Can Niccol right the ship?
Niccol is no stranger to turning a ship around. He is credited with Chipotle’s rise from disgrace.
After years of bad press over foodborne illness, former Taco Bell CEO Niccol took charge of Chipotle in 2018. The stock has far outperformed the market during that time as Niccol steered the company past E. coli, the pandemic and inflation.
If there is a question mark in the Niccol hire for Starbucks, it is his lack of recent experience in China. Chipotle is barely an international player and not present in China, while China is Starbucks’ second-biggest market.
But if Starbucks’ board is taking Schultz’s advice to heart that domestic operations is where the problem starts, his resume is as stuffed as a Chipotle burrito on a good day.
Tags: China, Coffee, E. coli, Economy, Fast food, restaurants, Starbucks, Stock Market, Taco Bell, U.S. Economy
Simone Del Rosario: Starbucks on some extra espresso to start the day, its stock shot up more than 22% Tuesday morning on news it is swapping out CEOs.
Laxman Narasimhan is out effective immediately, while the coffee giant poached Chipotle’s CEO to turn things around for them like he did the burrito business.
Brian Niccol has been CEO of Chipotle since 2018. He’ll take over at Starbies on September 9.
Less than two years ago, Starbucks thought they had their guy.
Howard Shultz: It’s a great day for Starbucks. I feel like we have a number one draft choice.
Simone Del Rosario: But sometimes first rounders don’t pan out.
In the 17 months Narasimhan led Starbucks, the stock has dropped nearly 23%.
By comparison, over the same time, the incoming guy’s company, Chipotle, saw its stock rise more than 73%.
On news it was losing its CEO, Chipotle was down more than 12% Tuesday morning. COO Scott Boatwright will be interim CEO there.
What’s souring Starbucks?
It’s been struggling with store sales in and out of the U.S.
News clip: Total transactions are down more than 6% across the country.”
Simone Del Rosario: Traffic and sales are huge disappointments in the U.S. and China. For both countries, customers seem to be gravitating toward cheaper options.
News clip: When we look at the biggest loser today it’s gonna be Starbucks. It’s among the worst performers in the S&P 500.
Simone Del Rosario: After a big earnings miss, former CEO and Chairman Howard Schultz wrote in an open letter, “I have emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace. The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores.”
Just a couple of weeks ago, Brian Niccol spoke with CNBC about how Chipotle was increasing growth while others had to go the value meal route.
Brian Niccol: And that’s really a testament to our operators executing great throughput, our restaurants being staffed correctly, being deployed correctly. And then our marketing really hit with some terrific menu news around chicken al pastor. The value proposition of Chipotle really hinges on great culinary. Providing great customization with terrific speed. And one of our key equities is these generous portions we provide. And I think our teams have done a fabulous job of doing that.
Simone Del Rosario: Niccol is no stranger to turning a ship around.
He is credited with Chipotle’s rise from disgrace.
News clip: More trouble for Chipotle. The CDC is investigating another E Coli outbreak linked to the Mexican Restaurant chain.
News clip: It’s happened again. More than 600 customers got sick after eating at a single Chipotle restaurant.
Simone Del Rosario: After years of bad press over foodborne illness, former Taco Bell CEO Brian Niccol took charge of Chipotle in 2018. The stock has gone up more than 700% under his tutelage as he’s steered it past e coli, the pandemic and inflation.
If there’s a question mark in the Niccol hire for Starbucks, it’s his lack of recent experience in China. Chipotle is barely an international player and not in China, while China is Starbucks’ second-biggest market. But if the board’s taking Shultz’s advice to heart that domestic operations is where the problem starts, his resume is as stuffed as a Chipotle burrito on a good day.
For Straight Arrow News, I’m Simone Del Rosario.
Media Landscape
See who else is reporting on this story and which side of the political spectrum they lean. To read other sources, click on the plus signs below. Learn more about this data
Left 27%
Center 64%
Right 10%
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146 other sources covering this story
Total News Sources
146
Leaning Left
31
Center
74
Leaning Right
11
Last Updated
3 months ago
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