Starbucks has replaced its CEO, Laxman Narsimhan, in a surprise move from its senior team following pressure from investors.
Narasimhan is stepping down from his position after more than a year, handing over the leadership to Brian Niccol, chairman of the Mexican restaurant group Chipotle.
The management change follows weeks of pressure from activist investor Elliott Investment Management, which has pushed for changes at Starbucks as sales have slowed in key markets including the United States, Canada and China.
Shares of Starbucks, which had fallen about 23% this year, rose more than 20% today on the announcement. On the other hand, Chipotle shares fell about 13% in response to the news.
Narasimham, who previously served as PepsiCo’s chief commercial officer, will succeed Starbucks founder Howard Schultz in 2022 after an extensive global search for a new leader.
Even after stepping down from the Starbucks board, Schultz has remained vocal about the company’s operations.
In May, after Starbucks lowered its annual sales forecast, Schultz took to LinkedIn to express his concerns, stating that the company’s US operations were “the primary reason for the company’s decline.” He urged managers to spend more time with frontline workers to better understand and address the challenges facing the company.
Narasimham has resigned from his duties as CEO and director with immediate effect. Starbucks CFO Rachel Ruggeri will take over as interim CEO.
Since becoming Chipotle’s CEO in 2018, Brian Niccol has led the company to significant growth, doubling revenue, 7xing profits, and increasing the stock price by nearly 800%.
He will start his new position at Starbucks in September.
Mellody Hobson, Chairman of the Starbucks Board of Directors, said, “Brian is a culture bearer who brings a wealth of experience and a proven track record of driving innovation and growth.
“Like all of us at Starbucks, he understands that a great customer experience is built on an exceptional partner experience.”
Prior to joining Chipotle, Brian Niccol served as CEO of Taco Bell and held various executive positions at Pizza Hut, both of which are Yum! Brands.
Founded in Seattle in 1971, Starbucks now has over 39,000 stores worldwide, including over 1,000 in the UK.
Last year, Starbucks announced plans to open 100 new stores in the UK, dispelling rumors of a possible sale of its UK business in July 2022.
