Starbucks ousts CEO and hires Chipotle boss following investor pressure

Starbucks has replaced its chief executive Laxman Narsimhan in a surprise shake-up of its senior team following pressure from investors.

Narsimham will step down after little more than a year in the job and hand the reins to Brian Niccol, chairman of Mexican restaurant group Chipotle.

It follows weeks of pressure from activist investor Elliott Investment Management, which has called for change at Starbucks following a slowdown of sales in the US, Canada and China.

Starbucks’ shares, which have dropped around 23% this year, jumped over 20% today following the announcement. At the same time, Chipotle’s shares fell around 13%.

Narasimham, the former chief commercial officer at PepsiCo, took over from Starbucks’ founder Howard Schultz in 2022 following a global search for a successor.

Despite stepping back from the Starbucks board of directors, Schultz has continued to be outspoken about the chain’s performance.

In May, shortly after Starbucks cut its annual sales forecast, Schultz wrote on LinkedIn that its US operations were “the primary reason for the company’s fall from grace” and that senior leaders needed to spend more time with front-line workers.

Narasimham has today stepped down as chief executive and director immediately, with Starbucks’ chief financial officer Rachel Ruggeri taking over as interim chief executive.

Niccol became chief executive at Chipotle in 2018 and has overseen a doubling of revenue, with profits increasing sevenfold and the stock price rising nearly 800%. He will start his new role at Starbucks in September.

Starbucks board chair Mellody Hobson said: “Brian is a culture carrier 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 remarkable customer experience is rooted in an exceptional partner experience.”

Before joining Chipotle, Niccol was chief executive at Taco Bell and has held leadership roles at Pizza Hut, another division of Yum! Brands.

Starbucks was founded in Seattle in 1971 and now has more than 39,000 stores worldwide, including over 1,000 in the UK.

Last year the coffee chain revealed plans to open 100 stores in the UK, putting an end to rumours that circulated in July 2022 that the brand was looking to sell its UK business.

Image: Lucian Milasan / Shutterstock