Starbucks is replacing its CEO with Chipotle Boss Brian Niccol, amid declining business and pressure from activist shareholders.
Changes at Starbucks: the American coffee giant announced on Tuesday the departure of its CEO Laxman Narasimhan, who has been in the position for only sixteen months. He will be replaced from September 9 by the boss of the American fast food chain Chipotle, Chipotle Boss Brian Niccol .
Laxman Narasimhan was hired in 2022 with the hope of undertaking a “reinvention” of the world’s largest coffee chain. But he appears not to have been up to the challenge. Since his appointment, Starbucks’ stock has continued to suffer, losing about 20% of its value over the past five years . By comparison, the S&P 500 index has gained more than 80%.
And then, at the end of July, came the final blow: Starbucks indicated that it had not met its sales forecasts. Disappointing results that it justified by falling demand, both in the United States and in China.
Pressure from activist shareholders-Chipotle Boss Brian Niccol
Chipotle Boss Brian Niccol addition to this drop in attendance, the company has been facing pressure from shareholders for several weeks . Activist investment firms Elliott Investment Management and Starboard Value , which recently took stakes in the company, are demanding changes in strategy, according to American media.
Privately, Elliott reportedly pushed Starbucks to improve its performance and stock price by proposing to improve its governance . The activist was in talks with the coffee company to bring his business partner Jesse Cohn onto its board.
Starbucks, however, is being cautious: the investment fund was not consulted on this major change at the head of the company, a discussion that began several months ago, assured the chairwoman of the board of directors, Mellody Hobson.
Brian Niccol's Rich Resume
The popular fast-food chain has outperformed its competitors in recent quarters . While most have suffered a decline in business, its "Tex-Mex" cuisine has continued to attract customers...and delight investors, with its shares up more than 20% this year.
An attractive record for Chipotle Boss Brian Niccol, who joined Chipotle as CEO in 2018, before becoming chairman of its board of directors in 2020.
Well-known across all the big names in fast food - he previously worked for Pizza Hut and Taco Bell - he first spent ten years at Procter & Gamble at the start of his career, where he held various brand management roles.
Starbucks Chief Financial Officer Rachel Ruggeri will serve as interim CEO until he takes up his new role, the company said.
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