Tue 13th Aug 2024 - Starbucks replaces CEO with Chipotle CEO after coming under activist investor pressure Starbucks replaces CEO with Chipotle CEO after coming under activist investor pressure: Starbucks has hired Chipotle chief executive Brian Niccol to replace Laxman Narasimhan, who leaves the business with immediate effect. Narasimhan took over as chief executive of Starbucks last March, but the company’s performance has struggled this year, impacted by weak sales in the US and China, its two largest markets. Former chief executive Howard Schultz, who handpicked Narasimhan as his successor and remains the largest individual shareholder in Starbucks, had written an open later in May, weighing in on the company’s issues and offering advice. Activist investor Elliott Management had acquired a stake in Starbucks in recent weeks. Elliott Management has now been joined by fellow activist investor Starboard Value, which has called on Starbucks to take steps to improve its share price. Niccol joined Chipotle as chief executive and a director in March 2018, and became chairman in March 2020. Before joining Chipotle, he served as chief executive of Taco Bell. Before becoming its chief executive, he held roles including chief marketing and innovation officer, and president. He also served in leadership roles at Pizza Hut, another division of Yum! Brands. He began his career in brand management at Procter and Gamble. Niccol will start in his new role on Monday, 9 September. Starbucks chief financial officer, Rachel Ruggeri, will serve as interim chief executive until that time. Mellody Hobson, Starbucks board chair, will become lead independent director. Schultz said: “Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact. His retail excellence and track record in delivering extraordinary shareholder value recognises the critical human element it takes to lead a culture and values driven enterprise. I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support. I thank Mellody and the Starbucks board for their deep commitment to shaping the future of this remarkable global phenomenon that is Starbucks.” Niccol said: “I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners. I have long-admired Starbucks iconic brand, unique culture and commitment to enhancing human connections around the globe. As I embark upon this journey, I am energised by the tremendous potential to drive growth and further enhance the Starbucks experience for our customers and partners, while staying true to our mission and values.” The company said that during Narasimhan’s tenure, he improved the Starbucks partner experience, drove significant innovation in its supply chain, and enhanced its store operations. “On behalf of the board, I want to sincerely thank Laxman for his contributions to Starbucks, and his dedication to our people and brand,” said Hobson. “In the face of some challenging headwinds, Laxman has been laser focused on improving the business to meet the needs of our customers and partners. We all wish him the very best and know he will do great things in the future.” Hobson said the decision to replace Narasimhan was not based on just one quarter. She also said that Niccol will come out with his own plans for the company and the brand. After the announcement shares of Starbucks increased 12.8% in pre-market action to trade at their highest level since late April. Meanwhile, Chipotle traded 7.9% lower. Chipotle has appointed Scott Boatwright, chief operating officer, as interim chief executive. Boatwright joined Chipotle in 2017 and the company said he has been instrumental in driving restaurant operations for the company's more than 120,000 employees and 3,500-plus restaurants. He also led the integration of new technology into restaurants, built a strong culture aligned to the organisation's values, and achieved industry-leading retention rates yielding impressive results and improvements in throughput and the overall guest experience. Boatwright said: “I have the utmost confidence in our five key strategies and I'm excited for the new opportunity to lead the business moving forward. We have a world-class organisation full of talented leaders who are passionate about our brand and purpose and excited for the long-term opportunity to grow to 7,000 restaurants in North America and expand internationally.” In addition, Jack Hartung, who recently announced his retirement from Chipotle in 2025, has agreed to remain with the business indefinitely as president of strategy, finance and supply chain to ensure a smooth transition. Scott Maw, Chipotle's lead independent director, has been named its new chairman, effective immediately. “Thanks to our robust talent planning process, we are well-prepared for events like this due to the deep bench within the organisation,” said Maw. “The board is excited to see other strong leaders expand their roles and provide growth and development for more people in the organisation.” Niccol added: “I'm incredibly proud of the work that has been accomplished since I joined Chipotle in 2018. The strategic priorities this team has put in place have positioned Chipotle to win today and enable future growth. It's hard to leave such a great company and all of the talented people I've had the pleasure to work with, but I depart knowing the business is in great shape and poised for growth with a strong, experienced leadership team.” Starbucks features in the Propel UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and is available exclusively to Premium subscribers. The database is updated every two months and the next version will be sent tomorrow (Wednesday, 14 August) and feature 270 businesses. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.