Starbucks boss replaced by Chipotle chief executive Brian Niccol

Starbucks has announced that it is replacing its chief executive Laxman Narasimhan with Chipotle boss Brian Niccol, a move which saw the company’s shares jump more than 20%.

The Seattle coffee giant named Mr Niccol as its new chairman and chief executive, hoping he can revive fading sales and re-establish Starbucks as a destination where customers are willing to pay premium prices.

“I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners,” Mr Niccol said.

Laxman Narasimhan, who is stepping down as CEO of Starbucks
Laxman Narasimhan, who is stepping down as CEO of Starbucks (Stephen Brashear/AP)

However, Mr Niccol faces far larger and deeper challenges at Starbucks, which has 38,000 stores worldwide compared to Chipotle’s largely US-based chain of 3,500 restaurants.

Mr Niccol now has to figure out how to get inflation-weary customers back into stores for its pricey drinks.

“I will pay nine dollars for a burrito, I’m not sure I’m going to pay nine dollars for a cup of Venti shaken espresso,” said Nancy Tengler, chief executive of Laffer Tengler Investments, which owns shares in Starbucks and Chipotle.

In the US, Starbucks has struggled to balance demand for mobile orders and faster service with its more traditional role as an upscale cafe where customers can gather and relax.

Ms Tengler said long wait times and a deluge of mobile orders have damaged the in-store experience at Starbucks, and Mr Niccol will have to develop a plan to flip that around.

Starbucks, along with other big brands like McDonald’s, is also confronting US consumers who are increasingly looking for value and deals.

In China, Starbucks’ second-largest market with 6,500 stores, customers are increasingly opting for coffee from lower-priced rivals.

A Starbucks mermaid logo sign is displayed on a store in the US
A Starbucks mermaid logo sign is displayed on a store in the US (Charles Krupa/AP)

Mr Niccol replaces Laxman Narasimhan, who is stepping down immediately after spending a little more than a year in Starbucks’ top job.

Mr Niccol will become Starbucks’ chairman and chief executive on September 9.

Starbucks chief financial officer Rachel Ruggeri will be the interim chief executive until then.

Elliott Investment Management, an activist firm with a significant stake in Starbucks, said it began talking about a change in leadership with Starbucks’ board two months ago.

In a statement Tuesday, the firm called Mr Niccol’s appointment a “transformational step forward”.

“We welcome the appointment of Brian Niccol and we look forward to continuing our engagement with the board as it works toward the realization of Starbucks’ full potential,” Elliott managing partner Jesse Cohn and partner Marc Steinberg said in a joint statement.

At Taco Bell, where Mr Niccol started as chief marketing officer in 2011 and eventually transitioned to chief executive, he focused on menu innovation, introducing breakfast at the Mexican food chain.

He also upgraded restaurant cooking equipment and dining rooms and introduced mobile ordering.

Starbucks chairwoman Mellody Hobson — who will transition to lead independent director once Mr Niccol becomes chairman — said Mr Niccol can use the same playbook to transform Starbucks.

Mr Schultz also said he has long admired Mr Niccol.

“I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support,” Mr Schultz said in a prepared statement.

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