Starbucks brings in Chipotle head as new CEO

Starbucks is getting a new head honcho.

Chipotle CEO Brian Niccol is making the leap from pinto to coffee beans. He’ll be taking over Starbucks’s top spot on September 9, the Wall Street Journal reported Tuesday. Starbucks’s CFO Rachel Ruggieri will act as interim CEO until then.

The news came as a surprise to many. Starbucks’s CEO, Laxman Narasimham, had the imprimatur of Howard Schultz, the executive who led the chain to prominence throughout the 1990s and 2000s. But Narasimham’s tenure, which began in March 2023, was marked by sluggish sales. Starbucks cut its earnings guidance twice this year, and its shares have fallen 25% in the past 12 months. The company’s China business has faltered as it faced competitors like Luckin Coffee.

Starbucks customers have also complained about long lines, which a Bloomberg article suggested were caused by understaffing amid Narasimham’s “productivity push.” And activist investors have emerged, with Elliott Investment Management acquiring a significant portion of Starbucks’s stock—though the activist hedge fund had not been part of Niccol’s hiring process, the Wall Street Journal reported.

In April, Schultz himself criticized the direction the chain was taking in a widely publicized LinkedIn post. The chain needs “a maniacal focus on the customer experience,” he wrote, calling for Starbucks to “reinvent the mobile order and payment platform.”

Niccol may prove a good fit for Starbucks. He started as Chipotle’s CEO in 2018 and helped the company recover from a spate of food-safety lapses that sickened customers. Recently, Chipotle has enjoyed steady sales and profits, in spite of inflationary pressures. Its revenues have risen 14.1% and 18.2% year over year in the last two quarters, while Starbucks revenue fell 2% and 1% year over year.

The markets certainly seem to approve of the choice of Niccol: Starbucks’s stock was up around 21% following the announcement.