by
Starbucks logo of a chain in Tempe, Arizona (Image: Athar Khan)
After seeing declining profits and pressure from their shareholders, Starbucks has hired a new CEO. Previous head of the company, Laxman Narasimhan, will be stepping down as CEO and director, effective immediately. In the meantime, Starbucks CFO Rachel Ruggeri will serve as interim CEO. This change marks Starbucks’ fourth leader in three years.
In with the new
The new CEO will assume his position on September 9, and his name is Brian Niccol.
Niccol is assuming the role of Starbucks CEO after a successful tenure at a number of fast food chains, including Chipotle, Taco Bell, and Pizza Hut. Prior to this role, he was CEO of American fast food chain, Chipotle, where he expanded the menu and helped the company navigate the pandemic.
While other restaurants have been struggling in recent financial quarters, Chipotle has actually had an upward trajectory in their traffic and sales. Niccol joined the company in 2018, and revenue has increased from US$4.9 billion in 2018 to US$9.9 billion in 2023.
Starbucks is likely hoping for a similar turnaround, as they have offered Niccol a very attractive incentive to leave Chipotle and join the coffee chain — this package includes a $10 million sign-on bonus and an annual salary of US$1.6 million.
Why the change
The large investment doesn’t come without large expectations. Most recently, Starbucks sales have dropped 3% globally at stores open for at least a year. Starbucks’ largest markets are in the US and China, and both markets have seen decreasing profits; the US market has seen a 3% drop, while sales in China fell by 11%.
The reason as to why can be attributed to a number of factors, but is most likely linked with Starbucks’ public image.
View this post on Instagram
Image issues
Presently, there has been a large movement to boycott Starbucks. Calls for boycott came late last year, with the beginning of the conflict between Israel and Palestine. The boycott against Starbucks in particular began in response to the company suing their workers union. The union made a post expressing their solidarity with Palestine in the conflict, and in response, the company released an internal notice asking the union to remove any affiliation with Starbucks logo and company name from that post.
The company claimed that the union angered their customers and angered the company’s reputation. In response, people online sided with the union and began discussions of boycotting.
These discussions came to fruition as Starbucks and a number of businesses came under fire for their alleged connection with Israel. These companies were accused of funding war efforts. The two companies at the forefront of these accusations were McDonalds and Starbucks. Although it began online, these boycotts made it offline likely contributed to Starbucks’ declining sales globally.
Strong portfolio
Such an image issue is likely why they choose to sign on with Niccol. Niccol’s past experiences in Chipotle and Taco Bell involved a reinvention of their brand image, and considerable company growth.
Howard Schultz, Starbucks Founder, said of Niccol: “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 recognizes 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.”
