Starbucks has replaced its chief executive Laxman Narsimhan in a surprise shake-up of its senior team following pressure from investors.
Narasimhan will step down after just over a year in the role, passing the leadership to Brian Niccol, the chairman of the Mexican restaurant group Chipotle.
The leadership change follows weeks of pressure from activist investor Elliott Investment Management, which has pushed for changes at Starbucks due to a slowdown in sales across key markets, including the US, Canada, and China.
Starbucks' shares, which had declined by about 23% this year, surged by over 20% today following the announcement of the leadership change. Conversely, Chipotle's shares dropped by around 13% in response to the news.
Narasimham, who previously served as the chief commercial officer at PepsiCo, succeeded Starbucks' founder Howard Schultz in 2022 after an extensive global search for a new leader.
Even after stepping down from the Starbucks board of directors, Schultz has remained vocal about the company's performance.
In May, following Starbucks' reduction of its annual sales forecast, Schultz took to LinkedIn to express his concerns, stating that the company's U.S. operations were 'the primary reason for the company's fall from grace.' He urged senior leaders to spend more time with front-line workers to better understand and address the challenges facing the business.
Narasimham has stepped down from his roles as chief executive and director effective immediately. Starbucks' chief financial officer, Rachel Ruggeri, will assume the position of interim chief executive.
Since becoming chief executive at Chipotle in 2018, Brian Niccol has led the company through significant growth, doubling its revenue, increasing profits sevenfold, and driving the stock price up by nearly 800%
He will start his new role at Starbucks in September.
Starbucks board chair Mellody Hobson said: “Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth.
“Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience.”
Before joining Chipotle, Brian Niccol served as the chief executive at Taco Bell and held various leadership roles at Pizza Hut, both of which are divisions of Yum! Brands.
Starbucks, founded in Seattle in 1971, now operates over 39,000 stores globally, including more than 1,000 locations in the UK.
Last year, Starbucks announced plans to open 100 new stores in the UK, dispelling rumors from July 2022 about a potential sale of its UK business.
