{"id":30906,"date":"2024-08-14T03:59:32","date_gmt":"2024-08-14T08:59:32","guid":{"rendered":"https:\/\/ustower.net\/?p=30906"},"modified":"2024-08-14T03:59:36","modified_gmt":"2024-08-14T08:59:36","slug":"starbucks-ceo-replaced-by-brian-niccol-a-fixer-who-revived-chipotle-when-the-chain-was-in-distress","status":"publish","type":"post","link":"https:\/\/ustower.net\/?p=30906","title":{"rendered":"Starbucks CEO replaced by Brian Niccol, a fixer who revived Chipotle when the chain was in distress"},"content":{"rendered":"\n

In 2018, when Chipotle was reeling from multiple food poisoning outbreaks<\/u><\/a> that had sickened 1,100 people, the company called Taco Bell CEO Brian Niccol to turn things around.<\/p>\n\n\n\n

As Chipotle\u2019s chairman and CEO, Niccol beefed up marketing and product innovation, added a loyalty program and improved store operations. He also instituted employee benefits, like a program that pays employees\u2019 college tuition<\/u><\/a> costs at certain schools.<\/p>\n\n\n\n

Chipotle\u2019s revenue since then has nearly doubled.<\/p>\n\n\n\n

On Tuesday, Niccol answered another call, this time from Starbucks. The Seattle coffee giant named Niccol as its new chairman and CEO, hoping he can revive fading sales<\/u><\/a> and re-establish Starbucks as a destination where customers are willing to pay premium prices.<\/p>\n\n\n\n

\u201cI am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners,\u201d Niccol said.<\/p>\n\n\n\n

Starbucks shares jumped 24.5% Tuesday on the news, recapturing all of their losses for the year.<\/p>\n\n\n\n

However, Niccol faces far larger and deeper challenges at Starbucks, which has 38,000 stores worldwide compared to Chipotle\u2019s largely U.S.-based chain of 3,500 restaurants. Niccol has to figure out how to get inflation-weary U.S. customers back into stores for its pricey drinks.<\/p>\n\n\n\n

\u201cI will pay $9 for a burrito. I\u2019m not sure I\u2019m going to pay $9 for a cup of Venti shaken espresso,\u201d said Nancy Tengler, CEO of Laffer Tengler Investments, which owns shares in Starbucks and Chipotle.<\/p>\n\n\n\n

In the U.S., 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. Tengler said long wait times and a deluge of mobile orders have damaged the in-store experience at Starbucks, and Niccol will have to develop a plan to flip that around.<\/p>\n\n\n\n

Starbucks \u2014 along with other big brands like McDonald\u2019s<\/u><\/a> \u2014 is also confronting U.S. consumers who are increasingly looking<\/u><\/a> for value and deals. Niccol will have to convince drinkers that a medium Starbucks iced coffee \u2014 now more than $5 in Manhattan \u2014 is worth paying for.<\/p>\n\n\n\n

In China, Starbucks\u2019 second-largest market with 6,500 stores, customers are increasingly opting for coffee from lower-priced rivals. And in the Middle East and some countries in Europe, Starbucks is seeing boycotts<\/u><\/a> related to the Israel-Hamas war<\/u><\/a>.<\/p>\n\n\n\n

Niccol replaces Laxman Narasimhan, who is stepping down immediately after spending a little more than a year in Starbucks\u2019 top job. Niccol will become Starbucks\u2019 chairman and CEO on Sept. 9. Starbucks Chief Financial Officer Rachel Ruggeri be the interim CEO until then.<\/p>\n\n\n\n

Narasimhan succeeded Howard Schultz, the longtime Starbucks leader and chairman emeritus, in March 2023. But investors and the company\u2019s board quickly soured on the longtime PepsiCo executive, who trained as a barista<\/u><\/a> and worked monthly in Starbucks stores but had little retail experience.<\/p>\n\n\n\n

Starbucks\u2019 revenue dropped 2%<\/u><\/a> in the first three months of this year, the first quarterly sales decline for the company since the end of 2020. The decline prompted a rebuke from Schultz, who wrote in a LinkedIn post this spring that company leaders should spend more time in stores<\/u><\/a> and focus on coffee drinks.<\/p>\n\n\n\n

Revenue fell again the next quarter. A new summer drink with boba-like raspberry \u201cpearls\u201d drove strong U.S. sales, but the company had to pull back on marketing after it ran out of ingredients.<\/p>\n\n\n\n

Andy Barish, an equity analyst at the investment bank Jefferies, said investors didn\u2019t feel Narasimhan was effectively addressing Starbucks\u2019 issues, including increasingly complicated operations for store employees and ineffective marketing. New products \u2014 like a line of energy drinks \u2014 were also lackluster, Barish wrote Tuesday.<\/p>\n\n\n\n

Starbucks\u2019 same-store sales \u2014 or sales at stores open at least a year \u2014 fell 2% between April and June. During the same period, same-store sales at Chipotle jumped 11%.<\/p>\n\n\n\n

Chipotle bucked the slowdown in consumer spending by offering popular limited-time items like Chicken al Pastor. The company also emphasized value. When some customers began complaining on social media that they were getting smaller portions, Niccol said the company would retrain workers at the 10% of Chipotle stores that were making meals too small.<\/p>\n\n\n\n

Elliott Investment Management, an activist firm with a significant stake in Starbucks, said it began talking about a change in leadership with Starbucks\u2019 board two months ago. In a statement Tuesday, the firm called Niccol\u2019s appointment a \u201ctransformational step forward.\u201d<\/p>\n\n\n\n

\u201cWe 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\u2019 full potential,\u201d Elliott Managing Partner Jesse Cohn and Partner Marc Steinberg said in a joint statement.<\/p>\n\n\n\n

At Taco Bell, where Niccol started as chief marketing officer in 2011 and eventually transitioned to CEO, Niccol focused on menu innovation<\/u><\/a>, introducing breakfast at the Mexican food chain. He upgraded restaurant cooking equipment and dining rooms and also introduced mobile ordering.<\/p>\n\n\n\n

Starbucks Chairwoman Mellody Hobson \u2014 who will transition to lead independent director once Niccol becomes chairman \u2014 said Niccol can use the same playbook to transform Starbucks. Schultz also said he has long admired Niccol.<\/p>\n\n\n\n

\u201cI believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support,\u201d Schultz said in a prepared statement.<\/p>\n\n\n\n

It\u2019s not immediately clear how Niccol\u2019s arrival will impact the ongoing unionization effort at Starbucks. Schultz opposed unionization<\/u><\/a>, but under Narasimhan the company pivoted, saying it would restart labor talks<\/u><\/a> with the aim of reaching contract agreements this year. Workers at more than 475 U.S. Starbucks stores have voted to unionize since 2021.<\/p>\n\n\n\n

Chipotle opposed unionization under Niccol. The company agreed to pay $240,000 to former employees last year after the U.S. government found it violated the law<\/u><\/a> by closing a Maine store that voted to unionize. Only one other Chipotle, in Michigan, has voted to form a union.<\/p>\n\n\n\n

Chipotle shares, which have risen more than 20% this year, fell 7.5% Tuesday on word of Niccol\u2019s departure.<\/p>\n\n\n\n

Chipotle said Tuesday that Scott Boatwright, the company\u2019s chief operating officer, will become its interim CEO.<\/p>\n\n\n\n

Apnews<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In 2018, when Chipotle was reeling from multiple food poisoning outbreaks that had sickened 1,100 people, the company called Taco Bell CEO Brian Niccol to turn things around. As Chipotle\u2019s chairman and CEO, Niccol beefed up marketing and product innovation, added a loyalty program and improved store operations. He also instituted employee benefits, like a program that […]<\/p>\n","protected":false},"author":5,"featured_media":30907,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1155],"tags":[23419,25162,8544],"class_list":["post-30906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-chain-store","tag-dilemma","tag-starbucks"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/30906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30906"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/30906\/revisions"}],"predecessor-version":[{"id":30908,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/30906\/revisions\/30908"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/30907"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}