Starbucks Corp. has named Chipotle Mexican Grill Inc. Chief Executive Officer Brian Niccol because the coffee chain’s latest CEO and chairman, replacing Laxman Narasimhan, who had served within the role for just over a yr.
Niccol will start his latest job on Sept. 9, the corporate said in an announcement. The current chief financial officer will lead the corporate until then. Starbucks shares rose 15% in premarket trading following the news, while Chipotle shares fell 8.3%.
The abrupt change in leadership comes after activist investors Elliott Investment Management and Starboard Value According to reports have accrued stakes in the corporate. The coffee chain’s shares had fallen 20% this yr after sales declined for 2 consecutive quarters.
CEO Mellody Hobson said in an interview with CNBC on Monday that the corporate began discussions about governance several months ago and downplayed Elliott’s influence.
“Sometimes you have to make difficult decisions and those difficult decisions are the right thing to do,” Hobson said within the interview. “It’s not necessarily due to external pressures.”
Hobson said the board takes full responsibility for Starbucks’ weaknesses and desires to quickly turn the business around. “We are responsible for the consequences,” she said. “We are not passing the buck and we know we have a job to do and we are doing it.”
Although former CEO Howard Schultz doesn’t have a seat on the board or hold an official role with the corporate, Starbucks’ sixth-largest shareholder issued an announcement of support for the brand new CEO. Hobson said she told Schultz concerning the decision every week ago and “he said, ‘Mellody, this is a slam dunk.'”
Hobson said the board has not yet presented a concrete recovery plan and urged patience. “He is not in office yet, let him come and then come out with the plans,” she said. “He will be the one who drives the strategy and the board will decide. I would imagine he will look at everything closely.”
Niccol joined Chipotle as CEO in 2018 and have become the corporate’s chairman in 2020. The company has outperformed competitors in recent quarters, winning over guests while others have suffered from a decline in demand. Chipotle shares rose greater than 20% this yr through Monday’s close. Before joining Chipotle, Niccol was CEO of Taco Bell.
Chipotle said Chief Operating Officer Scott Boatwright will take over as interim leader. CFO Jack Hartung, who recently announced his retirement in 2025, has also modified course and agreed to stick with the corporate indefinitely as president of strategy, finance and provide chain to make sure a smooth transition, the corporate said in an announcement.
