Starbucks has announced a significant executive restructuring, appointing Brian Niccol, the current CEO of Chipotle, to take the helm of the coffee company. This news has propelled Starbucks stock to post its largest single-day increase ever, while Chipotle’s shares experienced a decline.
Starting September 9, Niccol will take on the roles of chairman and CEO of Starbucks, following the immediate departure of current CEO Laxman Narasimhan from both his position and the board of directors. Rachel Ruggeri, the chief financial officer of Starbucks, will step in as interim CEO until Niccol formally assumes his role. Additionally, Mellody Hobson, who chairs the board, is set to become the lead independent director.
Under Niccol’s leadership at Chipotle since 2018, the company’s revenue nearly doubled, profits increased nearly sevenfold, and the stock price soared by 800%, according to the company’s announcement.
Prior to his time at Chipotle, Niccol held various executive roles at Taco Bell and Pizza Hut, which are part of Yum Brands.
This leadership change follows a recent investment by the hedge fund Starboard Value in Starbucks, with plans aimed at boosting its stock performance. At the same time, Starbucks is negotiating a settlement with activist investor Elliott Investment Management, which has been advocating for changes within the company.
Elliott Investment is seeking representation on Starbucks’ board, potentially leading to a proxy battle for a board seat. The future intentions of Starboard Value regarding board representation remain uncertain.
Howard Schultz, the former CEO, is still recognized as the largest shareholder of Starbucks, having been succeeded by Narasimhan in March 2023.
In terms of stock performance, Starbucks shares surged by 24.5% on Tuesday—a record increase—while shares experienced a rise of 2.6% on Monday after news of the Starboard investment. Starbucks’ stock has slipped slightly this year and was down 20% through Monday’s close due to declining sales, prompting the company to adjust its outlook.
Conversely, Chipotle’s stock dropped by 7.5% on Tuesday, falling below its 200-day moving average, which limited its yearly gain to 13% after it had surged following a stock split implemented on June 26, marking the company’s first split in its 30-year history.