Starbucks Fires CEO, Stock Surges 20%

Starbucks responded to declining sales and investor dissatisfaction with a leadership change, replacing CEO Laxman Narasimhan with Brian Niccol, current chairman and CEO of Chipotle Mexican Grill.

Why it matters: Narasimhan was hired just 15 months ago. Despite concerns about his background, Starbucks appeared confident. Months later, the strategy has failed.

The shift: Niccol is recognized for revitalizing Chipotle through menu innovation, operational excellence, and digital transformation. His appointment aims to replicate this success at Starbucks.

Key Details:

• Rachel Ruggeri, Starbucks' CFO, will serve as interim CEO until Niccol takes over on September 9.
• Starbucks shares surged over 21% following the announcement.
• Under Narasimhan, Starbucks faced declining sales, supply chain issues, and increased competition.

What are they saying: Starbucks board chair Mellody Hobson emphasized Niccol's track record, while founder Howard Schultz expressed support.

Yes, but: Elliott Investment Management, an activist firm with a significant stake in Starbucks, played a role in advocating for the leadership change. They view Niccol's appointment as a "transformational step forward" and are optimistic about his ability to unlock Starbucks' full potential.

Looking ahead: Niccol brings experience from Chipotle, Taco Bell, and Pizza Hut. His focus will likely be on revitalizing Starbucks' brand through innovation and enhancing experiences.

Bottomline: Starbucks' stock soared more than 20% after the announcement, reflecting investor optimism about the potential turnaround under Niccol's guidance.