In a surprising move, Starbucks announced on Tuesday that it is replacing its CEO Laxman Narasimhan after just 16 months. The decision follows dissatisfaction with Narasimhan’s performance and a significant drop in sales.
Reasons for the Change
Narasimhan, who joined Starbucks from Reckitt Benckiser in London, faced challenges in addressing slowing sales in key markets like the US and China. Despite spending six months familiarizing himself with Starbucks’ operations, including barista training, the company’s stock fell by over 20% during his tenure.
Investor dissatisfaction and concerns from Starbucks’ chairman emeritus, Howard Schultz, who had initially selected Narasimhan, also contributed to the decision.
New Leadership
Starbucks has named Brian Nichol, the current CEO of Chipotle, as Narasimhan’s successor. Nichol has led Chipotle since 2018, during which the company’s stock surged by more than 700%. Under his leadership, Chipotle has thrived, particularly as consumers shifted towards essential food options amid inflationary pressures.
Official Statement
Starbucks’ board issued a statement expressing gratitude to Narasimhan for his efforts, acknowledging the challenges faced during his tenure. “Laxman has been laser-focused on improving the business,” the statement read, “and we wish him all the best in his future endeavors.”
As Starbucks transitions to new leadership, the company aims to revitalize its performance and address ongoing sales challenges under Nichol’s guidance.
