Starbucks, the world's largest coffee chain brand, has changed its third CEO in two years, bringing in a 'fire brigade captain'.
On August 13th, Starbucks (SBUX. US) announced the appointment of Brian Niccol as Chairman and CEO, who will officially take office on September 9th. His former CEO, Laxman Narasimhan, has resigned from his positions as CEO and board member. Prior to the appointment taking effect, the Chief Financial Officer shall serve as the interim CEO.
Starbucks China informed Red Star Capital that the personnel adjustment at headquarters does not involve the Chinese market.
As soon as the news of the appointment of a new CEO came out, Starbucks' stock price surged. As of August 13th, the US stock market closed at $95.9 per share, up 24.5%, marking the largest daily increase since the listing of Chuangxing Buck in 1992.
According to Starbucks' appointment letter, Nicole currently serves as the Chairman and CEO of Chipotle. Since becoming CEO in 2018, under his leadership, Chipotle's revenue has almost doubled, profits have increased nearly sevenfold, stock prices have risen nearly 800%, while increasing salaries for retail team members, expanding benefits, and strengthening culture.
Chipotle, a Mexican chain restaurant brand, is the third largest chain restaurant brand in the world in terms of market value, second only to McDonald's and Starbucks. Its signature is Mexican tortillas. Chipotle was once embroiled in food safety and brand crisis, but Nicol reversed the company's declining reputation and performance through online transformation of mobile ordering apps and personalized customized menus.
Before joining Chipotle, he also led another Mexican food and beverage brand under Yum! Brands, Taco Bell, which maintained its competitiveness through a low price strategy and online transformation. Nicole also served in Yum!'s Pizzahut and P&G.
Starbucks, which is currently experiencing weak performance, needs such a 'fire brigade leader'.
Former CEO of Starbucks, John Woo, joined Starbucks on October 1, 2022. During his tenure, Starbucks' stock price dropped from $80.96 per share to $77.03 per share, a decrease of 4.85%. According to Starbucks' financial performance for the third quarter ending June 30, 2024, during the reporting period, operating revenue decreased by 0.6% year-on-year to $9.1 billion, and net profit decreased by 7.62% year-on-year to $1.055 billion. Among them, Starbucks China's revenue was $734 million, a year-on-year decrease of 10.71%.
Earlier, the Q2 2024 financial report showed that same store sales had declined for the first time in nearly three years. Quarterly revenue decreased by 2% year-on-year to $8.56 billion, while net profit decreased by 14.96% year-on-year to $772 million. Therefore, Starbucks lowered its annual performance guidance on April 30th, causing its stock price to fall by over 10%.
These performances led Starbucks founder Schultz, who handed over the baton to the CEO, to publicly express his dissatisfaction. According to a report by China Business Daily, Schultz criticized Eslite's leadership in an open letter in May and stated that Starbucks' US business is the "main reason for the company's decline".