Starbucks Replaces Laxman Narasimhan As Its CEO (X image @TrackInsiders_)
Starbucks replaced its CEO, Laxman Narasimhan. Chipotle CEO Brian Niccol will take over the role on September 9th. Narasimhan has served the chair only for 17 months. He is also leaving the board of directors. Narasimhan stepped down from the role as CEO “with immediate effect”. Until Niccol takes over, Starbucks Chief Financial Officer (CFO) Rachel Ruggeri will serve as the interim CEO.
Narasimhan became the CEO of the Seattle-based coffee company in March 2023. He took up the chair by replacing Howard Schultz, who was in his third stint as CEO. Schultz had come out of retirement in 2022 to serve as interim CEO after Kevin Johnson retired.
“On behalf of the board, I want to sincerely thank Laxman for his contributions to Starbucks, and his dedication to our people and brand. In the face of some challenging headwinds, Laxman has been laser focused on improving the business to meet the needs of our customers and partners”, Starbucks board chair Mellody Hobson said in a news release.
Also Read: $13 Billion Market Loss: Starbucks Reaches Critical Point Of Decline Amid Boycott
The weak sales traffic, and boycotts of Starbuck by the Palestine supporters, for the company’s link to Israel – which is accused of carrying out genocidal war in Gaza – hugely impacted its quarterly revenue. Supply chain issues caused the company to step away from marketing new products.
Narasimhan was an outsider to the US food retail industry. He was the former PepsiCo executive and CEO of U.K.-based Lysol-maker Reckitt. He took upon a reinvention plan introduced by Schultz that included investment in new stores, technology and leadership that would prioritize convenience.
Schultz, who served as the CEO of the coffee giant from 1986-2000, 2008-2017, and as interim CEO from 2022-2023, introduced the said plan during the company’s 2022 Investor Day. The price tag attached to the plan was $450 million.
Narasimhan backed Schultz’s reinvention plan by announcing in April that Starbucks would invest $600 million over the next three years to inject more automated technology into stores.
Also Read: Starbucks To Fire 2,000 Employees After The Boycott Campaign Following Israeli Atrocities In Gaza
Narasimhan spent a six-month transition period learning the ropes from Schultz while also training as a barista. He also said that he planned on working once a month in a Starbucks store.
Under his supervision, Starbucks has had two quarters in a row of falling sales. Last quarter, sales at coffee shops fell by 3% compared with the previous year. Revenue has been buoyed by customers spending more per purchase, but investors were not happy.
In April this year, Starbucks reported slumping sales, which set off a 12% share price drop in after-hours trading when earnings were reported.
Social media is buzz after Starbucks announcement. Among several comments, there is also a month-old interview of Narasimhan with Fortune Magazine, which is going viral. In the video, he was hear as saying that he doesn’t work past 6 pm to maintain his work-life balance.
“Starbucks CEO Laxman Narasimhan recently said that he doesn’t work past 6 pm and that if anyone at Starbucks gets a minute of his time after 6 pm they ‘better be sure that it’s important’. He was just fired today,” an X user wrote, sharing the interview.
