Starbucks announced a major executive shake-up early Tuesday and appointed Chipotle CEO Brian Niccol to lead the coffee giant. Starbucks stock posted a record gain Tuesday. Meanwhile, Chipotle stock tumbled.
Seattle-based Starbucks announced that Niccol will serve as chairman and CEO starting Sept. 9. Starbuck's current CEO Laxman Narasimhan is stepping down from his role and as a director, effective immediately.
Rachel Ruggeri, Starbuck's CFO, will serve as interim CEO until Niccol takes over. Meanwhile, Starbucks board chair Mellody Hobson will become lead independent director.
Niccol currently serves as chairman and CEO of Chipotle and was named chief executive in 2018. During his tenure, Chipotle revenue nearly doubled, profits increased nearly sevenfold and the stock price spiked 800%, Starbucks said in the release.
Before Chipotle, Niccol served in various executive and leadership roles at Taco Bell and Pizza Hut, a division of Yum Brands.
The announcement comes after New York-based hedge fund Starboard Value purchased a stake in Starbucks last week, with plans to improve its stock price. Meanwhile, Starbucks is working on a settlement with another activist investor, Elliott Investment Management. Elliott built its own position in the company and has pushed for changes behind the scenes, the Wall Street Journal reported in mid-July.
Currently, Elliott Investment is vying for representation on Starbuck's board, and could potentially launch a proxy battle for a board seat. It's unclear if Starboard Value will also try to secure a board seat.
Former CEO Howard Schultz remains the top Starbucks shareholder, according to the WSJ. He was succeeded by Narasimhan in March 2023.
Chipotle And Starbucks Stock Performance
Starbucks stock bolted 24.5% Tuesday, which marked its largest percent increase on record, based on available Dow Jones Market Data.
Shares swung 2.6% higher Monday after the Starboard news.
Starbucks is now down just a fraction on the year. Shares tumbled 20% in 2024 through Monday's close amid slowing sales, which prompted the coffee giant to cut its guidance.
Chipotle stock fell 7.5% Tuesday, dropping below its 200-day moving average.
CMG stock pared its gains on the year to 13% after tumbling from late June highs.
Chipotle initiated a 50-for-1 stock split on June 26. It was the first stock split in Chipotle's 30-year history and one of the biggest in the history of the New York Stock Exchange.
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