Key Takeaways:
– Brian Niccol, former CEO of Chipotle, is Starbucks’ new chief executive officer.
– His appointment follows a successful stint at Chipotle, where he focused on digital innovation.
– Starbucks’ stock soared more than 20% following the announcement of Niccol’s appointment.
– Niccol is set to bring a wealth of digital experience, which may aid Starbucks’ struggling sales.
Decisive Leadership Change at Starbucks
Starbucks, the renowned coffee conglomerate based in Seattle, announced on Tuesday that it has appointed Brian Niccol as its new CEO. Niccol, who was instrumental in turning around the fortunes at Chipotle over a six-year tenure, takes over from Laxman Narasimhan, the beleaguered outgoing CEO. With Starbucks battling sliding sales and increased investor scrutiny, this marks the company’s third leadership change in just 18 months.
Niccol’s Impact at Chipotle
As the CEO of Chipotle, Niccol spearheaded a range of digital innovations which reversed the fast-food giant’s erstwhile flagging fortunes. The strategy included a redesign of the digital sales wing, the launch of a rewarding customer loyalty program, and an overall focus on improving customer experience. His innovative outlook pays off as these changes resulted in the digital sales arm accounting for an impressive 35.3% of the total food and beverage revenue in the second quarter.
Digital Reinvention and Starbucks
Niccol’s appointment might herald a wave of needed digital innovations for Starbucks. With around 31% of the company’s total transactions at their U.S. operated stores accruing from the company’s mobile app, a technological revitalization could boost sales which fell by 4% in the previous quarter.
In addition, Starbucks boasts nearly 34 million members in its loyalty program, accounting for 60% of total spend. Howard Schultz, the former CEO, and chairman at Starbucks, had suggested earlier in May that the company needs to rethink its mobile order strategy. He maintained that Starbucks should be experiential rather than transactional and highlighted the importance of interaction with the frontline staff- the green apron holders.
Narasimhan’s Digital Investment and Future Plans
Before his recent exit, Narasimhan had announced Starbucks’ plan to invest $600 million over the next three years to digitize their stores and target customers in a more personalized fashion. This move came shortly after Niccol joined the Walmart board, with a previous experience as the CEO of Taco Bell.
Niccol is slated to take charge at Starbucks on Sept. 9., replacing interim CEO Rachel Ruggeri. Starbucks’ board chair, Mellody Hobson will be taking up a new role as the lead independent director.
Commending Niccol’s appointment, Schultz said, “His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture and values-driven enterprise. I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support.” The future of Starbucks lies in the balance, and the world will be watching closely to observe how Niccol brings his transformative touch to the coffee giant.
