A significant leadership change has been made at Starbucks with the company’s CEO Laxman Narasimhan, who has been in the position for more than a year, stepping down and being replaced by Brian Niccol, the former CEO of Chipotle. Niccol who has prior experience in the successful transformation of Chipotle; after the company had serious food-borne illness issues is scheduled to join Starbucks as the chairman and CEO on September 9. During his tenure, Chipotle was able to bounce back from a spate of foodborne illnesses that sickened more than 1,100 people.
He effected positive changes which included; enhanced marketing strategies and plans, new product introduction and development, and the establishment of a customer reward program. Also, as part of the company’s operations and image, Niccol worked at increasing how stores operated and introducing benefits such as covering college tuition fees for employees in certain institutions. They also managed to cause Chipotle’s revenue to rise by nearly a mark of $1 billion during his time as CMO and regain the trust of consumers.
Challenges Await Brian Niccol as He Takes Over at Starbucks
However, as Niccol gets into this new position at Starbucks he is in for a lot of problems. The coffee giant has been struggling with sales slump and issues along its brand equity. Starbucks in the U. S. has found it difficult to manage the high consumers’ preference for mobile ordering and the conventional in-store cafe. The number of persons in a store has increased due to longer time to spend waiting to order or waiting to be served for a mobile order, all of which reduce the quality experience that should be associated with a Starbucks store, an issue that will demand the attention of Niccol to wish to restore the image of the company as a quality coffee producer and seller.
Furthermore, Starbucks’ prices are high and the inflation rate is usually high coupled with changes in consumer behavior, Niccol will struggle to explain why Starbucks should charge higher prices than other brands. Globally, Starbucks is experiencing stiff competition in the second market; China, where rivals have started offering cheap coffee. The firm is also facing boycotts in the Middle East and some parts of Europe, which they attribute to the company’s perceived position on the Israel-Hamas conflict.
Narasimhan’s Short Tenure Ends as Starbucks Struggles Continue
Narasimhan’s reign was short-lived as Starbucks failed to get out of the woods.
Analyzing Narasimhan’s departure, one can conclude that the period was rather short and problematic. But Narasimhan’s attempt to revive the company failed, even if he tried to spend more time in stores, as well as working as a barista to gain a deeper insight into the company’s operations. In the first quarter of this year, Starbucks had a 2% decrease in revenue, which marked the decline from late 2020, and another decline of its revenue in the following quarter.
At the same time, under the leadership of Niccol, Chipotle has achieved a growth of 11% throughout comparable stores, which proved that the companies’ results are distinctly dissimilar. Shareholders approved the appointment of Niccol by responding positively to the information through the increased stock value; Starbucks experienced a 24% increase in its stock price. 5 easily erasing all their previous losses for the complete fiscal year. When Niccol starts leading Starbucks, the industries will know whether he will create a similar effective strategy for Chipotle and manage the numerous issues confronting the coffee colossal.