MUSCAT : Starbucks has announced an unexpected leadership change. CEO Laxman Narasimhan will depart immediately after only a year at the helm. Effective September 9, Brian Niccol, CEO of Chipotle, will step into the role of chairman and CEO of the coffee giant. The news sent Starbucks’ stock soaring by more than 13% in premarket trading, while Chipotle’s shares fell by 8%.
Niccol, who has led Chipotle since 2018, is credited with driving significant growth and setting new industry standards. Under his leadership, Chipotle’s revenue surged nearly 800%, earning him praise from Starbucks’ new lead independent director, Mellody Hobson. “Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth,” Hobson said, adding that Niccol will be a transformative leader for Starbucks.
Narasimhan, who also leaves the Starbucks board, took over in March 2023 but faced considerable challenges. The coffee chain recently reported a 3% drop in global sales at stores open for at least a year, including a 2% decline in North America. The company has struggled with consumer fatigue from rising prices and a shift in its business model from a sit-down café to a drive-thru and mobile takeout operation.
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Retail analyst Neil Saunders pointed to ongoing issues such as operational inefficiencies and a lack of innovation that are contributing to Starbucks’ difficulties.
The abrupt change in leadership also comes amid a 17% drop in Starbucks’ stock this year and ongoing negotiations with activist investor Elliott Investment Management.
Former Starbucks CEO Howard Schultz, who has been vocal about his concerns, praised Niccol, stating he has his “respect and full support.”
This also sheds light on other troubling matters that need to be dealt with for the new CEO with Starbucks’ recent fiscal troubles, including a 4% drop in same-store sales in the second financial quarter, due to the ongoing war in Gaza.
Starbucks said several issues impacted its sales, including firing many employees across the Middle East. One of them was the ongoing boycott of its stores for its perceived support of Israel in the war in Gaza, which was felt mainly in the Middle East but also in the United States and elsewhere.
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