The Scoop: Investors hope Niccol can change Starbucks’s story

Starbucks is handing over executive leadership duties to longtime Chipotle CEO Brian Niccol, hoping the PR-savvy executive can help the coffee chain rebound after a year of poor sales in the United States and China. 

Under the watch of former CEO Laxman Narasimhan, who assumed the role in March 2023, Starbucks has experienced a rash of bad headlines ranging from customer complaints about increased prices – and a public refusal by the company to consider lowering them – to what the New York Times described as the company’s “dirty war against organized labor.” 

Starbucks shares were down nearly 20% this year before Tuesday’s trading session, per NBC News. As a result, activist investors Elliott Management and Starboard Value had pushed for changes within the company. 

Elliott Investment Management on Tuesday called Niccol’s appointment a “transformational step forward.” And as late Tuesday, it seemed most investors agreed. 

Starbucks stock shot up by more than 20% for the day. 

Why it matters: Trust in leadership is one of the most important things to a company’s brand reputation. 

In its employee announcement, Starbucks noted that under Niccol’s six years of leadership, Chipotle revenue has nearly doubled, profits have increased nearly sevenfold, and the stock price has increased by nearly 800%, “all while increasing wages for retail team members, expanding benefits, and strengthening the culture.” 

National Restaurant News reported that:  

Niccol has cracked down on store-level throughput by ensuring that frontline workers, particularly at high-volume stores, have the resources necessary to deal with peak lunch hours and can improve both order accuracy and wait times. 

Those positive outcomes bolster Niccol’s reputation as a leader who’s comfortable leading a company through periods of bad press. After helping to turn around the Taco Bell brand, Niccol moved to Chipotle in 2018, where he helped the company overcome an E. coli outbreak that threatened both its reputation and bottom line. 

Niccol faced many of the same issues he’ll need to tackle at Starbucks during his tenure at Chipotle. Beyond price increases, the fast-casual chain confronted a wave of social media criticism over what some, such as popular food influencer Keith Lee, thought were shrinking portion sizes for its once-massive burritos and bowls. 

There was some initial backlash to Niccol’s playful TikTok that addressed the my-burrito-is-smaller-than-it-used-to-be controversy. But in a subsequent media response he attempted to reassure customers that “generous portions” always have been and “always will be” part of Chipotle’s core brand identity. 

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Casey Weldon is a reporter for PR Daily. Follow him on LinkedIn.