The Scoop: Investors hope Niccol can change Starbucks’s story
Plus: Justice Department considers breaking up Google search monopoly, Google launches human-like Gemini Live.
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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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- The Justice Department and state attorneys general are reportedly considering a forced breakup of Google to eliminate the company’s monopoly as a search engine tool, according to the New York Times. The news stems from last week’s court decision that Google has violated antitrust law. What’s next for Google and the broader tech community is still very much up in the air. But even rumors of the possibility of a splintered Google Search may further open the door for the swelling number of companies – many of them rooted in AI – looking to take a bigger cut of the global search market space. As PR Daily previously reported, Bing has an enhanced platform in the works and other companies, including Perplexity and the new SearchGPT tool from OpenAI, are on the horizon as well. Each platform has its own unique algorithm and will populate results differently. Google Search remains the undisputed king, and it’ll take major alterations to consumer behavior to change that. But it’s a good idea to remain in the loop about how each of these platforms operates amid this changing landscape.
- In other Google news: The tech giant is rolling out a series of new AI-enabled features, including the human-sounding Gemini Live tool. Wall Street Journal reporter Janna Stern said “sounds so human, I almost forgot it was a bot.” Gemini Live, which will be available on Pixel and Samsung hardware, replaces the existing Google Assistant. Unlike its predecessor Google Assistant, this new AI platform can understand intent, follow a train of thought and perform complex tasks. You can even talk to it about aspects of your personal life, per Gizmodo. For communicators, Gemini Live – and the technology from other companies to follow suit – will become a potentially essential tool for a range of tasks such as event planning and ideating pitches. But it also represents just how fast this technology is evolving. Go out and check out these new technologies to see how they’ll work for you in the future. One piece of advice, though: Don’t fall in love with it.
- The annual inflation rate in the United States dropped to 2.9% in July, marking the first time that number has fallen below 3% since 2021. The news is likely to be a sigh of relief for many businesses, especially ahead of expected interest rate cuts next month. These changes are a positive sign for the direction of the national economy, but it’s also a reminder to communications that they need to stay on top of market trends and broader economic issues. These changes will undoubtedly have ramifications on your business. If you don’t know what they are, it’s time to learn.
Casey Weldon is a reporter for PR Daily. Follow him on LinkedIn.