Starbucks Shakes Up Business Model by Hiring Chipotle CEO Brian Niccol
Coffee giant Starbucks (NASDAQ: SBUX) made a bold move by abruptly firing CEO Laxman Narasimhan and bringing in Chipotle’s (NYSE: CMG) CEO Brian Niccol. This unexpected decision has caused SBUX stock to soar while CMG stock takes a hit.
Niccol is set to begin his new role at Starbucks on Sept. 9. Investors are ecstatic about this change, with SBUX stock jumping up 13% in overnight trading. The stock opened today at $91, pushing its market cap back up to $106 billion. On the other hand, Chipotle’s stock fell nearly 8%, opening at $50 and bringing its market cap down to $67 billion.
At Chipotle, Niccol made a name for himself, almost reaching the status of Starbucks’ former CEO Howard Schultz. He turned around the struggling burrito chain by implementing changes like relocating the headquarters, introducing a loyalty program, and expanding the menu. This resulted in a significant increase in stock price, with CMG stock splitting 50-for-1 in March.
Starbucks, on the other hand, faced challenges with its business model, transitioning from a community-focused space to an app-driven, drive-thru centric company. This shift caused them to lose ground in the U.S. market to competitors like Dutch Bros (NASDAQ: BROS) and Black Rifle (NASDAQ: BRCC). Additionally, international operations were impacted by rising anti-American sentiment.
With Niccol now at the helm of Starbucks, investors are eager to see what changes he will bring to the table and how it will impact the company’s future. This move could potentially be the turning point Starbucks needs to regain its footing in the market and compete effectively against its rivals.
In conclusion, Starbucks’ decision to hire Niccol as CEO marks a significant shift in the company’s direction and has the potential to reshape its future trajectory. Investors should keep a close eye on how Niccol’s strategies unfold and the subsequent impact on SBUX stock performance.