Big changes could be headed to Starbucks once Brian Niccol takes over the company’s CEO position next month.
Niccol, who has spent six years as the CEO of Chipotle, is slated to become Starbucks’ next CEO on September 9, the company said on Monday. He will replace Laxman Narasimhan, who has held the chain’s top job for 17 months.
So far, Niccol hasn’t said publicly what his plans for Starbucks might include, and his first earnings call as CEO isn’t expected until this fall.
But analysts are already pointing to some areas where Niccol is poised to shake up Starbucks.
One clue about the scope of the changes that Niccol will be able to make is in Starbucks’ press release that announced the CEO change. In it, Niccol is described as the incoming CEO as well as chairman — the latter a title that his predecessor didn’t get when he took the top job in 2023.
“Receiving day-1 Chairmanship is a significant departure from previous actions at Starbucks and shows the tangible authority” that the company is giving Niccol, JPMorgan analyst John Ivankoe wrote in a research note on Tuesday.
Bringing on new executives is one way Niccol is likely to use that authority, Deutsche Bank analyst Lauren Silberman wrote on Tuesday. Starbucks’ C-suite has seen lots of departures over the last few years, from 20-year veterans like former COO John Culver to Roz Brewer, who left the role after a few years for drugstore chain Walgreens, Silberman wrote.
Niccol could also bring big changes to Starbucks’ menu and stores.
Under his leadership, Chipotle has introduced new types of proteins and limited-time offers over the last few years, TD Cowen analyst Andrew Charles wrote on Monday.
The chain also capitalized on social media trends, adding a fajita quesadilla to its menu last year that started as a “hack” that Chipotle customers shared on TikTok.
Niccol “will bring a similar discipline that will enable Starbucks to better succeed with menu innovation,” Charles wrote on Monday.
New menu items — including those that target new meals and times of the day — could also be on the agenda, Deutsche Bank’s Silberman wrote.
At Chipotle, Niccol and his executive team carefully evaluated new offerings as they were developed and tested through the “stage-gate process,” which “was designed to ensure successful rollouts,” Silberman wrote. Niccol could implement a similar strategy at Starbucks and use it to expand Starbucks’ breakfast and lunch offerings, she said.
The incoming CEO also focused on store operations while at Chipotle. The company has experimented with robots that can make tortilla chips and core avocados for guacamole, for instance.
Under Niccol, Starbucks could slow down new store openings and look for opportunities to improve operations at the ones it already has, said Gregory Francfort, an analyst at Guggenheim Partners.
“We think it makes sense for Starbucks to redeploy some of the capital expenditures for new store development back into the existing locations to accelerate the pace of equipment and technological improvements,” he said.
But Niccol’s skillset and experience might not be a match for every problem facing Starbucks. One issue for the coffee chain is slumping sales at its stores in China, which represent almost 20% of Starbucks’ locations globally.
Taco Bell and Chipotle, by contrast, mostly operate in the US, meaning that Starbucks will be Niccol’s first time managing a restaurant chain with a large overseas presence, KeyBanc Capital Markets analyst Eric Gonzalez wrote in a note on Monday.
Outgoing CEO Narasimhan floated the idea of spinning off Starbucks’ China business on an earnings call in July.
Niccol’s appointment “increases the possibility that Starbucks would consider strategic alternatives, including a spinoff of its China operations,” Gonzalez wrote.
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