Incoming Starbucks CEO’s tall order: Calming anxious employees

The coffee chain’s board of directors, investors and longtime leader Howard Schultz have embraced Niccol since his hiring last month, praising the former Chipotle Mexican Grill CEO as the best possible choice to turn around Starbuck’s operations and restore its brand after a turbulent few years.

At the company’s Seattle headquarters and across its U.S. cafes, the reception is more mixed. Some Starbucks workers said the rapid turnover in the CEO role—Niccol will be the company’s fourth in less than three years—is fatiguing. Many said they were hopeful that Niccol’s restaurant-industry experience would lead to improvements, though some felt jarred by former CEO Laxman Narasimhan’s abrupt August ouster, a year and a half into the job.

Niccol plans to host a town hall this week, meet with baristas in cafes and employees at headquarters, and start assessing the company’s challenges and opportunities.

Starbucks for years has struggled with cafe operations, where orders for often-complex drinks have frequently overwhelmed baristas and created long lines of frustrated customers. Snarled stores and rising prices have contributed to employee turnover and declining traffic, pressuring the company’s results.

Over the past five years, Starbucks shares have declined by about 5%, while the S&P 500 stock index has gained around 82%. In recent months, the company has faced activist investors and public criticism from Schultz over its operations.

Starbucks’s recent relations with workers have often been uneasy. Three years ago baristas, frustrated with pay and working conditions, began unionizing. In March 2022, Kevin Johnson, Starbucks’s CEO at the time, stepped down and was succeeded by Schultz. Taking over for a third stint as CEO, Schultz reinvested in stores, raised wages for baristas and helped position a permanent successor.

Starbucks picked former Reckitt Benckiser Group CEO Narasimhan, who underwent a six-month training period that included working as a barista. But the company’s challenges deepened, with Starbucks in April cutting its sales outlook for the second time this year.

Wall Street enthused last month when Starbucks poached Niccol from Chipotle, bringing to Starbucks restaurant-operations chops that Narasimhan lacked, and turnaround experience. Starbucks’s shares have gained around 18% since his hiring was announced.

Internal reactions at Starbucks have been more complicated, according to store managers, corporate workers and others with the chain, which prizes ritual and tradition. Some employees said they feel like they have navigated years of shifting executive-office priorities and personalities, from Narasimhan’s focus on supply chain to Schultz’s backing of an olive oil-infused coffee.

Manny Paz, a district manager from Southern California, said Niccol introduced himself when he visited Paz’s store during a recent Pumpkin Spice Latte promotion. Niccol chatted with the baristas and sampled one of Starbucks’s signature drinks.

“He’s a genuine and curious individual," Paz said.

Some workers were skeptical of the hybrid work arrangement that allows Niccol to commute to Seattle on a company jet and establish an office near his Southern California home. Narasimhan had moved to Seattle from London to take the CEO position, and the chain expects Seattle-based corporate employees to generally work from headquarters three days a week.

Several Starbucks store managers said they wished Rachel Ruggeri, Starbucks’s chief financial officer of roughly two decades, would become the next CEO, noting her long tenure and candor with employees. Others wished they could have said goodbye to Narasimhan, who regularly convened informal chats with employees.

Starbucks said it has sought to listen to and address workers’ concerns about the abrupt CEO transition, and it established a way for employees to share their gratitude to Narasimhan.

“We look forward to the fresh ideas that Brian will bring to our business," Starbucks said.

Some Starbucks alumni said that despite the tumult, a shake-up was merited after a spate of lackluster performance.

“Things were really bleak," said Major Cohen, a former chain project manager who retired in 2020 after 25 years at the company.

Starbucks didn’t make Niccol available for an interview. He informed Chipotle on Aug. 12 of his decision to step down, and he has met with Starbucks’s U.S. leaders and visited dozens of cafes since, Starbucks said.

Niccol, 50 years old, helped turn Chipotle into an industry powerhouse after it was laid low by food-safety problems. Niccol said last month that he was energized at the opportunity to spur growth at Starbucks and make improvements for customers and employees.

Starbucks is moving ahead negotiating with Workers United, the union that has organized bargaining units at 475 of the chain’s 9,950 U.S. stores as of last month. The company and the union said they have made progress on contract terms and toward resolving litigation, including during three days of bargaining last month. The parties expect to hold another bargaining session this month.