Opinion
Mint Quick Edit | Will Starbucks’ new CEO get a free hand?
Summary
- Having served just over a year as CEO of Starbucks, Laxman Narsimhan will make way for Brian Niccol at the iconic coffee chain’s top. Will its ex-chief Howard Schultz’s shadow loom over his role, as it did over Narsimhan’s? That could make all the difference to whether the chain can turn around.
Starbucks has had a change at the top shortly after hedge fund Elliott Management acquired a significant stake in it. Brian Niccol, CEO of Chipotle, a fast-food chain, will take over as the chief of the global coffee chain that popularized the idea of a “third place" in between one’s home and office.
Niccol replaces Laxman Narasimhan, who had a tumultuous tenure of just over a year as its boss, a period marked by softening financial performance amid top-level divisions over labour relations.
Elliott has a reputation as an activist investor, and a 10% jump in Starbucks’ share price in response to the switch suggests market confidence in the new CEO’s ability to turn its numbers around.
Also read: Starbucks zooms 24%, adds over $20 billion in mcap after replacing Laxman Narasimhan with Brian Niccol as CEO
Its shares had been trading at a price-earnings multiple in the teens, well below its five-year average of 28. The sad part is that Narasimhan found his role shadowed too often by previous chief Howard Schultz, who, as observers pointed out, not only stayed on as an advisor, but also aired needless criticism on social media about changes made by his own handpicked successor.
Schultz is seen as the leader behind the chain’s success, but still, staying on too long after handing over charge is never good for any business.
