Coffee chain Starbucks (NASDAQ:SBUX) abruptly fired CEO Laxman Narasimhan and replaced him with Chipotle (NYSE:CMG) CEO Brian Niccol. This is sending SBUX stock rocketing up today and CMG stock tumbling.
Niccol will start work at the Seattle-based coffee chain on Sept. 9.
Investors cheered the move, sending SBUX stock up 13% in overnight trade. Shares opened today at $91 each, bringing its market capitalization back up to $106 billion. Chipotle, on the other hand, fell nearly 8%, opening at $50, bringing its market cap down to $67 billion.
Niccol Drops Dimes
At Chipotle, Niccol built a legend almost equal to that of Starbucks’ former CEO Howard Schultz.
Niccol was hired by Yum! Brands (NYSE:YUM) Taco Bell chain in March 2018. He transformed the burrito chain, then mired in scandal. It became the market leader for fast casual dining. He moved the headquarters from Denver to southern California, copied Starbucks’ loyalty program, and introduced new menu items. He delivered a 10-fold increase in the stock price. CMG stock split 50-for-1 this last March.
Chipotle quickly moved to promote Chief Operating Officer Scott Boatwright to its CEO chair. Strategy executive Jack Hartung, who had previously said he would retire next year, agreed to stay on to assist with the transition.
Starbucks has suffered multiple reverses. These climaxed recently with activists Elliot Management and Starboard Value buying stakes in the company, demanding change. Niccol may be the change they are looking for.
While Niccol was reinventing Chipotle, Starbucks was breaking its business model. It dumped its role as “the third place” in favor of an app-driven company focused on drive-thru. In the process it lost ground in the U.S. to rivals like Dutch Bros (NASDAQ:BROS), Black Rifle (NASDAQ:BRCC), and thousands of local entrepreneurs. It was also blindsided by the rise of “boba shops” serving flavored teas with tapioca balls.
International operations, meanwhile, were hit by a rising tide of anti-Americanism. China, once Starbucks’ star market, is losing ground to local rivals. Across the Middle East, resentment over American support of Israel has led to boycotts.
SBUX Stock: What Happens Next?
Niccol faces a crisis at Starbucks not unlike the one he faced at Chipotle six years ago. His strategy, and the results, should be one of the great business stories of 2025.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
