Starbucks CEO Laxman Narasimhan Steps Down Amid Company’s Sliding Stock and Decline in Sales
- He took over the coffee giant in March 2023, and has seen the coffee chain struggle under his leadership.
Starbucks CEO Laxman Narasimhan is stepping down immediately after just a year in the role, the coffee giant announced today. He will be replaced by Chipotle CEO Brian Niccol who will start in his new role on Sep. 9. Starbucks chief financial officer, Rachel Ruggeri, will serve as interim CEO until that time. Mellody Hobson, Starbucks board chair, will become the lead independent director.
CNN reports that “the abrupt change at the top comes amid a sliding stock, which is down 17% for the year.” In its latest quarter, the company reported “a 3% decline in same-store sales,” according to CNBC. As pressure on the company mounted as it struggled to drive traffic to stores, activist investor Elliott Management purchased stakes in the company and had been “pushing for changes, including getting board seats,” The Wall Street Journal reported.
Narasimhan, who is also leaving the board, took over Starbucks in March 2023 and has seen the coffee chain largely struggle under his purview. The company’s shares have “fallen 21% during Narasimhan’s tenure, excluding Tuesday’s move,” the report added.
CNN notes that” Starbucks’ struggles reflect consumer fatigue with high prices at food chains, restaurants, and stores after years of price hikes.” They also “reveal cracks in Starbucks’ business model, which has changed in response to customer demand from a predominantly sit-down coffee shop to a mostly drive-thru and mobile takeout chain,” CNN added.
In May, former CEO Howard Schultz, who handpicked Narasimhan as his successor, wrote an open letter, posted on LinkedIn. He weighed in on the company’s issues and offered advice, but never addressed Narasimhan by name. “Over the past five days, I have been asked by people inside and outside the company for my thoughts on what should be done,” he wrote. “I have emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace. The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data but in the stores.”
Before joining Starbucks, Narasimhan served as CEO of the health and hygiene company Reckitt, which owns brands such as Lysol, Durex, and Mucinex. “Since his appointment in September 2019, Laxman has led a successful rejuvenation of the company’s strategy, execution, and foundational capabilities,” read a Reckitt press release. “The company’s purpose – to protect, heal and nurture in the relentless pursuit of a cleaner and healthier world – is, and remains, foundational to the future direction of the company; as do its environmental, societal and governance commitments.”
He moved to the United States in 1991 to attend the University of Pennsylvania’s Wharton School. He then joined the consulting giant McKinsey & Company, eventually becoming a senior partner. In 2012, he moved to PepsiCo, where he rose through the ranks, overseeing operations in Latin America, Europe, and sub-Saharan Africa, and becoming chief commercial officer.
Previously, the Pune-born executive held various leadership roles at PepsiCo, including as global chief commercial officer, where he was responsible for the company’s long-term strategy and digital capabilities. He also served as CEO of the company’s Latin America, Europe, and Sub-Saharan Africa operations, and previously as the CEO of PepsiCo Latin America, and the CF) of PepsiCo Americas Foods.
Before PepsiCo, Narasimhan was a senior partner at McKinsey & Company, where he focused on its consumer, retail, and technology practices in the U.S., Asia, and India and led the firm’s thinking on the future of retail.
Narasimhan holds a degree in Mechanical Engineering from the College of Engineering, University of Pune. He has an MA in German and International Studies from The Lauder Institute at The University of Pennsylvania and an MBA in Finance from The Wharton School of The University of Pennsylvania.