Newswise — Starbucks abruptly fired its chief executive this week and quickly replaced him with Chipotle Mexican Grill CEO Brian Niccol amid slowing sales in some of its biggest markets and activist investors pushing for change at the company. Previous Starbucks CEO Laxman Narasimhan will leave the coffee company after just one year of service. Niccol’s sign-on pay package is worth up to $113m and Starbucks shares soared after the announcement.
If you would like more context on this matter, please consider Chris Kayes, professor of management and chair of the Department of Management at the George Washington University. He is an expert in leadership, resilience, management learning and change, learning styles, organizational development, and learning in groups and teams.
Kayes shares his thoughts on the challenges that await Niccol’s in his new role at Starbucks, effective in September:
“The new CEO of Starbucks, Brian Niccol, faces big challenges as the new CEO. Expectations are high, as shareholders bid up the price of Starbucks in expectation of great new things from the former CEO of Chipotle. But Niccol will need to keep the orders flowing to satisfy customers who have cooled to the coffee and beverage brand.
In addition to high expectations, Niccol will need to contend with a faltering image and increasing competition. In terms of leadership, Niccol will need to contend with a group of outside investors eager to see a quick turnaround as Starbuck’s has had four CEOs in nearly as many years. But the biggest challenge may be dealing with former CEO Howard Schultz, who just can’t seem to keep away from trying to run the company. He is still one of Starbuck’s largest shareholders and keeping vocal investors like Schultz at bay may become a full-time job. Top this off with an increasing number of unionized baristas (approaching 500 stores at last count), customers unhappy with the product, and slow growth in China, and you have a full order as CEO.
Niccol faces a big challenge with customer perceptions. He will have to decide which direction to take the brand. The ‘middle’ branding is not working. The Starbucks brand is no longer fancy enough for the high-end coffee crowd seeking a more authentic café experience. At the same time, Starbucks is not affordable enough for those seeking a jolt of caffeine that can be more easily obtained from the gas station. At the same time, Starbucks faces growing competition from companies like Dunkin’, Blue Bottle, as well as up-and-comers like Dutch Brothers and Tim Hortons. Starbucks has lost its appeal as a brand, and that could be bad news considering once fashionable names like Sears, JCPenny’s, and Macy’s occupied the same middle ground in customers’ minds.
Despite the challenges, Niccol may be just the man for the job. He turned around a troubled Chipotle and has a strong track record in rethinking brands. With some patience, investors, customers and employees may find Niccol at the right time and place to lead the company through change.”
If you would like to speak with Prof. Kayes, please contact GW Senior Media Relations Specialist Cate Douglass at [email protected].
-GW-
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