Brian Niccol, on his second day as Starbucks Corp.'s (NASDAQ:SBUX) CEO, announced plans to return the company to its roots as a community coffeehouse.
What Happened: Niccol emphasized the need for comfortable seating and a clear distinction between "to-go" and "for-here" services. He acknowledged that the company has drifted from its core values and is committed to enhancing the in-store experience.
Niccol, known for turning around Chipotle Mexican Grill, Inc. (NYSE:CMG) and Taco Bell owned by Yum! Brands, Inc. (NYSE:YUM), is Starbucks' fourth CEO in two years. He takes over amid declining sales and pressure from employees and investors.
Starbucks has experienced falling sales for two consecutive quarters. Customers have complained about high prices, slow app orders, and subpar food options. The company has also faced union organizing efforts due to dissatisfaction with working conditions, pay, and benefits.
Niccol plans to empower baristas by providing them with the necessary tools and time to craft quality drinks. He noted that mobile orders often overwhelm stores, leading to a hectic environment.
Despite scrutiny for not relocating to Seattle, Niccol will spend time in stores, at headquarters, and with employees globally.
Why It Matters: Niccol's appointment comes at a critical time for Starbucks. Just a day before his announcement, top Wall Street analysts predicted a potential 21% rally in Starbucks' stock, reflecting optimism about his leadership.
However, Niccol's decision to commute between his California home and Seattle headquarters via a company jet has sparked environmental concerns.
Niccol's move to Starbucks also led to a rapid transition at Chipotle, where Adam Rymer was fast-tracked to the CFO position following Niccol's departure.
Additionally, Starbucks' international operations have faced challenges. The company's operator in Malaysia reported significant losses due to anti-Israel boycotts.
Price Action: Starbucks stock closed at $93.34 on Tuesday, up 1.23% for the day. In pre-market trading, the stock was down 0.17% at the time of writing. However, year to date, the stock is down 0.35%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
