Starbucks CEO removed following decrease in sales:
Less than two years into his role, the Starbucks boss has been removed due to declining sales and customer boycotts related to Israel.
The worldwide coffee franchise officially announced the exit of Laxman Narasimhan on Tuesday as he resigned immediately.
Brian Niccol, previously the CEO of Chipotle, has taken over his position after being credited with improving the fast food restaurant’s financial situation.
The shift in management follows a tumultuous year at Starbucks. Sales decreased for two quarters in a row, with a 4 percent drop in the first three months of the year and a 3 percent decrease in the following three months.
Certain customers have reduced their consumption of the chain’s pricey coffee, while others have refused to support the company due to its supposed connections to Israel.
This has caught the interest of activist investor Elliott, who has put pressure on the board after acquiring a stake in the company.
Starbucks’ stocks dropped approximately 25% in the last year, but rose by about 20% on Tuesday following the news of Mr. Narasimhan’s resignation.
The coffee company faced a boycott last year due to its perceived backing of Israel during the Gaza conflict.
Conflict escalated when it filed a lawsuit against the Starbucks Workers United (SWU) union for trademark violation in Iowa. This was a reaction to the union’s demonstration of “solidarity with Palestine” on social media after the Oct 7 attacks by Hamas terrorists.
During March, the Middle Eastern franchisee of the company disclosed intentions to terminate thousands of employees due to decreased sales resulting from boycotts associated with the conflict in Gaza.
The company has maintained that its reported backing of Israel is due to false information on the internet, asserting that it has not provided any funds to the Israeli government or military.
Mr. Narasimhan, who previously headed Reckitt, the company behind Durex, took over as CEO of Starbucks in March 2023.
He left Reckitt in the middle of a three year restructuring effort.
Brian Niccol will assume the role of CEO at Starbucks on September 9 while Rachel Ruggeri, the company’s CFO will act as interim CEO until that date.
Mellody Hobson, chairman of Starbucks, expressed: “Our board is confident that he will bring about significant change as a leader for our company, employees, and global customers.”
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