Starbucks stock may shoot higher under new CEO Brian Niccol

Starbucks stock surged 24.5%, while Chipotle shares dropped 7.5% following the news that Chipotle’s CEO, Brian Niccol, will take over as Starbucks' CEO starting September 9.

The shift in leadership had a significant market capitalization impact on August 13: Starbucks gained $21.4 billion, whereas Chipotle’s value decreased by $5.8 billion, resulting in a total market capitalization change of $27.2 billion.

Who is Brian Niccol?

A 1996 graduate of Miami University of Ohio, Niccol has served as Chipotle’s CEO since 2018 and has been the company’s chairman of the board since 2020. Prior to Chipotle, he was the CEO of Taco Bell from 2015 to 2018.

Niccol also sits on the board of directors at Walmart, the world's leading brick-and-mortar retailer. Under his leadership, Chipotle's share price has surged over 1,000% since his appointment in February 2018, factoring in the company's recent stock split.

Brian Niccol may preside over a rise in Starbucks stock

Starbucks is seeking a turnaround as its stock has significantly lagged behind the S&P 500 on a year-to-date, 5-year, and 10-year basis. As of Monday, shares were trading roughly 20% below their August 2019 levels.

The company has faced a sharp slowdown in sales growth—analysts project less than 2% annual growth for the fiscal year ending next month—and has struggled to regain pre-pandemic profit levels, with a projected net income of $4 billion for 2024 falling short of the 2019 record of $4.5 billion.

Activist investors such as Elliott Investment Management and Starboard Value have recently acquired substantial stakes in Starbucks, aiming to push the company to enhance shareholder value.

Brian Niccol is known for success in the industry, including leading Taco Bell and Chipotle. His experience in the Quick Service and Fast Casual formats is expected to bring significant value to Starbucks Corp (NASDAQ:SBUX).

Niccol also has a history of turning around the digital side of business. Chipotle’s digital orders went up from 10-15% to over 40% during his tenure, which consistently boosted revenues and earnings.

Starbucks Corp (NASDAQ:SBUX) is also adjusting its strategy, focusing on coffee innovation and drive-through formats, similar to Dutch Bros. The new textured coffee drinks are likely to be priced competitively, with Niccol’s expertise in digital marketing expected to play a key role in positioning these offerings effectively, just as he did at Chipotle,

Starbucks giving new CEO private jet to commute

New Starbucks CEO Brian Niccol officially begins his role on September 9, but the backlash around his planned commute to work has already begun, with users on social media mocking the company for insisting on using paper straws while allowing its CEO to travel by private jet.

Niccol will not be stationed full-time at the company's Seattle headquarters when he takes over next month. Instead, he will commute weekly from his home in Newport Beach, California.

According to Niccol's offer letter disclosed last week, he will have a "small remote office" at his California residence and will not be required to permanently relocate to Seattle. Starbucks will provide him with a corporate jet for his weekly commutes.

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