Starbucks Soars After Tapping Chipotle's Brian Niccol As Its New CEO

Starbucks shares soared more than 20% after the coffee chain announced it is ousting its current CEO, Laxman Narasimhan, and will replace him with Chipotle's chief executive Brian Niccol.

The move to name Brian Niccol as CEO comes as Starbucks contends with activist investors, stagnant sales, and a sinking stock price. I Photo: Business Wire

The move comes as Starbucks contends with activist investors, stagnant sales, and a sinking stock price, Aimee Picchi reported for CBS News.

Starbucks shares gained $15.93, or 21%, to $92.96 in early afternoon trading, after soaring as much as 24% earlier in the day. Prior to today's stock jump, the company's shares had shed 18% of their value since January. Starbucks said on Tuesday that Niccol will start in his new role on September 9.

The company's chief financial officer, Rachel Ruggeri, will serve as interim CEO until that date, while Mellody Hobson, the board chair, will become Starbucks' lead independent director.

Narasimhan, who spent a little more than a year leading Starbucks, is stepping down immediately.

The appointment comes as Starbucks is losing ground with consumers around the globe, leading to its first drop in quarterly revenue since 2020 earlier this year.

Store traffic was down 3% in the January through March period compared with a year earlier, with some coffee drinkers complaining the drinks were too pricey at a time when many people are feeling a financial pinch from inflation.

"There is a sense that Starbucks has been on the back foot for too long and that it has lost sight of the basics. This has led to a poor performance, particularly in the U.S.," said Neil Saunders, managing director of GlobalData, in a Tuesday research note.s