CEO Brian Niccol replaces with Laxman Narasimhan   ||  Latest Update - video Dailymotion

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00:00We've got some breaking news to bring you, and this is big.

00:02Starbucks' CEO, Laxman Narasim, is now stepping down as CEO and director.

00:08That is effective immediately.

00:10The company has named Chipotle's CEO, Brian Nichol, as chairman and CEO.

00:14That's going to be effective September 9th.

00:16In the meantime, the company's CFO, Rachel O'Jerry, is going to be serving as interim

00:21CEO.

00:22This is big news in the world of both Starbucks and, of course, in the world of investments,

00:28There have been a number of activist investors around this.

00:30Melody Hobson, the current Starbucks chair, will become lead independent director.

00:35And we're going to be able to break all of this down, hopefully, in just a couple of

00:38minutes.

00:39She's going to join us on the show, but we've been talking about Starbucks for quite some

00:43time.

00:44Laxman taking over the company about a year ago, the stock down since he took over.

00:49Just in the past year, you're looking at the stock down about 23, 25 percent.

00:52By the way, the news here, up now, putting the stock up about 8 percent on the back of

01:00this news.

01:01I wonder what Chipotle is doing.

01:02Chipotle is down 7 percent.

01:03We should also take a look at Chipotle as well.

01:06And we're going to have to see who's going to ultimately run that company.

01:09But you can see the confidence that people have in Brian.

01:12Keep in mind what has happened to Chipotle's stock since Nichol took over in 2018.

01:16Yeah, it's incredible.

01:17March 2018, it took over.

01:18The stock was split adjusted roughly five bucks compared to where it is now.

01:24So that is the kind of operator he has been.

01:26They've been able to fight inflation with price increases, innovation to the menu, also

01:30a lot of technology improvements, the autocado, which automatically scoops out the avocado.

01:35So a lot of things like that.

01:37If he can impart some of that to the Starbucks story, which has had so many different problems

01:42for the first time offering a $5 pairing menu now, because they have to join the fight in

01:47terms of, you know, consumers just pushing back on prices at this point.

01:51That's what Narasimhan has not been successful at.

01:54And so this is really seen as it's amazing that they got a box.

01:58It's amazing.

01:59It really is.

02:00It was a must.

02:01They must be paying him a lot.

02:02I want to read from Howard Schultz.

02:04Of course, Starbucks is founder is the chairman emeritus.

02:06He was apparently consulted on this hiring.

02:09He says, having followed Brian's leadership and transformational journey at Chipotle,

02:12I've long admired his leadership impact, his retail excellence and track record in delivering

02:16extraordinary value, recognize the critical human element it takes to lead a culture

02:21and values-driven enterprise.

02:23And I'm underlining those words, because if you think about some of the criticism that

02:29Howard Schultz has leveled towards, actually, this management, I believe he is the leader

02:33that Starbucks needs at a pivotal moment in its history.

02:36He has my respect and full support.

02:39He then goes on to thank Melody and the Starbucks board for their deep commitment to shaping

02:43the future.

02:44One of the big questions now is going to be what the activist investors, Elliott and Starboard,

02:49which are taking positions, think of this.

02:52Are they going to still pursue trying to get seats on that board?

02:56What other kind of pressure points are they going to push?

02:58Or are they going to say, you know what, these are the operational decisions and moves that

03:02have to be made?

03:03We've said for a very long time this is a company that would struggle in many ways.

03:07There's not a financial engineering program that you can put into place at this company.

03:11This is an operational issue.

03:13Some people have talked about, do you spin off China, do you franchise the business?

03:18I'm not sure any of those things are now going to be on the table, and maybe this is going

03:21to give them some room to try to figure it out.

03:23Chipotle has its own release out about who is going to resume the role here.

03:28So far, it looks like an interim CEO, Scott Boatwright, who's the current chief operating

03:32officer.

03:33But Jack Hartung, who had been the president or CEO of Chipotle prior, he had retired,

03:39will stay on indefinitely with the organization as president of strategy.

03:43So...

03:44That's stuck down almost 10%.

03:45Yeah.

03:46Wow.

03:47It is a blow.

03:48But this is a huge move in the world of fast food.

03:58I'd call it something else.

03:59Brian Nichols probably, and I'm going to go out on a limb here, is one of the best operators

04:03in the business.

04:04In the business.

04:05And probably one of the best CEOs out there.

04:08And it's interesting that Howard Schultz had to be brought in to give his approval,

04:13because he has been sort of the, I don't want to say the third person in the room all the

04:19time, but always sort of second-guessing, right?

04:21I mean, he had that open letter that was published saying that he didn't like the direction which

04:26Starbucks was going.

04:28And so he has a say, even if he's away from the company.

04:31And to your point, the great things that he did at Chipotle, aside from technology and

04:36being a great operator, was always doing things that made Chipotle feel special.

04:41They were doing sort of, you know, in that context, high-end things, special menu offerings

04:46that made it not just another commoditized maker of rice bowls and burritos.

04:50And that's exactly what Starbucks needs.

04:52Right.

04:53There's a reason why people are willing to pay 20 bucks for a bowl.

04:56And they still feel like, oh, we're getting Chipotle, that's special.

04:59So can you do that with a cup of coffee?

05:01And that's the question.

05:03We've discussed it.

05:04We were discussing this yesterday.

05:05Yeah.

05:06And your point of, should they just make, you know, just to get people in the store,

05:09you know, 99-cent coffee, just to get, and Brian would probably go the other direction.

05:13No.

05:14Yeah.

05:15Probably try to move up market and make it more special.

05:17I think the question, the question is how do you make it special?

05:20Right.

05:21Right.

05:22And the costs right now, unfortunately- Are too high.

05:23For Starbucks is too high.

05:24And so- For this macro environment.

05:25What is the kind of product that you can bring in?

05:27And also, what is the experience?

05:29Going back to that third place idea.

05:30The experience.

05:31It's all about the experience.

05:32And the human interaction.

05:33And we've all lost it because we're buying everything on our phone.

05:36And you know, they've had a lot of trouble, by the way, just even fulfilling the orders.

05:40You go, and look, the good news is there's long lines.

05:42The bad news is there's long lines.

05:44And so how do you fix that?

05:46How do you fix the experience in the stores?

05:48How do you clean up some of the stores?

05:49I mean, I think there's a lot of work to be done, but he has a lot of respect in the business

05:54and we're going to continue to talk about this story in just a moment.

05:58Yeah.

05:59And again, if you're just joining us, Brian Nickell, the former CEO of Chipotle, joining

06:02Starbucks.

06:03The stock is up 10.5%.

06:04Chipotle is down by 9%.

CEO Brian Niccol replaces with Laxman Narasimhan || Latest Update

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