Starbucks’ new boss should beware its backseat barista

{"text":[[{"start":8.280000000000001,"text":"The coffee grounds have settled on the boardroom drama at Starbucks and a victor has emerged. "},{"start":13.134,"text":"Take a bow Howard Schultz. "}],[{"start":15.82,"text":"In a major shake-up, the Seattle-based coffee giant has named current Chipotle boss Brian Niccol as its new chief executive. "},{"start":22.774,"text":"He will replace Laxman Narasimhan, who leaves immediately. "}],[{"start":26.78,"text":"Niccol is highly regarded for the turnaround at Chipotle — and his appointment should (at least temporarily) quieten the ambitions of Elliott Investment Management. "},{"start":35.222,"text":"The activist, with a stake in Starbucks, had been in talks with Narasimhan. "}],[{"start":40.68,"text":"It is Schultz who appears victorious: the former CEO, major shareholder and vociferous critic of Narasimhan had opposed any deal with Elliott. "},{"start":48.922,"text":"The fact that Niccol’s appointment was not discussed with Elliott (but came with Schultz’s full support) suggests that the former may have been outmanoeuvred. "}],[{"start":57.08,"text":"The market made its feelings clear. "},{"start":59.384,"text":"Starbucks’ shares shot up nearly 23 per cent to erase its losses for the year while Chipotle fell more than 13 per cent. "}],[{"start":67.17,"text":"That, in part, reflects Niccol’s tenure at Chipotle. "},{"start":71.049,"text":"Since taking the helm in March 2018, sales at the Mexican-inspired chain have more than doubled to hit nearly $10bn last year. "},{"start":78.57900000000001,"text":"Profits are up 600 per cent. "},{"start":80.772,"text":"Even accounting for Tuesday’s drop, those who bought Chipotle shares on Niccol’s appointment would be sitting on a 873 per cent gain. "}],[{"start":null,"text":"

"}],[{"start":89.07,"text":"His experience should transfer well to Starbucks’ problems in the US: understaffing, customer frustration with long waiting times, and tired-looking stores are execution rather than demand issues. "},{"start":99.84899999999999,"text":"They can be overcome: Starbucks needs to invest in staff and improve its store operations and efficiency. "}],[{"start":106.64999999999999,"text":"By contrast, the company’s troubles in China — its second biggest market — are deeper-rooted. "},{"start":112.30399999999999,"text":"Competition from foreign and local brands is stiff, while the economy is slowing. "},{"start":116.722,"text":"Revenue at its 7,306 Chinese stores fell 11 per cent during the fiscal third quarter to June. "}],[{"start":123.91,"text":"For Niccol, the quick pick-me-up might be to slow expansion plans in China. "},{"start":128.427,"text":"Starbucks has more than doubled its store count there over the past six years. "},{"start":132.394,"text":"BTIG analyst Peter Saleh reckons Starbucks has invested more than $400mn a year — or 20-25 per cent of the company’s capital spend — to expand. "}],[{"start":142.42,"text":"Fixing Starbucks will not be as straightforward as Chipotle. "},{"start":146.012,"text":"The coffee chain is a far bigger beast, with 39,477 locations worldwide. "},{"start":152.10399999999998,"text":"Chipotle has just 3,530 outlets, mostly in the US. "}],[{"start":157.69,"text":"But Niccol’s appointment will buy the company some time to start addressing US problems and pare back in China. "},{"start":163.444,"text":"But his task comes with another complication: a backseat barista who has just secured what looks like a win. "}],[{"start":169.27,"text":""}]],"url":"https://creatives.ftacademy.cn/album/167358-1723596015.mp3"}