Shares of Starbucks ( SBUX -3.23% ) The stock experienced a strong start on Tuesday, increasing by as much as 23.7%. By 11:19 a.m. ET, the stock was still showing a gain of 22.7%. Chipotle Mexican Grill is a popular fast-casual restaurant chain known for its Mexican-inspired menu items such as burritos, tacos, and bowls. ( CMG 1.04% ) The stock experienced a drop of up to 14.1% but has since recovered slightly and is now down by 11.8%.
The unexpected news that Starbucks had recruited Chipotle’s top leader to lead their transformation caused a significant shift in the restaurant industry, leading to various outcomes for these prominent figures.
An impressive history of achievements
Starbucks made a statement on Tuesday revealing that Brian Niccol, who is presently the CEO of Chipotle, has been selected as the chairman and CEO of the coffee company. Laxman Narasimhan is resigning from his position as CEO and will be leaving the board of directors immediately. CFO Rachel Ruggeri will take on the role of interim CEO. Niccol will assume his new responsibilities on September 9th.
Niccol is familiar with making significant changes in the restaurant business. He gained attention for his work while working at… Yum Brands The individual responsible for creating popular temporary menu items at Taco Bell is known as the architect. Some of the creations they are credited with are the Naked Chicken Chalupa, Quesarito, and Nacho Fries, along with the Doritos Locos Taco, which became a permanent menu item.
He was recognized for leading a successful transformation for the previously challenged Chipotle. After becoming the CEO in March 2018, the company’s earnings almost doubled, profits grew almost seven times, and the stock price surged by almost 800%, as stated in the official announcement.
Is Niccol able to do the same thing for Starbucks?
In the last year, Starbucks’ stock has remained stagnant, decreasing by 24%, while Chipotle’s stock has surged by 51%. The recent performance of both companies highlights the significant difference between them.
In the third quarter of fiscal year 2024 that ended on June 30, Starbucks experienced a 1% decrease in net revenue compared to the previous year, and a 7% decline in adjusted earnings per share (EPS), primarily due to Sales from stores that have been open for a certain period of time and are being compared to previous sales data. The sales of Company A went down by 3%. In contrast, Chipotle saw a rise in revenue by 18% and an increase in EPS by 32%, mainly due to a growth of 11% in same-store sales.
Given Niccol’s history of successful achievements Starbucks investors are celebrating, while Chipotle shareholders are feeling disappointed.
