It's almost getting to the point that Starbucks customers can stand in line longer to get their morning fix than a CEO gets to try running the company. Starbucks has hired Brian Niccol, the well-regarded Chipotle Mexican Grill's former chief executive who presided over a successful turnaround. He replaces Laxman Narasimhan, who leaves immediately.
At one level, it was a simple decision about money. Starbucks sales were flagging and investors were unhappy. But the situation is more complex and Niccol will have fights on his hands. With 38,038 company-owned and licensed locations globally — 9,645 stores in the U.S. alone — and not counting the bean and pre-packaged coffee sales, that's a lot of commercial real estate that could feel a pinch of things don't turn around.
First, out of no particular order, there are prices, as the Wall Street Journal explains. As the cost of living goes up on all fronts, consumers have to reconsider whether a cup of Starbucks is something they want to spend money on. There was a 6% drop in U.S. orders in the quarter that ended June 30. Wages grew, food and materials costs were up, and so the company hiked prices. Some long-term fans decided they couldn't justify the expense, the Journal noted.
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