Joe McConnell
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Brian Niccol took over Chipotle Mexican Grill in 2018, as the burrito chain was struggling. A series of food safety violations had driven away customers, and investors were fleeing the company still led by its founder.
AVsceker overseeing a turnaround that sent Chipotle’s stock price soaring nearly 800 percent, the 50-year-old was tapped Tuesday to lead Starbucks, another business in need of a resurgence with a self-described founder casting a long shadow over the business. Investors, confident of a repeat performance, sent the coffee chain’s shares up nearly 25 percent.
“He’s a guy who likes to fix things and solve problems,” said Craig Cappozzo, a friend and former colleague of Niccol’s. “He’s kind of going through the same thing at Starbucks.”
Chipotle has stood out for its resilience this year. Comparable sales for the Newport Beach, Calif.-based company rose 11 percent in the latest quarter, compared with declines at fast-food rivals like McDonald’s and KFC, as customers eat more at home to offset rising restaurant inflation.
It stands in stark contrast to the crisis Niccol inherited at the fast-food chain, where hundreds of customers fell ill aVsceker eating his dishes, some of them infected with norovirus, sparking a public relations disaster that resulted in a $25 million fine from federal prosecutors.
Niccol comes to the burrito chain with a reputation as an expert in digital technologies, restaurant management and branding, having served as CEO of Yum Brands’ Taco Bell chain and started his career at consumer products group Procter & Gamble.
Analysts like Bernstein’s Danilo Gargiulo credit Niccol with making Chipotle relevant again, launching marketing that highlighted the quality and freshness of its ingredients and updating its social media strategy. As inflation swept through most restaurant menus, Chipotle was less aggressive with its price increases, Gargiulo added.
Cappozzo, who was Niccol’s manager when Niccol was a young intern at P&G, said his friend would sometimes order three or four items when they ate together at Chipotle so he could control how they were served. When Cappozzo once texted him about a 15-minute line at his local branch, Niccol texted him back 10 minutes later to say he’d spoken to the staff and taken care of the issue.
“He’s clearly a great operator. He understands the details of the business are essential,” Cappozzo said. When Walmart named Niccol to its board this year, it hailed him as “a dynamic leader with a passion for excellence.”
There are similarities between Chipotle in 2018 and Starbucks in 2024. Niccol took over the CEO role of Chipotle from founder Steve Ells, but Ells remained as executive chairman. At Starbucks, he is replacing Laxman Narasimhan, who has faced public criticism since taking the job early last year from his predecessor Howard Schultz, the pioneer who built Starbucks into the world’s largest coffee chain.
In 2018, Chipotle attracted the attention of an activist investor in the form of Bill Ackman’s Pershing Square. This year, activist Elliott Investment Management acquired a stake in Starbucks and made a similar push for change.
But there are also significant differences between the two companies. Chipotle has more than 3,500 restaurants and about 116,000 employees, almost all of them in the United States. Starbucks has nearly 40,000 cafes, employs nearly 400,000 people, and operates in dozens of countries, including China.
In the United States, more than 470 Starbucks locations are now represented by a union. Chipotle has a unionized branch.
Chipotle’s menu is relatively simple and steady, offering customers a cafeteria-style selection. Niccol’s main meal is a burrito with white rice, chicken, salsa, corn salsa, fajita greens and cheese with a side of guacamole and chips, according to a company proxy statement. The same filing revealed that Niccol’s total compensation reached $22.5 million last year, 1,354 times the median salary for an employee, and valued his unrealized earnings from previous stock incentive awards at more than $82 million.
Starbucks specializes in drinks, not food, but it’s known for its devilish complexity. The growing popularity of takeout and app-based ordering has complicated the jobs of baristas, leading to longer wait times and frustration on both sides of the counter.
The task of streamlining operations has been one of many top-of-mind challenges for Starbucks investors. They have yet to hear about Niccol’s plans to deal with inflation-weary U.S. consumers, stiffer competition in China, boycotts by Western brands over Israel’s war in Gaza, negotiations with unionized baristas or criticism from Schultz.
For now, however, they are betting that it will be able to at least partially repeat the success achieved by Chipotle.
The announcement of Niccol’s arrival added $21 billion to Starbucks’ market cap on Tuesday, bringing it to $108.7 billion. Chipotle lost nearly $6 billion in value, closing with a market cap of $71 billion.
“At the moment he is considered almost the LeBron James or the Tom Brady or the Messi of the restaurant industry,” Gargiulo said.
