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As Starbucks’ new CEO, Brian Niccol, the current CEO of Chipotle CMG-0.86%, faces a tough road ahead: he must win the favor of both the former CEO Howard Schultz, and the demand of shareholders. Balancing the two has tripped up past leaders, making his task all the more critical.
“Brian’s success, or perceived success will depend a lot upon how Howard Schultz views him,” Jerry Sheldon, vice president of technology at the market research firm IHL Group, said. “Howard is still highly influential within Starbucks SBUX+0.09%.”
Sheldon added that, “there is an old saying that no man can truly serve two masters,” but in Niccol’s case, with Schultz’s legacy looming large and shareholders expecting robust returns, Niccol must navigate a high stakes landscape while steering Starbucks through evolving market challenges and internal pressures.
Notably, Niccol’s reputation as the leader of Chipotle has shined bright in the restaurant industry. The burrito making company has reported consecutive quarters of strong earnings. Despite social media banter about its portion sizes, the chain is among the few in the industry that has actually seen robust consumer demand.
According to R.J. Hottovy, head of analytical research at foot traffic analytics firm Placer.ai, Niccol’s track record of boosting customer visits during his time at Taco Bell YUM-1.20% and Chipotle can be attested to some key initiatives under his direction, including new menu items, engaging marketing campaigns, and improved operations.
“Chipotle has outperformed the quick-service restaurant space the past several years, and we’d expect new food and beverage products and advertising campaigns to be a focus early in his tenure at Starbucks,” Hottovy said.
That could bode well for Starbucks, which has largely been struggling to peak the interest of consumers both in the U.S. and internationally. The coffee giant has also struggled with market saturation and rising operational costs, all while facing competition and supply chain snarls. As CEO Niccol takes the helm, he will need to address these challenges in an effort to rejuvenate the brand and drive growth.
“Absent the return of Howard Schultz, Niccol is probably as good of a pick as exists for Starbucks’s new leader,” William Blair analysts Sharon Zackfia and Matthew Curtis, said in a research note.
Although a CEO search creates uncertainty, Zackfia and Curtis of William Blair said Chipotle’s future looks bright thanks to its seasoned management. Scott Boatwright, the chain’s chief operating officer since 2017, will serve as interim CEO.