Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favourite stories in this weekly newsletter.
Brian Niccol took over as CEO of Chipotle Mexican Grill in 2018 when the burrito chain was in trouble. A series of food safety violations had driven away customers and investors were turning away from shares of a company still led by its founder.
After masterminding a turnaround that sent Chipotle’s stock price soaring nearly 800 percent, the 50-year-old was named chief executive of Starbucks on Tuesday, another company in need of a revival whose self-proclaimed founder casts a long shadow over the company. Investors hoping for a repeat of the success drove 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 gets into a similar situation at Starbucks.”
Chipotle has stood out for its resilience this year. The Newport Beach, Calif.-based company’s comparable sales rose 11 percent last quarter, compared with declines at fast-food rivals such as McDonald’s and KFC, as diners eat more meals at home to offset rising inflation in the restaurant business.
This is in stark contrast to the crisis that Niccol inherited at the fast-casual chain: Hundreds of customers fell ill after eating the company’s food, some with norovirus. The PR disaster led to a $25 million fine from federal prosecutors.
When Niccol joined the burrito chain, he was considered a proven expert in digital technology, restaurant operations and brand management. He previously served as CEO of Yum Brands’ Taco Bell chain and began his career at consumer goods giant Procter & Gamble.
Analysts such as Danilo Gargiulo of Bernstein credit Niccol with making Chipotle relevant again. He introduced marketing measures that emphasized the quality and freshness of ingredients and improved its social media strategy. When inflation ravaged most restaurants’ menus, Chipotle was less aggressive in its price increases, Gargiulo added.
Cappozzo, who was Niccol’s manager when he was a young intern at P&G, said his friend would sometimes order three or four dishes when they ate together at Chipotle so he could see how it was served. When Cappozzo once texted him about a 15-minute line at his local branch, Niccol responded 10 minutes later to say he had spoken to staff and the problem was taken care of.
“He is clearly a great entrepreneur. He understands that the details of the business are critical,” Cappozzo said. When Walmart nominated Niccol to the board this year, it praised 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 at Chipotle from its founder Steve Ells, but Ells stayed on as chairman. At Starbucks, he replaces Laxman Narasimhan, who since taking office early last year has not escaped public criticism from his predecessor Howard Schultz, the pioneer who built Starbucks into the world’s largest coffee chain.
In 2018, Chipotle caught the attention of an activist investor in the form of Bill Ackman’s Pershing Square. This year, activist investor Elliott Investment Management took a stake in Starbucks and pushed for similar changes.
But there are also significant differences between the two companies. Chipotle owns more than 3,500 restaurants and employs about 116,000 people, 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 US, more than 470 Starbucks branches are now unionized. Chipotle has one unionized branch.
Chipotle’s menu is relatively simple and consistent, offering diners a cafeteria-style selection. Niccol’s signature dish is a burrito with white rice, chicken, mild salsa, corn salsa, fajita veggies and cheese, with guacamole and chips on the side, according to a company proxy statement. The same statement disclosed that Niccol’s total compensation last year was $22.5 million — 1,354 times the average employee’s salary — and that his unrealized gains from past stock ownership awards were estimated at more than $82 million.
Starbucks specializes in drinks, not food, but they’re known for their devilish complexity. The growing popularity of takeout and app ordering has made baristas’ jobs more difficult, leading to longer wait times and frustration on both sides of the counter.
The task of simplifying operations is one of the many challenges that most preoccupy Starbucks investors. They have not yet heard of Niccol’s plans for inflation-stricken US consumers, tougher competition in China, boycotts of Western brands over Israel’s Gaza war, negotiations with unionized baristas or Schultz’s criticism.
For now, however, they are betting that he can replicate at least some of the success he had at Chipotle.
The announcement of Niccol’s arrival boosted Starbucks’ market cap by $21 billion to $108.7 billion on Tuesday. Chipotle lost nearly $6 billion in value to close with a market cap of $71 billion.
“Right now he’s almost considered the LeBron James, the Tom Brady or the Messi of the restaurant industry,” Gargiulo said.
