CNBC’s Jim Cramer discussed on Tuesday Starbucks‘ Management restructuring, he said the new leadership will be crucial in getting the business back on track after the ubiquitous coffee chain announced it would replace CEO Laxman Narasimhan with Brian Niccol, who is currently CEO of Chipotle.
“Brian Niccol is the key to a new Starbucks, one that can reclaim its old reputation as a ‘third place’ – you just have to understand that this turnaround cannot happen overnight,” he said. “But I’m telling you, it will happen.”
Starbucks has been struggling recently, reporting declining sales at its stores over the past two quarters. The company has struggled in both the US and China, its biggest markets. In response to the CEO’s announcement, stock prices rose sharply, closing up 24.5 percent.
According to Cramer, Narasimhan was not the right person for the position. Starbucks needed a manager who knew the fast-food industry to effectively solve the company’s problems. Narasimhan previously worked at McKinsey, was a senior executive at PepsiCo and was CEO of a packaging company Reckitt Benckiser.
Niccol’s successes at Chipotle make him a great fit for the role, Cramer said. He explained that Niccol has successfully improved the food, store efficiency and customer throughput at Chipotle. Cramer also admired Niccol’s selective strategy at Chipotle when it comes to new products, unlike Starbucks, which introduced too many new drinks for the baristas to handle efficiently.
“Today we saw something very rare: a CEO was fired, and in his place we didn’t just get some philistine we didn’t care about,” he said. “No, Starbucks brought in Brian Niccol, the man who almost single-handedly turned Chipotle around, as CEO. They couldn’t have picked a better man.”
Starbucks did not immediately respond to a request for comment.
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