Starbucks announces leadership change amidst declining sales, intensified boycotts

Starbucks announced the resignation of CEO Laxman Narasimhan, just one year into his tenure.

This move comes as Starbucks faces significant challenges, including declining sales and increasing external pressures, such as the impact of boycott movements, according to CNN.

The company also appointed Brian Niccol, the current CEO of Chipotle, as the new President and CEO of Starbucks, with Niccol set to begin his role on September 9th.

- Consumer fatigue -

Under Narasimhan’s leadership, the company experienced a 3 percent decline in global sales, with a 2 percemnt drop in North American sales, Bloomberg reported.

Reports credit these declines to consumer fatigue over rising prices in the food service industry.

Additionally, Neil Saunders, a retail analyst and managing director at GlobalData, noted that while some slowdown can be attributed to consumers scaling back their spending, "much of it is due to a deteriorating store experience and a lack of innovation in areas like food."

The company is also facing increased competition in the Chinese market from lower-cost rivals.

He added that Starbucks lost market share to smaller cafes and other competitors, a trend Narasimhan was unable to address effectively.

- Ongoing boycotts -

Moreover, Starbucks is facing external pressures that have eroded its market position.

The company is the target of boycott movements due to its political stances related to the Israeli Occupation’s aggression in Gaza, impacting consumer sentiment and sales, particularly in key international markets.

Starbucks' stock fell 12 percent in market trading in May.

Earlier this year, the company laid off approximately 4 percent of its workforce, which totals around 50,000 employees, with most of the layoffs concentrated in Starbucks branches in the Middle East and North Africa, according to Reuters.