On 1st September 2022, Starbucks Corp. named Indian-born Laxman Narasimhan as its new CEO. Currently, former head Howard Schultz is serving as a temporary CEO for the coffee giant to steer the company from unionization push, rising costs, and challenges overseas.
Laxman Narasimhan will join the office on 1st October 2022. However, Howard Schultz will continue serving as interim chief till April 2023. Once Narasimhan becomes the CEO, Schultz will then join the Starbucks Board of Directors.
In march 2022, Starbucks said the CEO Kevin Johnson, the then CEO who had led the company for the past five years, would retire, and in his place, Mr. Schultz would become the interim CEO starting April 2022. Mr. Schultz is responsible for the global presence of the Seattle-based coffee chain. Since joining as the interim CEO, he has said that in recent years, Starbucks has made mistakes and requires change, from how baristas are paid to the blenders in its cafes.
Howard Schultz, the present CEO of Starbucks, said, “When I learned about Laxman’s desire to relocate, it became apparent that he is the right leader to take Starbucks into its next chapter. He is uniquely positioned to shape this work and lead the company forward with his partner-centered approach and demonstrated track record of building capabilities and driving growth in both mature and emerging markets,”
Starbucks said Mr. Laxman Narasimhan would relocate from London to the Seattle area and join Starbucks as incoming CEO on 1st October.
Mellody Hobson, Starbuck board chairwoman, said, “We really do believe that we have found an exceptional individual to be our next CEO. He’s a tested leader,”
Starbucks’s board asked Mr. Schultz to remain interim CEO until April 2023 to help Mr. Narasimhan get up to speed on the company and its culture, said Ms. Hobson.
Ms. Hobson said that while Mr. Narasimhan would work independently, Mr. Schultz would continue to play a special role at the company.
Ms. Hobson said about Mr. Schultz, “He certainly has a special voice, a deep knowledge of the business in ways none of us has, and we want that.”
Mr. Howard Schultz has handed over the CEO role twice, but afterward, he maintained strong ties with the company’s top executives and followed company affairs closely. Mr. Schultz mentioned in an interview earlier this year that he had asked to attend a Starbucks board meeting roughly two years ago after growing concerned over what he had seen in Starbucks stores and learned through informal conversations with company leaders.
For the past three years, Laxman Narasimhan has been working as the Chief Executive of Reckitt Benckiser UK. He was the first external candidate to serve as the head of the company ever since it was launched in 1999. Apart from it, the 55-year-old had held several leading positions at PepsiCo, including as global chief commercial officer. He has also led the company’s Europe, Latin America, and Sub-Saharan operations as the CEO.
Mr. Narasimhan also held the position of CFO of PepsiCo Americas Foods and CEO of PepsiCo Latin America. Prior to this, he was in McKinsey & Company as a senior partner. A trustee of the Brookings Institution, Mr. Narasimhan also served as a member of the UK Prime Minister’s Build Back Better Council. He is a member of Verizon’s Board of Directors.
Mr. Narasimhan will lead the world’s largest coffee chain through a changing business landscape. When the pandemic hit the world, Starbucks also suffered its consequences, and the stores were closed temporarily. The sales recovered by 2021 when the to-go orders started, but with rising costs of materials, the profit margins of Starbucks again suffered, and the company resorted to raising prices. The company is also dealing with a unionization effect that started almost a year ago in Buffalo, NY Starbucks workers are demanding better pay, staffing levels, and hours.