Starbucks has hired Laxman Narasimhan as its next chief executive, the company announced Thursday, pushing him to head the world’s largest coffee chain.
As the new leader of Starbucks, he will inherit a series of challenges. Growing union movements among employees, rising inflation and pandemic lockdowns are causing losses in China.
Narasimhan will take over from longtime Starbucks leader Howard Schultz next April.
“I was looking for a true servant leader with a deep sense of humility,” Schultz said in an interview. “First and foremost, Luxman is a true servant and his leader.”
Overseeing nearly 35,000 stores and 383,000 employees worldwide, Narasimhan, 55, will be thrust into a leadership role at one of the world’s most prestigious companies. A former senior PepsiCo executive, he most recently headed Reckitt Benckiser, a British conglomerate that makes Lysol disinfectant and Durex his condoms.
Born in Pune, India, Mr. Narasimhan immigrated to the United States in 1991 to attend the Wharton School at the University of Pennsylvania. He then joined consulting giant McKinsey & Company, eventually becoming a senior partner. He moved to PepsiCo in 2012 to oversee operations in Latin America, Europe and Sub-Saharan Africa, and was promoted to Chief Commercial Officer.
He was hired by Reckitt in 2019 to acquire infant product maker Mead Johnson for $16.6 billion, reviving a conglomerate beset by an ill-fated move to split the company. He has garnered praise from investors and analysts for selling underperforming businesses and guiding the company through the pandemic.
Shares of Reckitt fell more than 5% on Thursday. company suddenly announced Narasimhan, who plans to step down as chief executive on Sept. 30, said only that he was “asked for an opportunity to make life possible” in the United States. He was looking for a job back in the US, where his two adult children live.
It was his extensive experience across industries and borders that drew Starbucks to Mr. Narasimhan. “He’s a true operator and has his DNA of an entrepreneur,” Schultz said, adding that his background in technology and supply chain would be invaluable to the company. I was.
Schultz will serve as the company’s interim CEO until April, after which he will become an adviser to Narasimhan. Schultz will also remain on the company’s board of directors.
at Starbucks latest earnings reportin August, Schultz spoke of early progress in reinventing the company.
Coffee chains have been the focus of a resurgent union movement over the past year as workers demand higher wages and better working conditions. From the state where there is no union at the store, 230 as of Monday.
Labor organizers and the National Labor Relations Board have accused Starbucks of illegal activity. obstruction of the trade union movement Retaliate by closing stores and firing pro-union workers. The company denies these allegations, but continues to resist unionization efforts. Last month it raised wages for non-union baristas, saying workers there would have to bargain collectively with management.
Schultz — urged Starbucks to take a public stance on issues such as same-sex marriage Race relations have drawn criticism from conservatives – he says he opposes unionization of company employees. I don’t think so,” he said in June.
Still, trade union efforts face challenges, including reaching collective bargaining agreements in newly unionized stores. The pace of new trade union petitions submitted to the National Labor Relations Board, which peaked in the spring, steep drop from there.
Starbucks faces other challenges as well. In its earnings call last month, the company said its profit margins were under pressure from higher raw material costs and rising wages. The company also suffered declining sales in China, one of its largest markets outside the United States.
Schultz also talks about more transformative changes in Starbucks’ business model.
The chain has long described itself as a ‘third place’ between work and home where customers can relax for hours. But the pandemic has turned that lounging model upside down. So is pick-up and drive-thru orders, which drastically reduce customer time in stores, raise expectations for prompt service, and put more pressure on baristas.
Even the types of drinks customers prefer are driving change. As a customized frozen drink, Requires more complex and time-consuming preparationAs its popularity grew, the company was forced to reorganize its stores with ice storage in mind and a new layout to assist baristas.
Schultz said Narasimhan plans to “immerse” himself in the Starbucks culture over the next few months, visiting stores around the world and working at the counter in some before officially taking over.
“He will make us better,” Schultz said.