Starbucks Names Laxman Narasimhan as CEO Successor

This is an English adaptation of a FoodBud historical article originally published on September 1, 2022.

Starbucks announced on September 2, 2022, that Laxman Narasimhan would become its next CEO, adding another Indian-born chief executive to the top ranks of major U.S. companies.

Narasimhan had been CEO of UK consumer goods group Reckitt. Reckitt had just announced that he would step down on September 30, saying only that he was leaving to pursue an opportunity in the United States. Starbucks said he would formally join the company on October 1, spend several months learning the business and its reinvention plan, then become CEO and join the board in April 2023.

Starbucks founder Howard Schultz said the company had been looking for a leader with deep humility and a genuine spirit of service, and described Narasimhan as fitting that profile.

A Consumer-Goods Operator Takes Over a 35,000-Store System

At 55, Narasimhan was set to take the helm of the world’s largest coffee chain, overseeing more than 35,000 stores and 383,000 employees.

His career included senior roles at PepsiCo and, most recently, the CEO role at Reckitt. Born in India, he moved to the United States in 1991 to study at the Wharton School of the University of Pennsylvania. He later joined McKinsey, where he became a senior partner. In 2012, he moved to PepsiCo, rising through the company to become Chief Commercial Officer.

Narasimhan joined Reckitt in 2019, tasked with revitalizing a group weighed down by its $16.6 billion acquisition of infant-nutrition maker Mead Johnson. He won praise from investors and analysts for selling underperforming businesses and guiding the company through the pandemic.

Reckitt’s shares fell more than 5% after the unexpected announcement of his September 30 departure. Narasimhan explained only that he had been offered an opportunity that would allow him to live in the United States. The article noted that he had been seeking a role that would allow him to return to the U.S., where his two children lived.

Why Starbucks Chose Him

Starbucks was attracted by Narasimhan’s cross-industry and international experience. Schultz described him as a true leader with entrepreneurial instincts, adding that his background in technology and supply chain would be valuable to the company.

On Starbucks’ most recent quarterly earnings call at the time, Schultz had said the company would announce detailed plans on September 13 for a reinvention of Starbucks. Execution of that plan was expected to become one of Narasimhan’s central responsibilities.

The Challenges Waiting for the New CEO

Starbucks had been dealing with unionization activity over the prior year. Schultz maintained that Starbucks employees should not be led by a third party. In the prior month, Starbucks had raised wages for store baristas, but unionized stores were not included; the company said employees at those stores needed to negotiate with management.

Beyond labor pressure, Starbucks also faced the need to update store experience and equipment. Pandemic disruption had also hurt performance in China, creating multiple challenges for the company’s next phase.

During the six months before formally taking office, Narasimhan was expected to work with Schultz and other Starbucks executives to familiarize himself with the recently developed reinvention plan. Schultz had previously said the company needed a major overhaul.

Starbucks board chair Mellody Hobson called Narasimhan an inspiring leader and said his hands-on experience driving strategic transformation at consumer-facing global companies made him an ideal choice for Starbucks.

Note: Forward-looking timing, restructuring plans, share-price moves, and transaction figures are historical as of the original September 2022 article.