1 month ago
50
A Starbucks store in New York, US, on Friday, July 19, 2024. In what will go down as the most spectacular IT failure the world has ever seen, a botched software update from cybersecurity firm CrowdStrike Holdings Inc. crashed countless Microsoft Windows computer systems globally. Photographer: Michael Nagle/Bloomberg
Read more: Starbucks Ousts CEO and Taps Chipotle’s Brian Niccol as Boss (1)
Niccol is being hailed as the top public restaurant CEO in the U.S. by several analysts, including Bloomberg Intelligence’s Michael Halen, who said the hire is a “no brainer.” Oppenheimer & Co.’s Brian Bittner said Niccol is a “dream hire” for Starbucks. In just a few hours following the announcement, the stock received at least four upgrades, with Niccol earning praise for his successful track record as chief at Chipotle, as well as at Taco Bell, which is owned by Yum Brands.
The optimism is well deserved. Chipotle shares climbed 773% since Niccol took over as CEO in March 5, 2018 through Monday’s close. Starbucks shares are up just 35% for the same period, while the S&P 500 has gained 99%.
See also: Chipotle Tumbles as CEO Exit Adds Uncertainty: Street Wrap
“In our view, Starbucks picks up a hall of fame restaurant CEO, and his appointment as Starbucks CEO and Chairman suggests a new era is underway,” according to TD Cowen analyst Andrew Charles, who upgraded Starbucks to buy from hold. Charles said he sees similarities between the turnaround at Chipotle and what Starbucks needs to do to improve traffic, including in marketing, product innovation, and operations.
Danilo Gargiulo, a restaurants analyst at Bernstein, writes to clients that “while it is always hard to find the ‘right time’ to enter a stock, we doubt investors will find a better time to consider a position in Starbucks if the new CEO brings the same rigor as when turning around Chipotle.” He currently rates Starbucks market perform.
