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Starbucks boss ousted after Israel boycott fuels sales slump

Starbucks boss ousted after Israel boycott fuels sales slump
Laxman Narasimhan, who is stepping down as CEO of Starbucks

Laxman Narasimhan has stepped down less than two years after being appointed chief executive of the US coffee chain – Stephen Brashear/AP

The boss of Starbucks has been ousted less than two years into the role amid falling sales and customer boycotts over Israel.

The global coffee chain confirmed Laxman Narasimhan’s departure on Tuesday, as he stepped down with immediate effect.

He has been replaced by Brian Niccol, the former boss of Chipotle who is credited with turning around the Mexican chain’s fortunes.

The change in leadership comes after a turbulent year at Starbucks. Sales have fallen for two consecutive quarters, dropping 4pc in the first three months of the year and 3pc in the three that followed.

Some consumers have cut back on the chain’s expensive coffee, while others have boycotted the business over its alleged ties to Israel.

Brian Niccol has been named the chief of StarbucksBrian Niccol has been named the chief of Starbucks

Brian Niccol is credited with turning around the fortunes of Mexican food chain Chipotle – Mark Lennihan/AP

This has drawn the attention of activist investor Elliott, which has heaped pressure on the board after building up a stake in the business.

Starbucks shares have fallen by around 25pc over the past 12 months, but it regained around 20pc on Tuesday after Mr Narasimhan’s departure was announced.

The coffee company was hit by a boycott over the past year over its perceived support of Israel amid the conflict in Gaza.

Tensions rose after it sued the Starbucks Workers United (SWU) union for trademark infringement in Iowa. This was in response to the union expressing “solidarity with Palestine” in a social media post following the attacks by Hamas terrorists on Oct 7.

In March, the company’s Middle Eastern franchisee announced plans to lay off thousands of workers because of a downturn in sales caused by boycotts linked to the war in Gaza.

Pro-Palestine protest at a Starbucks in Chicago, USPro-Palestine protest at a Starbucks in Chicago, US

Starbucks has faced boycotts over its alleged ties to Israel – Vincent Alban/REUTERS

The company has repeatedly argued that its alleged support of Israel has been driven by misinformation online, claiming it has never given money to the Israeli government or military.

The outgoing Mr Narasimhan assumed the role of chief executive at Starbucks in March 2023, having formerly led the consumer goods giant Reckitt, the owner of Durex.

He stepped down from Reckitt mid-way through a three-year turnaround project.

Mr Niccol will start as chief executive at Starbucks on Sept 9, with Rachel Ruggeri, the company’s chief financial officer, serving as interim until then.

Mellody Hobson, Starbucks chairman, said: “Our board believes he will be a transformative leader for our company, our people, and everyone we serve around the world.”

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