Starbucks' New CEO Confirmed! A Familiar Face in China's Consumer Market?

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Starbucks Announces New CEO Appointment

On September 1st, U.S. local time, Starbucks announced that Laxman Narasimhan would officially take over as Chief Executive Officer from Howard Schultz — assuming the CEO role and joining the board of directors on April 1, 2023.

Schultz will remain interim CEO until April 1, 2023, serve as an advisor to Narasimhan through 2023, and stay on Starbucks' board. In the meantime, Narasimhan will manage the company and its teams alongside Howard, immerse himself in the brand and corporate culture, and take part in Starbucks' reinvention plan.

Narasimhan's Extensive Experience

By Starbucks' official account, Narasimhan brings nearly 30 years of leadership experience advising and running global consumer-facing brands. He spent 19 years at McKinsey, primarily responsible for consumer, retail, and technology businesses across the United States, Asia, and India. He then joined PepsiCo, holding positions including Chief Commercial Officer and Chief Financial Officer of PepsiCo Americas Foods, before serving two years as CEO of Reckitt Benckiser.

Across those three companies, Narasimhan built a reputation for deep operational expertise and a strong record of developing purpose-driven brands — precisely the decisive strategic vision and execution Howard was looking for in a successor.

Challenges Facing Starbucks

During his time at Reckitt Benckiser (whose brands include Dettol, Durex, and Veet), Narasimhan tackled several crises — cyberattacks, production failures, and unsuccessful product launches among them. Within two years he had turned multiple underperforming brands around and restored investor confidence.

Today's Starbucks faces its own hard problems and needs a manager who can both set strategy for the present and future and execute it effectively. The biggest challenge right now is operations: on one side, U.S. employees are steadily unionizing; on the other, overseas market performance is slipping.

Although Howard had already resolved some personnel and operational matters when he returned as interim CEO in April, one person's influence only goes so far, and his return was never a long-term solution. What Starbucks needs is someone younger, more visionary, and highly execution-oriented. That's why, upon coming back, Howard said he would name a successor by the autumn of this year.

Howard's return addressed some issues, and he has spoken of reshaping Starbucks' culture — but union tensions in America, rising employee turnover, and declining performance in the Chinese market are more than any one person can fix alone. Another reason for choosing Narasimhan is his deep experience in the consumer industry and overseas market management, with the United States and Asia being Starbucks' two largest markets.

Narasimhan's China Experience and Starbucks' China Market

When Narasimhan first became CEO of Reckitt Benckiser, he traveled personally to China, visited stores of multiple Chinese brands, and met with customers and employees. He shared his post-appointment plans and priorities with global employees from the China region — the first time a Reckitt Benckiser global CEO held a global employee meeting outside the UK.

According to Starbucks' Q3 2022 report, the company had 5,671 stores in China. Pandemic headwinds cut Q3 net revenue in the China market by 40%, with same-store transactions down 43% and same-store sales down 44%. Even so, China remains one of Starbucks' most important markets, and once Narasimhan takes office, helping the China business recover is likely to be a top priority.

Future Outlook

As for Howard, he will continue developing new frameworks and execute them together with Narasimhan. Some analysts believe that even after Narasimhan formally takes over next year, Howard will still drive many key operational decisions and judgment calls. Others argue that by choosing Narasimhan, Howard has shown he trusts him to run Starbucks.

Hopefully, this appointment will open a new chapter for Starbucks.

Image source: Internet

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