Starbucks is replacing its CEO with the boss of Chipotle in an abrupt management shake-up

• Starbucks CEO Laxman Narasimhan stepped down on Tuesday.
• Brian Niccol, the CEO of Chipotle, will replace Narasimhan in early September.
• This leadership change comes as Starbucks works to turn around its business.

Starbucks announced Tuesday that its CEO, Laxman Narasimhan, would step down effective immediately.

The company said Narasimhan, who took on the role in March 2023, would be replaced by Brian Niccol, who heads the fast-casual chain Chipotle, in early September.

Starbucks is looking to turn around its business amid slowing sales in the US and China in recent months. In its most recent quarterly results, it said same-store sales declined by 3% globally and by 2% in North America.

The chain has also faced pressures from activist investors to address how it is run.

Starbucks' share price jumped by more than 14% in premarket trading after the company's announcement.

"There is a sense that Starbucks has been on the back foot for too long and that it has lost sight of the basics," Neil Saunders, the managing director of GlobalData Retail, said in a note to clients early Tuesday. "This has led to a poor performance, particularly in the US.

"While some of the slowdown can be attributed to a more sluggish consumer cutting back, much is also the result of a worsening store experience and a lack of innovation in areas like food.

"Because of this Starbucks has been losing share to smaller, independent coffee shops and other rivals for a while, and the failure of Narasimhan to address this convincingly has irked investors," he said.

Chipotle has been performing well in recent months, even as consumer spending has shown signs of slowing in the US .

"Niccol's deep foodservice experience will be useful as Starbucks navigates a cocktail of challenges including increased costs, labor issues, operational inefficiency, and a growing dissatisfaction among customers," Saunders wrote.