Last week, when Starbucks announced a new CEO, the focus was on Growth - with a capital G. The departure of Laxman Narasimhan, who had led the US coffee giant for just two years, came as Starbucks revenue declined for a second consecutive quarter. For Starbucks board, the hope is that Brian Niccol, the new CEO from rival Chipotle, can restore the Seattle-based brand to its former glory years.
But, investors and analysts alike have been focused on the wrong G. It is not Growth that put Narasimhan out of a job. And, it is not Growth that will define Niccol’s tenure.
It is Geopolitics.
In a world full of information overload, it is easy to forget that at the beginning of the year, Starbucks results shocked many.
The boycotts of Starbucks across the US and Muslim-world, because of the Gaza War, was having a real impact. The brand had lost $11 billion in value, and adjusted its annual growth targets from 10%-12% growth to 7%-10%. In the Middle East, the company representing Starbucks franchises, Alshaya Group, had announced massive layoffs, cutting the workforce by 2,000 people, in part because of a “challenging” environment that had formed over the past “six months” - pointing to October and start of the Gaza War. Adding to the pressure, in the fourth quarter of 2024, every month, there were an average of 466,000 social media posts calling for a boycott of Starbucks.
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