Starbucks welcomes new CEO: What to expect from Brian Niccol

Starbucks (SBUX) is ushering in a new era as former Chipotle (CMG) CEO Brian Niccol takes over the reins of the coffee giant, effective Monday, September 9. As Starbucks embarks on this leadership transition, Yahoo Finance Senior Reporter Brooke DiPalma breaks down the details and discusses what investors can expect under Niccol's leadership as chairman and chief executive.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video transcript

Because the share is ticking slightly higher this morning after former Chipotle executive, Brian Nichol.

Well, guess what?

He's starting his new position as Starbucks chairman and CEO today for more on what shareholders can expect is our very own Brooke Dipalma Brooke.

Good morning to you both.

That's right.

As you saw right there, this is really a new era for Starbucks and investors are really hoping that Brian Nichols steps into this role and improves the value perception of Starbucks as well as operational efficiencies that really Starbucks needs right now.

So if we dive closer and why exactly is this a new, a new chapter for Starbucks?

Well, we now know that Nickel will be the chairman of Starbucks effective today.

This is a new E for Starbucks now that Melody Hobson Howard Shultz pick who was formerly chair has stepped down and we can also see new Starbucks leaders come into play here.

We know that Nicola has done that in the past at Chipotle when he took over following their E coli break out.

We also know that Nickel will be remote in that Newport Beach area that he has resided in as Chipotle CEO and that could attract new talent in Starbucks making their Seattle office perhaps a hub or a secondary.

We always of course their headquarters but really can attract new talent being that he's staying in California.

We also were hoping for a new focus on value perception, this premium product that Starbucks is known for, but it has certainly lost that price hikes as well as various other opposition to the prices that Starbucks has implemented in recent years.

And this menu innovation that Starbucks is known for.

They've introduced things like the energy drink and lavender in the past year.

But with so much cadence, one analyst told me that while people liked the drinks, they didn't market them efficiently.

And that's really tapping into Nichols sweet spot here.

In addition to that operational, something that Starbucks really really needs here, we know that nickel has time and time again proved that Chipotle could be efficient in terms of introducing a dual sided grill to increase cook time, as well as that digital make line to improve Chipotle take out.

And this really comes at a critical time for Starbucks as you can see shareholders really unsure of the direction of Starbucks here but certainly optimistic.

Once the announcement of nickel coming in was announced earlier their last month and this comes at a time where we saw same source sales down 3% for the second quarter in their recent results.

He's also expected to host a town hall this week and we know that he's been going to Starbucks really diving in head first to learn more.

Has he himself been doing some barista work?

Not yet, but I think he expected to be, I think that you will see Brian with a green apron on.

He is jumping right in and he's really, uh, from what I hear, he's all hands in right away.

Really looking to understand.

Oh, yeah.

Good to know.

Good to know how the coffee is made.

I mean, real question that I wanted to ask you though, Brooke, I mean, for investors out there that have tracked his tenure at Chipotle and are no stranger to this man who knows how to execute some limited time offers.

How's that expected to really translate over to Starbucks?

I mean, what was the the net end of the day percentage gain that shareholders saw while he was at Chipotle, while he was at Chipotle shareholder saw 770% an increase in the stock price.

And when you think about that and how that translates to Starbucks in the past five years, Starbucks has certainly underperformed, taking closer look at um Yahoo Finance take page on Starbucks in the last five years.

Starbucks shares are down roughly 5%.

And so investors are hopeful that he's going to step in.

He's going to fix the problems in terms of menu innovation, cadence, operational efficiencies.

And also this this tension that exists between their employees and leadership in hopes that they sort of move past these unionization problems that have been in the background for quite some time.

And when you think about the leadership changes over the past five years at Starbucks, we had Kevin Johnson, we had Howard Schultz back for the third time in a row.

Then we had Lakshman Nora Simmon who was ousted in August and now Brian Nichol really investors hoping that this is a clean slate, a new chapter for Starbucks trying to close the revolving door there at the CEO position.

Brooke.

Thanks so much.

Appreciate it.