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Back in 2017, during Brian Niccols seventh year as CEO, Taco Bell invited me into its innovation lab to see what stunt foods were being developed by the Mexican-ish chains R&D team. The short answer was, more menu items stuffed to the gills (or better yet, overflowing) with cheese.After that tour, Taco Bell banged out a series of gimmicky food items that stretched from nacho fries to KitKat quesadillas and Capn Crunch doughnut holes. These bookended a tenure for Niccol that began with rolling out Doritos Locos Tacos and the Live Ms brand revamp, before Niccol left Yum Brands in March of 2018 to run better-burrito rival Chipotle. In a surprise announcement, Niccol was just named Starbuckss new CEO and chairman.Arguably, none of Taco Bells gimmicks fit Chipotles then carefully crafted image of being a fresh, healthier option committed to sustainable sourcing. But caught in a downward spiral sparked by two years of giving customers food poisoning, Chipotle announced that Niccol was the perfect fit to take the company to the next level . . . while remaining true to our purpose and the values that are essential to our customers.Under Niccol, Chipotle then relocated from Denver to less-snazzy digs in Orange Countys Newport Beach, just a 20-minute drive from his old office at Taco Bell headquarters. The menu swelled to include everything from quesadillas to sides of guac and chips. Other stuff came and went, like smoked brisket and plant-based chorizo, and the beers and margaritas introduced to provide a more complete dining experience essentially vanished, while new Chipotlane drive-throughs popped up at hundreds of stores. In other words, Chipotle began a rapid transition into a fast-food-ier brandand to Niccols credit, profits soared.A fast-food guruHis successes at Chipotle and Taco Bell have made Niccolwho was at Pizza Hut before Taco Bellinto a sort of minor modern-day Ray Kroc or Truett Cathy, a fast-food icon who snagged big Corporate America accolades, including Fortunes Businessperson of the Year. Under Niccol, Taco Bell significantly increased revenue, marketshare, and profitability, laying the groundwork for growth that has since continued. In 2014, he prioritized digital, beating Starbucks to the mobile-ordering game by two months, then launched a loyalty program plus partnering with delivery platforms like GrubHub. Meanwhile, Chipotle was in a tailspin when Niccol joined; as he leaves, revenue has almost doubled, profits are up sevenfold, and the stock price is worth nearly 800% more.What his work doesnt seem immediately aligned with, however, is the corporate ethos espoused by Starbucksa company that has vehemently protested that it makes fast food, ever since former longtime CEO Howard Schultz began marketing the cafs as cultural third places and the brand as having a far-greater calling.But passing the wand to Niccol suggests that the coffee giantwhich has faced a tough past few monthscould be ready to call a spade a spade.In recent years, the business path Starbucks has followed has felt increasingly at odds with its original vision. Starbucks previously called out reporters who asked if its commitment to a welcoming third place ethos was compatible with the evolution of its cafs into impersonal preordered-drink collection sites. When Schultz caved to market pressure and stepped aside in 2022, handpicking now-outgoing CEO Laxman Narasimhan as his successor, Starbucks made sure to reiterate how Narasimhan, former head of British consumer goods company Reckitt, was the right choice to build on our heritage in this new era of greater well-being.The death of the third placeNarasimhan lasted a mere 17 monthsaccording to Starbuckss press release, hes out effective immediatelya period during which shares fell by 20% and Starbucks seemed almost continuously at war with itself: locked in battles against its own baristas, and with even Narasimhan and Schultz in a quiet mano-a-mano power struggle.After Starbucks announced Narasimhan would take the reins, but before he started, Schultz unveiled a new, very aggressive growth plan that required headlong expansion in China, to the point where Starbucks needed to cozy up further with the Chinese Communist Party. That left shareholders demanding the company get more transparent about Chinese operations, but also forced Narasimhan, then the actual CEO, to lower earnings guidance, confessing theyd perhaps been too optimistic about future performance.In May, Schultzjust a big-time Starbucks shareholder at this pointcomplained on LinkedIn, in a widely quoted post, that business was underperforming because the company lacked a maniacal focus on the customer experience, and that it wasnt dialed into the third place concept enough. It was key, he argued, to create differentiation in the marketplace and reinforce the companys premium position by being experiential, not transactional. Just weeks before Narasimhans arrival, Starbucks had published one of its Stories, doubling down on its vow to reimagine the Third Place, even if that meant tweaking the experience somehow. This was countered with moves by Starbucks, such as introducing, back in June, the companys first-ever value meals.History shows that Schultzs management tactics were pumping the brakes on what others might argue is progress. He swooped back in twice as CEO when he thought Starbucks was straying from its mission. During one interregnumJim Donalds, from 2005 to 2008Schultz published a notorious armchair-CEO memo lamenting that corporate was erasing the Starbucks experience, making it so that cafs no longer have the soul of the past.Then the pandemic rewrote the rules. Cafs stopped being hangout spots, to the extent they still were. The red-hot growth of app orders and drive-through traffic led customers to expect service thats unreasonably fast, frustrating baristas and even drawing store layouts into question. A standard Starbucks pickup counter nowadays might feature hot coffees, iced energy drinks, drink carriers crammed with four different types of Venti-size blended beverages, and a bevy of custom orders whose add-ins could involve powders, syrups, or scoops of flavored pearls. This has forced the brand to reimagine the Third Place so drastically that observers have been arguing, for a while now, that it more closely resembles discarding the model entirely.In Starbuckss press release, Niccol declares that next month hell roll up his sleeves and get to work leveraging his track record of driving growth while staying true to our mission and valuesboth of which seem to be overlapping pretty well already.
