Starbucks has announced that Brian Niccol, the current CEO of Chipotle, will take over as its new CEO on September 9, following the immediate departure of Laxman Narasimhan.

Following the announcement of Niccol's appointment, Starbucks' stock surged over 25%, recovering nearly all losses experienced since the beginning of the year.

Niccol, who has been at the helm of Chipotle since 2018, is credited with nearly doubling revenue and achieving an 800% increase in stock price during his tenure.

This leadership change comes amid pressure from activist investors, including Elliott Investment Management and Starboard Value, who are advocating for strategies to enhance Starbucks' stock performance.

Under Narasimhan's leadership, Starbucks faced significant challenges, including a 3% decline in same-store sales due to weak performance in key markets like the U.S. and China.

The company reported disappointing sales in July, which were attributed to declining demand in both the United States and China.

Despite the recent struggles, analysts expect that sentiment around Starbucks shares will remain positive, even if short-term operating results are not strong.

Starbucks has faced criticism for long wait times for drinks and significant price hikes, which may have contributed to the decline in customer transactions.

Initially, Starbucks experienced sales growth post-COVID lockdowns but encountered issues due to unionization efforts among its workforce.

To address declining sales, the company has explored initiatives like introducing boba-inspired drinks and meal bundling.

Speculation suggests that former CEO Howard Schultz's dissatisfaction with Narasimhan's performance may have contributed to his exit, as he publicly supported Niccol's appointment.