Starbucks taps McKinsey alum Laxman Narasimhan as incoming CEO

19 September 2022 3 min. read

Starbucks has selected former McKinsey partner Laxman Narasimhan as its incoming CEO.

Narasimhan – a consumer sector expert who most recently led health, hygiene, and nutrition products company Reckitt – will relocate from London to Seattle and will become incoming CEO on October 1. During a transition period he will work with founder and CEO Howard Schultz and learn about the company, its operations, and its “reinvention” plan, before becoming CEO and joining the board on April 1, 2023.

Following the transition period, Schultz will remain as an advisor and a board member.

“Laxman is an inspiring leader. His deep, hands-on experience driving strategic transformations at global consumer-facing businesses makes him the ideal choice to accelerate Starbucks growth and capture the opportunities ahead of us,” said Mellody Hobson, independent Starbucks board of directors chair. “His understanding of our culture and values, coupled with his expertise as a brand builder, innovation champion, and operational leader will be true differentiators as we position Starbucks for the next 50 years, generating value for all our stakeholders.”

Starbucks taps McKinsey alum Laxman Narasimhan as incoming CEO

Starbucks is facing unionization pressure in the US and slow growth in China, a key market for the chain’s growth plans. The company’s 5,700 stores in China have seen struggling sales as continuing periodic Covid shutdowns have hit retailers hard. Meanwhile, more than 230 stores in the US have thus far voted to unionize in the US. Starbucks has been boosting wages and benefits in an attempt to head off unionization pressure, while also attempting to streamline and ease barista workflows.

The coffee chain earlier this month unveiled its “reinvention” strategy, which includes the launch of thousands of new locations and redesigning its stores to boost efficiency. Starbucks plans to build approximately 2,000 new US stores between fiscal 2023 and 2025 and to grow its global footprint from 34,900 stores to 45,000 by the end of fiscal 2025.

The company plans to invest approximately $450 million in 2023 to upgrade cafes with automated equipment to simplify processes and speed up service. This includes systems to cut down average Frappuccino output time from 85 seconds to 35 seconds and an automatic hot coffee machine that grinds and brews a single cup in 30 seconds.

“When I learned about Laxman’s desire to relocate, it became apparent that he is the right leader to take Starbucks into its next chapter,” Schultz said. “He is uniquely positioned to shape this work and lead the company forward with his partner-centered approach and demonstrated track record of building capabilities and driving growth in both mature and emerging markets.”

Narasimhan has nearly three decades of experience leading and advising global consumer-facing brands. He spent the first 19 years of his career at management consultancy McKinsey & Company, where he was latterly a senior partner and focused on its consumer, retail, and technology practices across the US and Asia.

Narasimhan left McKinsey in 2012 to join Pepsico, where he held several senior roles including global chief commercial officer and CEO for Latin America, Europe, and Sub-Saharan Africa. He was hired by Reckitt as CEO in 2019.

He has an MBA in finance and an MA in German and international studies from the University of Pennsylvania, as well as a bachelor’s degree in mechanical engineering from the University of Pune, India.

“I look forward to working closely with Howard, the Board, and the entire leadership team – and to listening and learning from Starbucks partners – as we collectively build on this work to lead the company into its next chapter of growth and impact,” Narasimhan said.