From Burritos to Brews—The Billion-Dollar Move Shaking Up Starbucks

New CEO takes reigns at Starbucks: Key Highlights

• Brian Niccol, former Chipotle CEO, takes the helm at Starbucks. Known for his remarkable turnaround at Chipotle, Niccol is stepping up to lead Starbucks in what is one of the most significant executive deals in recent corporate history.

• Massive Pay Package: Niccol’s compensation includes a base salary of $1.6 million, along with a $10 million signing bonus. He also stands to gain $75 million in stock options, compensating for the shares he’s forfeiting at Chipotle.

• Lucrative Incentives: Niccol is set to receive $23 million in share-based bonuses each year, plus cash bonuses of $3.6 million tied to company performance. If all targets are met, Niccol’s total compensation could reach an eye-popping $113 million.

• Proven Track Record: Niccol is credited with revitalizing Chipotle in 2018, driving its stock price up by an astounding 760%.

Starbucks has been under pressure from activist investor Elliott Investment over its stock performance. Former CEO Howard Schultz hasn’t been silent on the matter either; since leaving in 2022, Schultz has voiced his concerns through LinkedIn, podcasts, and even direct emails to the leadership team.

After a nearly 20% decline in Starbucks’ stock over the past five years, Niccol’s signing caused the stock to skyrocket by 24%. Interestingly, Chipotle’s stock dropped about 8% following the news.

Dave’s Take;

• A Much-Needed Change: Starbucks needed to make a bold move. Activist investors like Elliott can be a thorn in the side for board members and top management. Bringing in a CEO like Brian Niccol—who successfully turned Chipotle around—could provide Starbucks with the strong leadership it needs to either pivot or gain renewed momentum.

• Big Pay, Bigger Impact: While the headline numbers of Niccol’s pay package might seem astronomical, it’s important to put things in perspective. Starbucks generated $36.6 billion in revenue in 2023. Niccol’s base salary is $1.6 million, which, although substantial, is modest compared to the typical S&P 500 CEO pay of $16.3 million. What’s more, Starbucks’ market capitalization increased by $20 billion after Niccol’s appointment was announced, making that $1.6 million base salary seem relatively minor in comparison—though, of course, it’s still a hefty sum!

• Why This Matters to Specialty Coffee: Like it or not, in North America, Starbucks often sets the benchmark against which specialty or third-wave coffee is measured. Converting Starbucks customers into specialty coffee enthusiasts is crucial. With Starbucks experiencing some setbacks (including declining same-store sales), this could be an opportunity for specialty coffee businesses to attract those customers. Plus, breaking down these numbers highlights just how interesting the dynamics at play are in the broader coffee industry.

Cole’s Take;

• Now that’s a latte: If Brian Niccol’s total salary was paid for in Venti sized lattes, he would be taking home approximately 28 million. Imagine if he was paid in coffee—he’d could be sipping a new Venti every minute for the next 53 years.

Reading: a dissertation on the effects of micro-climate on the growth and development of coffee, thanks to Poma Coffee, a Danish coffee producer and research station – yes, high end coffee being grown in greenhouses in Denmark. The team here is conducting controlled research on certain variables surrounding the coffee plant, monitoring the development on a daily basis. A fully transparent operation, Poma plans to share their research for the benefit of coffee production world wide. In this writing, Poma has focused on micro-climates, creating an environment that mimics the micro-climate of 2100 masl as well as 1700 masl.

Watching: This week, Dave re-watched “Baristas,” which offers an inside look at the intense preparation and skill required to compete in the World Barista Championship. After a fantastic conversation with Kyle Ramage, for a recent Buy The Drip podcast, I felt like jumping back in and watching the documentary again – we need more of these documentaries in our industry!

Listening: Check out Slow Radio by BBC Radio 3. It’s a meditative experience that captures the calming sounds of nature and everyday life, perfect for winding down after a long day.

Brewing: side-by-side comparison, tasting the latest Poma Coffee release – in conjunction with this weeks Reading. The “2100 masl Gesha” is complex, nuanced, very floral and has a higher quality of acidity, where the “1700 masl Gesha” is much more rich, with punchy fruit flavours, more viscous with less overall elegance. Both outstanding expressions of Gesha. $205 for 2 × 150 gram bags, means this coffee is approximately $14 per cup (150mL) these are limited, drop-style releases that seem to sell out quickly. Keep your eyes peeled 👀 

this week, Cole used ChatGPT with a prompt; “create for me an image of a coffee bar that has the feel of an iconic Vincent Van Gogh painting. I’m looking for a unique and captivating scenery which would stoke the imagination – lots of warm red, orange and yellow colours”

Would you load up the Van and Gogh for an artistic coffee at this cafe?

“I’ll do a Starry Night with a cup of Poma 2100masl Gesha, thanks Sport”

respond with a photo of your brew bar or get creative with an AI generated scene and we’ll feature and share in an upcoming week of BTD

Distance: a year ago neither of us were runners; this year, we’ve both clocked over 500km on our way to the 1000km goal.

Last week Dave put in a little over 23km in three runs, Cole clocked a touch over 26km through two runs. Did you hit the pavement? it’s not about the distance, it’s the consistency

“We’re either getting better or we’re getting worse”

Want to join us as we hit the road? Let’s connect on Strava! or, join our Whoop group – just respond to the email and let’s grind together! If we can grow our accountability structure, we can collectively achieve our individual goals.