Starbucks CEO Fired Amid Declining Sales and Boycott Impact

Global coffee giant Starbucks has announced the dismissal of its CEO after just two years in the role, citing declining sales due to rising prices and the impact of a boycott campaign against companies linked to Israel following the Gaza war, according to the British newspaper The Telegraph on Wednesday, August 14, 2024.

Starbucks confirmed the resignation of Laxman Narasimhan on Tuesday and appointed Brian Niccol, the former CEO of Chipotle, credited with revitalizing the fortunes of the Mexican fast-food chain, as his successor.

This leadership change follows a turbulent year for Starbucks, which saw sales decline for two consecutive quarters—dropping by 4% in the first three months of the year and another 3% in the following three months.

Some consumers have reduced their consumption of the expensive coffee offered by the chain, while others have boycotted the company due to its ties with Israel, which has waged an 11-month war on Gaza, leaving over 120,000 Palestinians dead or injured.

Starbucks shares fell by approximately 25% over the past 12 months, but recovered around 20% on Tuesday following the announcement of Narasimhan’s departure.

The global coffee company faced widespread boycotts last year due to its support for Israel. Tensions escalated after the company filed a lawsuit against the Starbucks Workers Union (SWU) in Iowa, accusing it of trademark infringement.

This legal action came in response to the union’s expression of “solidarity with Palestine” in a social media post following the October 7th attacks.

In March, the company’s franchisee in the Middle East announced plans to lay off thousands of workers due to declining sales caused by the boycott linked to the Gaza war.

A large boycott campaign, launched by activists and Gaza supporters, targeted companies that support the Israeli occupation following the start of the Gaza war. Several reports indicate that this campaign contributed to the global decline in sales for these companies.

A Bloomberg report noted a decrease in sales for American commercial companies such as McDonald’s, KFC, and Pepsi in the first quarter of this year in Asia and the Middle East due to the boycott.

Meanwhile, sales of Pepsi Pakistan dropped by 11% in the first quarter of 2024.

The Financial Times reported that the boycott of products from companies supporting Israel negatively impacted the second-quarter profits this year.