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I started the call by explaining to Lee that each year I select five finalists for worst CEO of the year, and this time the first name released was Starbucks CEO Brian Niccol. Despite joining in late 2023 and arriving with the prestige of his Chipotle turnaround, the early indicators are unfavorable. Store-level execution continues to deteriorate, product availability is inconsistent, and the company faces expanding employee strikes. These disruptions are now visible enough to undermine the brand’s long-standing premium positioning.
Operational Misfires and Mounting Labor Issues
The China Pivot That Raised More Questions Than Answers
The Value Shift in the Consumer Economy
Chipotle Comparisons and Leadership Risk
Lee observed that Niccol’s past success at Chipotle is now less comforting as that chain faces pricing pressure from younger consumers. The same issue is emerging at Starbucks. We agreed that Niccol’s leadership decisions, from operational resets to international restructuring, have not yet produced meaningful improvements. My prediction remains that he will not hold the CEO role at Starbucks by the end of next year.
Retail Winners and Losers
We closed the conversation by reiterating which retail names appear better positioned. Walmart and Costco continue to benefit from value-seeking behavior, while Target remains structurally disadvantaged in a landscape where every misstep is punished. For investors gauging the consumer cycle, the market is making the winners clear.
Transcript:
[00:00:00] Doug McIntyre: So Lee, every year I do a worst CEO of the year list. You have to be a publicly traded American company, and I release them one at a time. And then between Thanksgiving and Christmas, I announce who the winner is among the five.
[00:00:15] Doug McIntyre: So the number one, the first one released was released yesterday. And that’s Brian Nicole over at Starbucks. I know you’re a fan of his. He’s been in his job now since September of last year. he hasn’t improved anything. He’s come up with these nutty ideas like the baristas have, limits on what their uniforms are.
[00:00:39] Doug McIntyre: He’s cut back the menu items, so service is faster. I go to Starbucks all the time and they’re out of food constantly. Can you imagine going to a, a McDonald’s and ordering six hamburgers and they say, we don’t have any hamburgers. I’ve gone to Starbucks a number of times and it’s like, okay, I want a couple of drinks as well.
[00:00:56] Doug McIntyre: And you know, I want a sausage, egg, and cheese sandwich. I’m sorry we’re out of them. And it’s like, are you outta your mind? And then I just go across the street to Dunking Donuts ’cause they’re never outta donuts. It’s a sin. It’s a sin in the restaurant business to be out of anything. He’s now got, people striking Starbucks.
[00:01:16] Doug McIntyre: Not a lot of stores. But one of the things about labor unions is if they find out that there’s a new labor union and it’s starting to have some success, labor unions can gain a lot. Speed pick up a lot of momentum if success Oh yeah, they can. Success. Starbucks employees are paid very poorly. I know they have some decent benefits, but you know, they’re, they’re paid at a level where if you’re getting sort of the base hourly wage there, you’re not living much above the poverty level, depending on how many people there are in your family. So, listen, I think the guys at Chucklehead, I’m sure that the board thought it was a great job. As you know, the board there is burned through CEOs like a house on fire, right? Our friend Howard Schultz, who was the equivalent of their founder.
[00:02:05] Doug McIntyre: I think has held the job three times. And my prediction is, is Nicole is doing such a horrible job. Dumb thing
[00:02:11] Lee Jackson: for a moment. He, Sergeant s Schultz may not be back because this maybe won’t pay out. And the thing, the thing that’s so interesting about Nicole there, there’s like, I think it’s 95 stores in 65 cities are having these strikes or whatever.
[00:02:27] Lee Jackson: Yeah. But the thing that’s so incredible is that. When you look at why they hired him in the first place, well, he did a really, really stellar job at Chipotle (NYSE: CMG) | CMG Price Prediction. And the thing is though, who’s having problems now? Chipotle because when the dough was rolling in and, and everybody was flush.
[00:06:50] Doug McIntyre: You’re gonna see it with them. And, and look, I love Costco (NASDAQ: COST) and I love Walmart, as, as stocks.
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