Something strange happened in the American restaurant sector this month: Numerous major restaurant companies named new CEOs or saw CEO departures, sometimes with no warning.
It started bright and early on the morning of Aug. 1 in Louisville, Kentucky, when Papa Johns announced the hiring of Todd Penegor, formerly of Wendy’s, as CEO. Papa Johns had been looking for a CEO since Rob Lynch’s defection to Shake Shack in March. The pizza chain’s North American comparable sales took a beating over recent months, down 4% year-over-year in the second quarter.
Traffic troubles hung over many of August’s CEO transitions, including the dramatic high point of the month: Laxman Narasimhan’s ouster from Starbucks and his replacement with Brian Niccol, formerly CEO of Chipotle. That move in turn necessitated the appointment of Scott Boatwright as interim chief at the Mexican fast-casual chain.
Narasimhan joined Starbucks as it was undergoing a brand transformation in late 2022. Many of the initiatives announced before his accession, like the Siren System’s deployment, remained unfinished at the end of his tenure, while strengths of the brand in 2022 — China, and customization of digital orders — have become weaknesses.
In all, Narasimhan’s truncated tenure as CEO of the coffee giant lasted for five full quarters and parts of two others. Pressure on the company from activist investors and increased consumer price sensitivity could leave Brian Niccol little room for error, despite the market fanfare greeting his appointment.
BJ’s Restaurants, which terminated CEO Gregory Levin on Aug. 28, faced similar pressures to Starbucks, including a modest decline in same-store sales, according to a note from William Blair analysts.
“Levin was terminated, we suspect likely due to the lack of consistent sales and profit momentum in the business alongside probable pressure from activist investors,” Sharon Zackfia, William Blair analyst, wrote.
Bloomin’ also named a CEO in the middle of its brand turnaround efforts, while Red Lobster’s new owners picked a leader to oversee the company once it exits Chapter 11 proceedings.
If consumers continue to pull back from many restaurant brands, the disappointing same-store sales and traffic numbers posted by companies could produce more C-suite shifts as shareholders and boards look for a personnel path out of a macroeconomic problem.
