The news that Chipotle (CMG -2.78%) CEO Brian Niccol has left the ship and is moving to Starbucks (SBUX 0.53%) sent shockwaves throughout the restaurant industry. Niccol had a successful tenure at Chipotle, with rapid expansion, double-digit sales growth, and process changes that addressed the setbacks that had hurt Chipotle in previous years.

However, Starbucks also comes with its own challenges. Howard Schultz was Starbucks’ only truly successful CEO, and the company has brought him back more than once because it couldn’t find an adequate replacement. So the question for investors is whether this move will boost the coffee stock over time.

Why Starbucks chose Brian Niccol

Niccol’s choice was undoubtedly driven by his performance as CEO of Chipotle. Since he took over in March 2018, the stock has risen over 700%, nearly six times the return of the S&P500 delivered in the same period.

CMG data from YCharts.

His efforts were so successful that Chipotle reported 7% sales growth in 2020, a year in which many restaurants suffered 100% revenue losses due to closures. Moreover, double-digit sales growth resumed after the pandemic ended.

That part of Niccol’s resume may have attracted Starbucks. In recent weeks, activist investor Elliott Management bought a sizable stake in Starbucks as the weakening economy led to falling sales at its stores in the U.S. and China.

In addition, Niccol has proven he can lead a company through operational difficulties. Chipotle struggled with periodic E. coli and salmonella outbreaks between 2015 and 2018, before Niccol took over. Under Niccol, such outbreaks ended when he implemented a food safety program, improved the company’s food preparation and handling, and encouraged sick employees to stay home.

Starbucks is also facing a problem that Niccol left behind at Chipotle – the founder’s departure from leadership. Starbucks has struggled to find a successor to Howard Schultz, who founded the modern version of Starbucks. Likewise, Chipotle founder Steve Ellis had to return to the CEO position after difficulties in finding a successor. Only after Niccol took over was Ellis able to leave the company for good.

Niccol’s new challenges

Still, Starbucks will present Niccol with some unique challenges. For one thing, Chipotle and Starbucks are in different stages of growth.

Chipotle is positioned for growth in the United States and operates primarily in that country. The company is about halfway to its goal of 7,000 stores, which is considered “saturation” in North America. Much of the revenue growth came from increasing the number of restaurants by 8%, making double-digit revenue growth easier to achieve.

In contrast, Starbucks’ US market is close to saturation, so the company has turned to foreign markets, particularly China, to drive further growth. Therefore, to succeed in this job, Niccol will need to focus more on in-store sales growth and international expansion than he did at Chipotle.

Additionally, Starbucks sells more products in different locations. While the transition from selling primarily food to selling primarily beverages shouldn’t be a problem, Niccol will have to manage a more extensive product selection among the beverages, desserts and sandwiches that Starbucks sells.

Channel development, which consists of consumer goods, accounted for about 5% of Starbucks’ revenue in the third quarter of fiscal 2024 (ended June 30). While it’s not a major revenue generator, it’s another food-related business in which Niccol doesn’t have extensive experience.

Can Brian Niccol succeed at Starbucks?

While Niccol’s success is not guaranteed, this move will likely boost Starbucks’ stock price over time. Niccol has a proven track record of operating under difficult circumstances. And since Starbucks has been unable to find a worthy successor to Howard Schultz, Niccol’s ability to inherit the Chipotle founder without complications makes him a natural choice for the role.

Admittedly, Niccol will have to face the challenge of growing a more mature business and will face some challenges that may be new to him. But if he can revitalize this more mature business, he has a good chance of succeeding as Starbucks CEO.