Cramer says new Starbucks CEO Brian Niccol is key to the company’s turnaround after management shake-up

CNBC's Jim Cramer discussed Starbucks' management shakeup, saying the new leadership will be crucial to turn the business around.
The coffee chain announced it would replace CEO Laxman Narasimhan with Brian Niccol, who is currently the CEO of Chipotle.
Starbucks has struggled recently, reporting same-store sales declines during the past two quarters.

CNBC's Jim Cramer on Tuesday discussed Starbucks' management shake-up, saying the new leadership will be crucial to turn the business around after the ubiquitous coffee chain announced it would replace CEO Laxman Narasimhan with Brian Niccol, who is currently the CEO of Chipotle.

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"Brian Niccol is the key to a new Starbucks, one that can reclaim its old mantle as the 'third place' — you just need to know that this turnaround can't happen overnight," he said. "But, I'm telling you, it's going to happen."

Starbucks has struggled recently, reporting same-store sales declines during the past two quarters. The company has lagged in the U.S. as well as in China, its largest markets. Shares surged in response to the CEO announcement, with the stock closing up 24.5%.

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According to Cramer, Narasimhan wasn't the right person for the role, saying Starbucks needed an executive familiar with the fast-food industry to effectively solve its issues. Narasimhan formerly worked at McKinsey, was an executive at PepsiCo and was the CEO of packaged goods company Reckitt Benckiser.

Niccol's record at Chipotle makes him a great fit for the role, Cramer said. He explained that Niccol successfully improved Chipotle's food, store efficiency and customer throughput. Cramer also admired Niccol's selective strategy at Chipotle when it comes to new items, in contrast to Starbucks which had introduced too many new drinks for baristas to handle efficiently.

"Today we got something very rare: A CEO was straight up fired, and in his place, we didn't just get some stuffed shirt we didn't care about," he said. "No, Starbucks brought in Brian Niccol, the man who almost singlehandedly turned around Chipotle, to run the business. They could not have picked a better guy."