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Starbucks announced Tuesday that Chipotle CEO Brian Niccol would replace current CEO Laxman Narasimhan as the company addresses declining sales. The news sent Starbucks shares soaring more than 20%, while Chipotle shares fell as much as 10% on the news that Niccol would leave.

Media reports said Narasimhan's resignation is effective immediately. Starbucks Chief Financial Officer Rachel Ruggeri will serve as interim CEO until Niccol officially takes over on September 9.

Activist investors seek to save the company from failure as sales slump

Narasimhan will take over as Starbucks CEO in March 2023.But Starbucks has struggled this year, mainly due to weak sales in its two largest markets, China and the United States. In the latest quarter, Starbucks reported a 3% drop in same-store sales.Among them, same-store sales in the United States fell by 2%, declining for two consecutive quarters; while same-store sales in China fell by 14%.

Regarding the personnel changes at Starbucks, Starbucks China said: "The personnel adjustments at Starbucks headquarters do not involve the Chinese market. Our confidence and commitment to the Chinese market remain the same, and we will continue to focus on the long-term development of our business in China."

Pressure has mounted as the company has struggled to draw customers into its stores. Former Starbucks CEO Howard Schultz wrote an open letter in May addressing the company's problems and offering suggestions, but never mentioned Narasimhan by name.