Starbucks’ U.S. same-store sales declined 2% in the company’s fiscal third quarter, its sixth straight decline and one that extended the coffee shop giant’s longest sales slump in more than 15 years.
Yet the company pointed to a variety of bright spots in suggesting that its turnaround has started:
Employee engagement and customer connection scores are both up. Customer complaints are down. And the company’s value scores are improving with younger consumers, a key constituency for a chain battling emerging brands like 7 Brew and Dutch Bros.
More company stores are generating positive transactions. And delivery sales are up 25% and appear “highly incremental,” CEO Brian Niccol told analysts on Tuesday.
Maybe most importantly: Occasional customers are returning. Transactions among customers who aren’t members of the Starbucks Rewards loyalty program increased for the first time since the post-pandemic recovery.
“Our financial results don’t yet reflect all the progress we made, but the signs are clear, we’re gaining momentum,” Niccol said in a video message highlighting the company’s earnings. To investors, he said, “We see meaningful signs we are on the right path.”
In China, Starbucks’ second-biggest market, same-store sales rose 2%, including a 6% increase in transactions. The company also said that it generated $2 billion in international revenue.
The Seattle-based company is promising a “wave of innovation” in the coming year as it works to continue to rebuild U.S. sales. Niccol detailed several of those initiatives.
They include new products, including a protein cold foam expected later this year, improved baked goods, tea and coffee made with coconut water, some gluten-free and high-protein options.
It also includes a new mobile app, featuring enhanced mobile order and pay, as well as improvements to Starbucks Rewards.
Starbucks next month will be adding labor into stores and will give managers flexibility to deploy that labor, which it calls its “Green Apron” service model. Niccol said that stores using the model are outperforming the system. The company wants that model in place in time for the fall Pumpkin Spice Latte season.
“By the end of 2026, Starbucks will look and feel very different,” Niccol said. “We’re not just going back to Starbucks. We’re building a better Starbucks, where everyone can experience the best of our brand.”
Over time, he added, the result will be a “stronger top-line and in time healthy, sustainable profits will follow.”
(Check out our story on Niccol’s plan to revive Starbucks.)
The results generated a positive response from investors, as the stock was up 4% in after-hours trading on Tuesday. But Starbucks’ sales challenges have proven more stubborn than many anticipated when the declines started in late 2023.
The company’s same-store sales have fallen for six straight quarters, the longest sales slump since 2008 and 2009, when the recession hammered higher-income consumers that made up much of the company’s customer base at the time.
Niccol took over as CEO last September and has unleashed a steady stream of management changes, reorganizations and strategies to reverse Starbucks’ sales slide. One such strategy involves fixing its coffee shops.
Niccol acknowledged that the company plans to phase out its pick-up stores, or locations for takeout-only locations that were introduced just after the pandemic. Niccol said that they lacked the “warmth and human connection that defines our brand.”
But the company plans to spend $150,000 per store, with minimal downtime, to replace thousands of seats removed during the pandemic. Work on that process has started in New York and will start in Southern California. By the end of 2026 Starbucks expects to complete at least 1,000 uplifts in North America.
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