Starbucks on Wednesday reported a 1% increase in comparable-store sales, including a flat result in the U.S.
It was the best performance, both globally and domestically, since its sales slump began at the end of 2023. What’s more, company executives touted further improvement domestically in September and October.
The improvement was due somewhat to a favorable shift in the timing of its popular fall menu launch. But executives also noted that September was the first full month in which the company had deployed the new “Green Apron” service model in its company-operated shops, which included increases in store-level workers designed to improve service.
“When we launched the Green Apron service standard in the middle of August, we saw the business respond so much that September was the first month in which we actually had positive comps, driven by transaction comp growth,” CEO Brian Niccol told analysts.
In particular, the company said that its morning daypart improved, a crucial time for a company that specializes in coffee. Starbucks had been dogged at least in part by backups created by mobile orders.
The new service model, including a new “SmartQ” order sequencing program, have been designed to eliminate those backups. “We’re winning in morning because we’re better staffed, we’re providing better speed of service, while providing craft and connection,” Niccol said. “We’ve just seen improvement in the morning and specifically the number of transactions we are delivering per 15 minutes.”
Company executives expect this model to continue to improve sales over time, noting that their 650 stores where the model was tested have continued to perform better than the system as a whole.
Executives also believe that they have plans in place to boost sales further. Protein cold foam, introduced in September, has performed well, they said, and could be a platform for more sales. The company plans to bring back items like Eggnog Lattes and upgraded pastries next year.
Delivery is also proving to be a winner. Starbucks’ delivery sales rose nearly 30% last quarter and is now a $1 billion business for the chain.
Starbucks also plans to keep remodeling locations to improve in-store service. Niccol argued that this is crucial not just to rebuild sales from in-store customers, but to improve sales for drive-thru and mobile customers.
“The way we handled mobile orders actually distracted us from executing really well in the drive-thru as well as the café and for the new emerging channel around delivery,” Niccol said. “We’ve now established a new Green Apron service standard. That standard is going to support the simple idea of what makes Starbucks Starbucks, which is great craft, great connection. And that craft and connection can happen in mobile order. It can happen in drive-thru. And it can happen in the café.”
Starbucks is betting big that this will all work.
The company handed Niccol a nine-figure pay package to lure him from Chipotle more than a year ago.
It is also investing heavily behind his plans, which has eaten into profit margins.
Starbucks’ operating income declined 79% last quarter, to $278.2 million. Earnings declined 85%, to 12 cents per share.
In North America, where much of Starbucks’ focus has been this year, operating margin fell 1,420 basis points in the quarter, to 4.5% of sales.
Investors’ initial enthusiasm for the Niccol hire has waned this year. The company’s stock is down more than 7% so far in 2025, though it remains about 12% higher than it was just before he was hired.
All of which makes improving sales, particularly in the U.S., just so crucial. Executives believe those sales will yield better profits eventually and will pay off these investments. The company has shifted away from some of the discounted transactions that were prevalent when the sales challenges started last year.
“Earnings are going to lag,” CFO Cathy Smith said. “You grow top-line first and then earnings will follow. We are taking all the necessary actions now, though, to make sure that every single transaction is more profitable going forward.”
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