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Starbucks Sales Slide Again, But Executives Say Recovery Is Outpacing Expectations

Starbucks has reported its sixth consecutive quarter of same-store sales declines, but CEO Brian Niccol is optimistic. He claims the company’s transformation strategy is not only on track—but ahead of schedule.

“While our financial results don’t yet reflect all the progress we’ve made, the signs are clear — we’re gaining momentum,” Niccol said in a video released with the latest earnings.

Niccol, known for successfully revitalizing Chipotle during its food-safety crisis, is now applying a similar recovery playbook to the world’s largest coffee chain. And investors seem encouraged—Starbucks shares rose 4% in after-hours trading.

Q3 Earnings Overview: Revenue Beats, EPS Impacted by One-Time Costs

For the quarter ending June 29, Starbucks reported:

• Revenue: $9.5 billion vs. $9.31 billion expected
• Adjusted Earnings per Share: 50 cents (Wall Street expected 65 cents)
• Net Income: $558.3 million, or 49 cents per share (down from $1.05 billion, or 93 cents a year ago)
• One-time expenses, including a large-scale U.S. store managers’ event and a tax adjustment, reduced EPS by 11 cents.

Despite solid revenue growth of 4% year-over-year, global same-store sales dropped 2%, performing worse than analysts’ projections of a 1.3% decrease. However, performance varied by region.

North America: Modest Improvement and Reconnecting With Gen Z

North American stores saw a 2% same-store sales decline, slightly better than the 2.5% drop forecasted. Key highlights include:

• Transactions fell 3%, but average ticket size increased 1%
• Non-rewards members showed growth in transactions
• Starbucks’ college campus locations saw a surprising uptick, signaling a revival of interest among younger consumers

Niccol said employee morale, customer satisfaction, and operational performance are all trending upward, thanks in part to internal reforms.

Doubling Down on Hospitality: “Green Apron Service” and Café Revamps

To win back customers, Starbucks is shifting its focus from expansion to enhancing the in-store experience:

• Fewer new U.S. store openings are planned
• Thousands of seats removed during the pandemic and mobile-ordering boom will be reinstalled
• A company-wide rollout of the “Green Apron Service” is underway, focused on hospitality and meaningful barista-customer interactions

These initiatives are part of a broader effort to restore Starbucks’ premium café image.

China Market Sees First Growth in 18 Months

China, Starbucks’ second-largest market, finally delivered 2% same-store sales growth, breaking a year-and-a-half long slump.

• Transactions climbed 6%, though average ticket price fell, a result of Starbucks cutting drink prices to compete with rivals like Luckin Coffee
• The company is reportedly considering selling a stake in its China business, potentially valuing the operation at $10 billion

“We’ve received interest from over 20 potential partners,” Niccol said, adding that Starbucks remains committed to maintaining “a meaningful stake.”

Looking Ahead: New Products, Strategic Investments, and 2026 Vision

While Chief Financial Officer Cathy Smith struck a cautious tone for the final quarter of fiscal 2025—citing an uncertain consumer climate—she also confirmed:

• Starbucks will invest $500 million in labor next year, mainly to support Green Apron Service
• Innovation will play a key role in the recovery, with new beverage offerings such as:
  • Protein cold foam
  • Coconut-water drinks
  • Improved artisanal food items

Additionally, customers can expect a revamped Starbucks app and updated Rewards program in fiscal 2026, with more details to be shared at an investor event.

Final Takeaway

Starbucks is navigating a complex turnaround amid declining traffic, inflationary headwinds, and intensifying global competition. But under Niccol’s leadership, the company is prioritizing store-level experience, customer reconnection, and operational efficiency—a formula that helped him revive Chipotle and could do the same for Starbucks.

Investors and analysts will be closely watching the next two quarters to see if the momentum turns into measurable financial gains.