Brian Niccol turnaround taking hold

Introduction to Starbucks’ Turnaround

Customers enter a Starbucks coffee shop in New York, US, on Monday, July 28, 2025. Wall Street is seeing early signs that Starbucks’ turnaround is taking hold, despite a quarterly earnings miss and another quarter of shrinking same-store sales.

Quarterly Earnings and Same-Store Sales

The company reported weaker-than-expected earnings for its fiscal third quarter. Its same-store sales fell for the sixth straight quarter, but executives told analysts on the company’s earnings call that traffic improved sequentially every month of the quarter. The focus for Starbucks’ third fiscal quarter was less on the results and more on proof points on the pace of the potential recovery ahead, according to William Blair analyst Sharon Zackfia.

Promising Signs for Recovery

Another promising sign came in traffic growth from non-Starbucks Rewards members. For several years, the number of Starbucks customers who don’t belong to its loyalty program has fallen, making the cohort the primary culprit for the chain’s recent sluggish sales. RBC Capital Markets analyst Logan Reich pointed to CEO Brian Niccol’s comments that the turnaround is ahead of schedule, the accelerated rollout of its new "Green Apron Service" labor program and mobile app changes, among other factors.

Labor Changes and Menu Innovations

The labor changes aim to create a more welcoming environment in cafes while ensuring fast service. Starbucks also teased new menu items coming in fiscal 2026, including protein cold foam and improved food options. TD Cowen analyst Andrew Charles wrote that he has greater confidence that Starbucks’ same-store sales will continue to improve due to the company’s "more aggressive innovation agenda."

Analysts’ Views on Turnaround

But while many analysts presented a bullish case for the company’s turnaround, not all investors are sold on Niccol and his "Back to Starbucks" strategy. The comeback is taking longer than originally anticipated, based on Wall Street’s expectations of when the company’s same-store sales will grow again. Shares of Starbucks rose less than 1% in morning trading, after climbing as much as 5% in extended trading following the results.

Conclusion

In conclusion, despite a quarterly earnings miss and shrinking same-store sales, Wall Street is seeing early signs of Starbucks’ turnaround taking hold. The company’s traffic growth, labor changes, and menu innovations are promising signs for its recovery. However, not all investors are convinced, and the comeback is taking longer than expected.

FAQs

Q: What are the early signs of Starbucks’ turnaround?
A: The early signs include traffic growth, improved sequential monthly traffic, and promising signs from non-Starbucks Rewards members.
Q: What are the labor changes aimed at?
A: The labor changes aim to create a more welcoming environment in cafes while ensuring fast service.
Q: What new menu items is Starbucks introducing?
A: Starbucks is introducing protein cold foam and improved food options in fiscal 2026.
Q: What is the current market cap of Starbucks?
A: The current market cap of Starbucks is about $106 billion.
Q: How has the stock performed this year?
A: The stock has risen about 2% this year.