Additional Coverage:
- Starbucks’ turnaround plan shows promise in US as sales growth returns for first time in 2 years (foxbusiness.com)
Starbucks Brews Up a Comeback: Sales Rebound as Turnaround Efforts Take Hold
Starbucks is seeing a much-needed jolt of energy, with demand at its coffee shops on the rise, suggesting that CEO Brian Niccol’s strategic turnaround plan is effectively hitting the mark.
The company announced on Wednesday that sales at its North American locations open for at least a year climbed by 4%. This positive shift was primarily fueled by a 3% increase in purchases from existing customers, coupled with a 1% uptick in the average amount spent per transaction. This marks the first time in eight quarters that the coffee giant has seen an increase in comparable store sales.
Globally, sales also saw a 4% rise, driven by existing customers making more purchases and spending slightly more with each visit.
While the global coffee chain, which launched its overhauled strategy under Niccol in September 2024, surpassed Wall Street’s expectations for sales and revenue, it fell short on profit estimates, known as earnings per share.
Starbucks reported $9.9 billion in revenue and reinstated its full-year targets on Wednesday. The company’s stock has seen a positive trajectory this year, up $16.24, representing a 19.34% increase.
Niccol is set to host his first investor day as CEO on Thursday in New York, where he plans to further emphasize his vision for the chain to return to its authentic coffeehouse roots, encouraging customers to linger and enjoy their experience rather than rushing through.
“Our Q1 results demonstrate our ‘Back to Starbucks’ strategy is working and we believe we’re ahead of schedule,” Niccol stated. “It’s great to see the sales momentum driven by more customers choosing Starbucks more often, and this is just the beginning.” Even before these latest earnings, Niccol has consistently expressed confidence that the company was ahead of schedule in its turnaround efforts.
In September, Niccol told FOX Business that the coffee chain was indeed “ahead of schedule” in its revitalization, though he acknowledged that the work was far from complete.
Niccol is banking on an “aggressive” redesign of stores, an enhanced rewards program, and an array of new food and beverage items to build momentum and reverse the previous decline in customer traffic.
This isn’t Niccol’s first rodeo in turning around major brands; he previously guided Taco Bell and Chipotle through their own challenges. However, he became Starbucks’ third CEO in two years, inheriting a company grappling with widespread unionization campaigns and back-to-back disappointing fiscal quarters marked by declining traffic a year ago.
U.S. Starbucks locations have faced a continued decline in store visits during a period when broader economic pressures have made consumers more conscious of their spending.
Despite these headwinds, Niccol has consistently affirmed his confidence in the company’s trajectory, highlighting that several initiatives have been rolled out faster than initially anticipated. These include a new protein menu set to launch at the end of September and the implementation of the Green Apron Service model. This service model utilizes tools like Smart Queue to strategically sequence orders across mobile pickup, drive-thru, and in-café channels, preventing them from competing with each other and ultimately reducing customer wait times.