Starbucks’ Brew Gets Bitter as Turnaround Efforts Face Headwinds

Starbucks’ latest quarterly report reveals that its ambitious “Back to Starbucks” turnaround strategy is still steeping, with financial results falling short of expectations.

For the fiscal second quarter ending in March 2025, the coffee giant reported revenue of $8.76 billion, a 2% increase year-over-year but below Wall Street’s forecast of $8.83 billion. Adjusted earnings per share dropped to 41 cents from 68 cents a year earlier, missing the anticipated 49 cents. Net income fell 50% to $384 million.

Global same-store sales declined by 1%, with U.S. locations experiencing a 2% drop, attributed to a 4% decrease in transactions. International markets fared better, with comparable sales rising 2%, and sales in China stabilizing after previous declines.

CEO Brian Niccol, who took the helm in September 2024, is steering the company back to its roots with the “Back to Starbucks” initiative. This strategy emphasizes enhancing the in-store experience by simplifying menus, improving service speed, and creating more welcoming environments. A pilot program aimed at reducing wait times to under four minutes is set to expand to 3,000 locations by year-end.

To support these changes, Starbucks is shifting focus from technology investments to increasing labor, pausing the rollout of certain equipment like the Siren Craft System. This shift has contributed to a 12.1% rise in store operating expenses, totaling $4.2 billion for the quarter.

Following the earnings announcement, Starbucks’ stock fell nearly 7% in after-hours trading.

While the company’s efforts to revitalize its brand are underway, the financial results indicate that the turnaround is still in its early stages. Investors and customers alike will be watching closely to see if these initiatives can reignite growth in the coming quarters.​