✦ Back to Starbucks, Finally PayingNarrow moat

Starbucks (SBUX) — the future bets

The first quarter in which Back to Starbucks stopped costing more than it earned — and the labour cost has come back a tenth of a point.

1. ReportedThe programme was announced in the fourth quarter of fiscal 2024 with four pillars: supporting green apron partners, enhancing the customer experience, reestablishing the community coffeehouse, and strengthening the brand.
   Starbucks Corporation, Form 10-K for the fiscal year ended 28 September 2025 (SEC, CIK 829224) — Item 1, Business, and Item 2, Properties. Starbucks describes itself as the premier roaster, marketer and retailer of specialty coffee in the world, operating in 89 markets, formed in 1985 and trading on Nasdaq under SBUX; besides the flagship Starbucks Coffee brand it sells under Teavana, Ethos and Starbucks Reserve. In the fourth quarter of fiscal 2024 it announced its Back to Starbucks strategy, implemented to bring new and existing customers to its stores and return to growth, including supporting green apron partners, enhancing the customer experience, reestablishing itself as the community coffeehouse, and strengthening the brand through product development, marketing, in-store and digital experience. In the fourth quarter of fiscal 2025 it announced a restructuring plan involving the closure of coffeehouses and further transformation of the support organisation, having assessed the store portfolio on whether coffeehouses had a viable path to offering the physical environment consistent with the brand and a clear path to financial performance, and closed those that did not meet these criteria. Retail sales mix by product type for company-operated stores was beverages 73%, food 23% and other 4%. Company-operated store data for fiscal 2025: US 10,158 to 10,047 (509 opened, 620 closed, net -111), Canada 997 to 967, total North America 11,161 to 11,018 (554 opened, 697 closed, net -143); International China 7,594 to 8,009, Japan 1,809 to 1,883, UK 378 to 524, total International 9,857 to 10,496; total company-operated 21,018 to 21,514, including 627 stores closed in the fourth quarter as part of the Back to Starbucks restructuring and 113 licensed stores converted to company-operated following the acquisition of 23.5 Degrees Topco Limited. Licensed store data: total North America 7,263 to 7,293, total International 11,918 to 12,183, total licensed 19,181 to 19,476. Revenues from licensed stores accounted for 12% of total net revenues. Starbucks generally controls substantially all coffee purchasing, roasting and packaging and the global distribution of coffee used in its operations, while Nestlé controls distribution of Starbucks packaged coffee products outside Starbucks stores. Material properties include York, Pennsylvania (1,957,000 sq ft, roasting, warehousing and distribution), Seattle, Washington (1,294,000 sq ft, corporate administrative), Minden, Nevada (1,080,000 sq ft), Auburn, Washington (750,000 sq ft), Lebanon, Tennessee (680,000 sq ft), Kunshan, China (630,000 sq ft), Kent, Washington (510,000 sq ft) and Shanghai, China (221,000 sq ft); Starbucks owns most of its roasting facilities and leases the majority of warehousing and distribution locations, and as of 28 September 2025 had 21,514 company-operated stores, almost all of which are leased. Item 3 reports legal proceedings by reference to the commitments note. The stock performance graph indexes Starbucks at $100.00 on 27 September 2020 and $110.47 on 28 September 2025, against the S&P 500 at $214.30. — FY2025 · publ. 2025-11-14 · source ↗
2. ReportedIn practice it meant labour hours back into stores, a Green Apron Service model live across the full US company-operated portfolio by the fourth quarter of fiscal 2025, coffeehouse uplifts, menu discipline, and 627 store closures.
   Starbucks Corporation, Form 10-K FY2025 — Item 7, Management's Discussion and Analysis. Total net revenues increased 3% to $37.2 billion in fiscal 2025 compared to $36.2 billion; consolidated operating income decreased to $2.9 billion from $5.4 billion, with an operating margin of 7.9% against 15.0% — a contraction of 710 basis points primarily due to restructuring costs associated with the closure of coffeehouses and simplification of the support organisation (approximately 240 basis points), deleverage (approximately 210 basis points), investments in support of Back to Starbucks largely in labour hours (approximately 130 basis points) and inflation (approximately 80 basis points). Diluted EPS declined to $1.63 from $3.31. Capital expenditures were $2.3 billion against $2.8 billion, and $2.8 billion was returned to shareholders against $3.8 billion. Consolidated net revenues by type: company-operated stores $30,744.8M (+3.3%), licensed stores $4,350.4M (-3.4%), other $2,089.2M (+9.7%). Company-operated store revenue rose $979 million on net new company-operated store growth of 5%, or 1,010 stores, prior to the 627 restructuring closures late in the fourth quarter, plus $131 million from the conversion of 113 licensed stores following the 23.5 Degrees acquisition, partially offset by a 1% decline in comparable store sales ($408 million) attributable to a 2% decline in comparable transactions partially offset by a 1% increase in average ticket, primarily due to annualization of prior year pricing. By segment: North America total net revenues $27,373.1M (company-operated $24,793.0M at 90.6%, licensed $2,575.6M), operating income $3,156.7M with the margin contracting 830 basis points to 11.5% driven by deleverage (approximately 310 basis points), restructuring (approximately 240) and Back to Starbucks investments largely in labour hours (approximately 180); North America revenue rose 1% on net new company-operated store growth of 4%, or 441 stores, prior to the 584 restructuring closures, offset by a 2% decline in comparable store sales driven by a 4% decline in comparable transactions and a 2% increase in average ticket; store operating expenses were 56.4% of related revenues against 51.4%. International total net revenues $7,819.9M (+7%), operating income $950.0M at a 12.1% margin, contracting 210 basis points. Channel Development net revenues $1,871.7M (+6%), operating income $885.1M at a 47.3% margin, contracting 500 basis points primarily driven by a decline in North American Coffee Partnership joint venture income (approximately 350 basis points) and higher global product costs (approximately 90 basis points), with income from equity investees of $249.6M. Corporate and Other operating loss $(2,055.2)M. Cash and investments were $3.7 billion. Store closures in North America were substantially completed in fiscal 2025 and international closures were expected to complete in the first half of fiscal 2026; Starbucks expects a fiscal 2026 reduction in baseline North America company-operated revenues, partially offset by sales transfer to nearby coffeehouses, and expects the future impact on operating margins to be slightly accretive. The Green Apron Service model went live across the full US company-operated store portfolio in the fourth quarter of fiscal 2025, and Starbucks expects macroeconomic challenges including new tariffs and dynamic coffee prices to continue. — FY2025 · publ. 2025-11-14 · source ↗
3. ReportedNorth America operating margin fell 830 basis points to 11.5%; consolidated margin fell 710 basis points to 7.9%; earnings per share halved.
   Starbucks Corporation, Form 10-K FY2025 — Item 7, Management's Discussion and Analysis. Total net revenues increased 3% to $37.2 billion in fiscal 2025 compared to $36.2 billion; consolidated operating income decreased to $2.9 billion from $5.4 billion, with an operating margin of 7.9% against 15.0% — a contraction of 710 basis points primarily due to restructuring costs associated with the closure of coffeehouses and simplification of the support organisation (approximately 240 basis points), deleverage (approximately 210 basis points), investments in support of Back to Starbucks largely in labour hours (approximately 130 basis points) and inflation (approximately 80 basis points). Diluted EPS declined to $1.63 from $3.31. Capital expenditures were $2.3 billion against $2.8 billion, and $2.8 billion was returned to shareholders against $3.8 billion. Consolidated net revenues by type: company-operated stores $30,744.8M (+3.3%), licensed stores $4,350.4M (-3.4%), other $2,089.2M (+9.7%). Company-operated store revenue rose $979 million on net new company-operated store growth of 5%, or 1,010 stores, prior to the 627 restructuring closures late in the fourth quarter, plus $131 million from the conversion of 113 licensed stores following the 23.5 Degrees acquisition, partially offset by a 1% decline in comparable store sales ($408 million) attributable to a 2% decline in comparable transactions partially offset by a 1% increase in average ticket, primarily due to annualization of prior year pricing. By segment: North America total net revenues $27,373.1M (company-operated $24,793.0M at 90.6%, licensed $2,575.6M), operating income $3,156.7M with the margin contracting 830 basis points to 11.5% driven by deleverage (approximately 310 basis points), restructuring (approximately 240) and Back to Starbucks investments largely in labour hours (approximately 180); North America revenue rose 1% on net new company-operated store growth of 4%, or 441 stores, prior to the 584 restructuring closures, offset by a 2% decline in comparable store sales driven by a 4% decline in comparable transactions and a 2% increase in average ticket; store operating expenses were 56.4% of related revenues against 51.4%. International total net revenues $7,819.9M (+7%), operating income $950.0M at a 12.1% margin, contracting 210 basis points. Channel Development net revenues $1,871.7M (+6%), operating income $885.1M at a 47.3% margin, contracting 500 basis points primarily driven by a decline in North American Coffee Partnership joint venture income (approximately 350 basis points) and higher global product costs (approximately 90 basis points), with income from equity investees of $249.6M. Corporate and Other operating loss $(2,055.2)M. Cash and investments were $3.7 billion. Store closures in North America were substantially completed in fiscal 2025 and international closures were expected to complete in the first half of fiscal 2026; Starbucks expects a fiscal 2026 reduction in baseline North America company-operated revenues, partially offset by sales transfer to nearby coffeehouses, and expects the future impact on operating margins to be slightly accretive. The Green Apron Service model went live across the full US company-operated store portfolio in the fourth quarter of fiscal 2025, and Starbucks expects macroeconomic challenges including new tariffs and dynamic coffee prices to continue. — FY2025 · publ. 2025-11-14 · source ↗
4. ReportedNorth America comparable sales rose 8.1% on transactions up 4.5% and ticket up 3.5%, with operating margin up 30 basis points to 13.6% — 340 basis points of sales leverage against 240 of restructuring and 190 of continuing labour investment.
   Starbucks Corporation, Form 10-Q for the quarter ended 28 June 2026 (SEC, CIK 829224). Net revenues for the quarter: company-operated stores $7,506.1M against $7,812.5M, licensed stores $1,200.8M against $1,105.6M, other $615.8M against $537.9M, total $9,322.7M against $9,456.0M; for the three quarters $28,769.3M against $27,615.4M. Restructuring and impairments $302.6M against $20.8M for the quarter and $415.8M against $137.0M for the three quarters. Income from equity investees $78.6M. Operating income $980.4M against $935.6M for the quarter and $2,699.3M against $2,658.4M for the three quarters. Net gain resulting from divestiture of certain operations $536.3M. Net earnings attributable to Starbucks $1,045.3M against $558.3M; diluted EPS $0.91 against $0.49 for the quarter and $1.62 against $1.51 for the three quarters, on 1,143.8 million diluted shares; shares outstanding 1,140.0 million as of 23 July 2026. Starbucks has a presence in 90 markets and, as of 28 June 2026, more than 41,000 company-operated and licensed stores, an increase of 1% from the prior year. Consolidated net revenues decreased 1% to $9.3 billion primarily due to the conversion of Starbucks retail operations in China to the licensed joint venture model, offset by a 7.9% increase in global comparable store sales driven by a 7.9% increase in the US market, where the increase was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications; consolidated operating margin expanded 60 basis points to 10.5%, primarily driven by sales leverage and lower inflation paired with tariff refunds, offset by higher restructuring costs and labour investments largely in support of Back to Starbucks. North America total net revenues for the quarter were $7,395.1M (company-operated $6,754.8M, licensed $639.4M), up 7%, driven by an 8.1% increase in comparable store sales on a 4.5% increase in comparable transactions and a 3.5% increase in average ticket; North America operating income increased 10% to $1,008.9M with the margin expanding 30 basis points to 13.6%, driven by sales leverage (approximately 340 basis points), lapping of the Leadership Experience 2025 (approximately 120) and lower inflation paired with tariff refunds (approximately 110), partially offset by higher restructuring costs (approximately 240), labour investments (approximately 190) and product mix shift (approximately 100); store operating expenses were 56.1% of company-operated store revenue against 56.5%, and 57.3% against 56.4% for the three quarters. For the first three quarters North America revenue rose 5% on a 6.2% increase in comparable store sales, with operating income down 10% to $2.6 billion and the margin contracting 210 basis points to 11.8%, primarily driven by labour investments largely in support of Back to Starbucks (approximately 240 basis points). International quarter revenues were $1,322.6M against $2,010.7M, with company-operated store revenue falling from $1,526.8M to $751.3M and licensed store revenue rising from $465.1M to $561.4M. On 30 March 2026 Starbucks completed the divestiture of its retail operations in China; Boyu Capital acquired a 60% interest based on a cash-free, debt-free mutually agreed total enterprise value of approximately $4 billion, the transaction was partially financed with debt issued by the newly formed joint venture, and Starbucks received total consideration of $3.1 billion inclusive of its share of the debt proceeds, retaining a 40% interest of approximately $1.2 billion accounted for under the equity method. Starbucks derecognised net assets with a carrying value of $3.4 billion and reclassified approximately $282.8 million of cumulative translation adjustment losses and $99.7 million of net investment hedge losses from accumulated other comprehensive income into earnings, recognising a pre-tax gain of $536.3 million; incremental income tax expense associated with the gain is approximately $198.6 million and transaction costs were approximately $44.1 million for the quarter and $73.8 million for the three quarters. Upon completion, 7,991 company-operated stores previously included in the disposal group were converted to licensed stores within the International segment, and Starbucks continues to own and license the Starbucks brand and intellectual property to the joint venture; for the third quarter, revenues generated from the joint venture were $52.5 million and related product and distribution costs $18.5 million, with the carrying value of the investment $1.2 billion. Starbucks expects the conversion to the licensed joint venture model to continue to drive lower revenues and higher operating margin, used a portion of transaction proceeds for debt reduction, and states a shared long-term aspiration to grow to as many as 20,000 locations in China over time. In the second quarter of fiscal 2026 management approved a restructuring plan to relocate certain functions of the support organisation to an additional office in Nashville, Tennessee; in the third quarter it announced an additional fiscal 2026 restructuring plan focused on further transformation of the global support organisation and non-retail facilities and on reducing the future operational complexity of Starbucks Reserve and Roastery locations, resulting in a reassessment and impairment of the associated asset group. — Q3 FY2026 · publ. 2026-07-29 · source ↗
5. ReportedGlobally, comparable sales rose 7.9% and consolidated margin expanded 60 basis points to 10.5%.
   Starbucks Corporation, Form 10-Q for the quarter ended 28 June 2026 (SEC, CIK 829224). Net revenues for the quarter: company-operated stores $7,506.1M against $7,812.5M, licensed stores $1,200.8M against $1,105.6M, other $615.8M against $537.9M, total $9,322.7M against $9,456.0M; for the three quarters $28,769.3M against $27,615.4M. Restructuring and impairments $302.6M against $20.8M for the quarter and $415.8M against $137.0M for the three quarters. Income from equity investees $78.6M. Operating income $980.4M against $935.6M for the quarter and $2,699.3M against $2,658.4M for the three quarters. Net gain resulting from divestiture of certain operations $536.3M. Net earnings attributable to Starbucks $1,045.3M against $558.3M; diluted EPS $0.91 against $0.49 for the quarter and $1.62 against $1.51 for the three quarters, on 1,143.8 million diluted shares; shares outstanding 1,140.0 million as of 23 July 2026. Starbucks has a presence in 90 markets and, as of 28 June 2026, more than 41,000 company-operated and licensed stores, an increase of 1% from the prior year. Consolidated net revenues decreased 1% to $9.3 billion primarily due to the conversion of Starbucks retail operations in China to the licensed joint venture model, offset by a 7.9% increase in global comparable store sales driven by a 7.9% increase in the US market, where the increase was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications; consolidated operating margin expanded 60 basis points to 10.5%, primarily driven by sales leverage and lower inflation paired with tariff refunds, offset by higher restructuring costs and labour investments largely in support of Back to Starbucks. North America total net revenues for the quarter were $7,395.1M (company-operated $6,754.8M, licensed $639.4M), up 7%, driven by an 8.1% increase in comparable store sales on a 4.5% increase in comparable transactions and a 3.5% increase in average ticket; North America operating income increased 10% to $1,008.9M with the margin expanding 30 basis points to 13.6%, driven by sales leverage (approximately 340 basis points), lapping of the Leadership Experience 2025 (approximately 120) and lower inflation paired with tariff refunds (approximately 110), partially offset by higher restructuring costs (approximately 240), labour investments (approximately 190) and product mix shift (approximately 100); store operating expenses were 56.1% of company-operated store revenue against 56.5%, and 57.3% against 56.4% for the three quarters. For the first three quarters North America revenue rose 5% on a 6.2% increase in comparable store sales, with operating income down 10% to $2.6 billion and the margin contracting 210 basis points to 11.8%, primarily driven by labour investments largely in support of Back to Starbucks (approximately 240 basis points). International quarter revenues were $1,322.6M against $2,010.7M, with company-operated store revenue falling from $1,526.8M to $751.3M and licensed store revenue rising from $465.1M to $561.4M. On 30 March 2026 Starbucks completed the divestiture of its retail operations in China; Boyu Capital acquired a 60% interest based on a cash-free, debt-free mutually agreed total enterprise value of approximately $4 billion, the transaction was partially financed with debt issued by the newly formed joint venture, and Starbucks received total consideration of $3.1 billion inclusive of its share of the debt proceeds, retaining a 40% interest of approximately $1.2 billion accounted for under the equity method. Starbucks derecognised net assets with a carrying value of $3.4 billion and reclassified approximately $282.8 million of cumulative translation adjustment losses and $99.7 million of net investment hedge losses from accumulated other comprehensive income into earnings, recognising a pre-tax gain of $536.3 million; incremental income tax expense associated with the gain is approximately $198.6 million and transaction costs were approximately $44.1 million for the quarter and $73.8 million for the three quarters. Upon completion, 7,991 company-operated stores previously included in the disposal group were converted to licensed stores within the International segment, and Starbucks continues to own and license the Starbucks brand and intellectual property to the joint venture; for the third quarter, revenues generated from the joint venture were $52.5 million and related product and distribution costs $18.5 million, with the carrying value of the investment $1.2 billion. Starbucks expects the conversion to the licensed joint venture model to continue to drive lower revenues and higher operating margin, used a portion of transaction proceeds for debt reduction, and states a shared long-term aspiration to grow to as many as 20,000 locations in China over time. In the second quarter of fiscal 2026 management approved a restructuring plan to relocate certain functions of the support organisation to an additional office in Nashville, Tennessee; in the third quarter it announced an additional fiscal 2026 restructuring plan focused on further transformation of the global support organisation and non-retail facilities and on reducing the future operational complexity of Starbucks Reserve and Roastery locations, resulting in a reassessment and impairment of the associated asset group. — Q3 FY2026 · publ. 2026-07-29 · source ↗
6. ReportedStore operating expenses were 51.4% of related revenue in fiscal 2024, 56.4% in fiscal 2025 and 56.1% in the June quarter — barely down, with all the margin recovery coming from sales leverage instead.
   Starbucks Corporation, Form 10-Q for the quarter ended 28 June 2026 (SEC, CIK 829224). Net revenues for the quarter: company-operated stores $7,506.1M against $7,812.5M, licensed stores $1,200.8M against $1,105.6M, other $615.8M against $537.9M, total $9,322.7M against $9,456.0M; for the three quarters $28,769.3M against $27,615.4M. Restructuring and impairments $302.6M against $20.8M for the quarter and $415.8M against $137.0M for the three quarters. Income from equity investees $78.6M. Operating income $980.4M against $935.6M for the quarter and $2,699.3M against $2,658.4M for the three quarters. Net gain resulting from divestiture of certain operations $536.3M. Net earnings attributable to Starbucks $1,045.3M against $558.3M; diluted EPS $0.91 against $0.49 for the quarter and $1.62 against $1.51 for the three quarters, on 1,143.8 million diluted shares; shares outstanding 1,140.0 million as of 23 July 2026. Starbucks has a presence in 90 markets and, as of 28 June 2026, more than 41,000 company-operated and licensed stores, an increase of 1% from the prior year. Consolidated net revenues decreased 1% to $9.3 billion primarily due to the conversion of Starbucks retail operations in China to the licensed joint venture model, offset by a 7.9% increase in global comparable store sales driven by a 7.9% increase in the US market, where the increase was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications; consolidated operating margin expanded 60 basis points to 10.5%, primarily driven by sales leverage and lower inflation paired with tariff refunds, offset by higher restructuring costs and labour investments largely in support of Back to Starbucks. North America total net revenues for the quarter were $7,395.1M (company-operated $6,754.8M, licensed $639.4M), up 7%, driven by an 8.1% increase in comparable store sales on a 4.5% increase in comparable transactions and a 3.5% increase in average ticket; North America operating income increased 10% to $1,008.9M with the margin expanding 30 basis points to 13.6%, driven by sales leverage (approximately 340 basis points), lapping of the Leadership Experience 2025 (approximately 120) and lower inflation paired with tariff refunds (approximately 110), partially offset by higher restructuring costs (approximately 240), labour investments (approximately 190) and product mix shift (approximately 100); store operating expenses were 56.1% of company-operated store revenue against 56.5%, and 57.3% against 56.4% for the three quarters. For the first three quarters North America revenue rose 5% on a 6.2% increase in comparable store sales, with operating income down 10% to $2.6 billion and the margin contracting 210 basis points to 11.8%, primarily driven by labour investments largely in support of Back to Starbucks (approximately 240 basis points). International quarter revenues were $1,322.6M against $2,010.7M, with company-operated store revenue falling from $1,526.8M to $751.3M and licensed store revenue rising from $465.1M to $561.4M. On 30 March 2026 Starbucks completed the divestiture of its retail operations in China; Boyu Capital acquired a 60% interest based on a cash-free, debt-free mutually agreed total enterprise value of approximately $4 billion, the transaction was partially financed with debt issued by the newly formed joint venture, and Starbucks received total consideration of $3.1 billion inclusive of its share of the debt proceeds, retaining a 40% interest of approximately $1.2 billion accounted for under the equity method. Starbucks derecognised net assets with a carrying value of $3.4 billion and reclassified approximately $282.8 million of cumulative translation adjustment losses and $99.7 million of net investment hedge losses from accumulated other comprehensive income into earnings, recognising a pre-tax gain of $536.3 million; incremental income tax expense associated with the gain is approximately $198.6 million and transaction costs were approximately $44.1 million for the quarter and $73.8 million for the three quarters. Upon completion, 7,991 company-operated stores previously included in the disposal group were converted to licensed stores within the International segment, and Starbucks continues to own and license the Starbucks brand and intellectual property to the joint venture; for the third quarter, revenues generated from the joint venture were $52.5 million and related product and distribution costs $18.5 million, with the carrying value of the investment $1.2 billion. Starbucks expects the conversion to the licensed joint venture model to continue to drive lower revenues and higher operating margin, used a portion of transaction proceeds for debt reduction, and states a shared long-term aspiration to grow to as many as 20,000 locations in China over time. In the second quarter of fiscal 2026 management approved a restructuring plan to relocate certain functions of the support organisation to an additional office in Nashville, Tennessee; in the third quarter it announced an additional fiscal 2026 restructuring plan focused on further transformation of the global support organisation and non-retail facilities and on reducing the future operational complexity of Starbucks Reserve and Roastery locations, resulting in a reassessment and impairment of the associated asset group. — Q3 FY2026 · publ. 2026-07-29 · source ↗

• Starbucks Corporation Form 10-K, FY2025 (SEC EDGAR)