Starbucks signals US revival as CEO Niccol’s turnaround takes root

Jan 28 (Reuters) – Starbucks recorded sales growth in the U.S. for the first time in two years as CEO Brian Niccol’s efforts focused on a return to its coffeehouse roots and newly launched protein-infused drinks bring back customers.

The company poached Niccol from Chipotle Mexican Grill, where he revived the burrito chain after a salmonella scare and rolled out the popular drive-through option ‘Chipotlanes’.

Since taking the top job in September 2024, Niccol has pushed for a simplified menu, freshly baked food and cups with handwritten messages as part of his “Back to Starbucks” initiative.

Niccol has also looked to cut back service times and improve in-store efficiencies, but is facing outdated technology and a splintered supplier network, according to a Reuters report.

Starbucks was still at times falling short of its target to keep service under the 4-minute target, the CEO said on a post-earnings call.

Comparable sales growth at company-operated stores in the U.S. returned to a transaction-driven increase for the first time in eight quarters.

Money spent per order grew 1% in the U.S., driven by espresso and tea-based beverages and the increasing popularity of its cold-foam options, finance chief Cathy Smith said.

Starbucks also reinstated its full-year targets ahead of its first investor day under Niccol on Thursday in New York.

Shares, which have risen about 14% so far this year, were up about 9% in early trading.

“The strategic investments we are making to fix our operating foundations will take time to flow through to sustainable earnings growth,” Niccol added.

STRONG 2026 FORECAST

Comparable sales rose 4% in North America in the first quarter. The company has shed hundreds of underperforming stores, including its flagship Seattle roastery, and has also tried to lower back-end operational costs.

Starbucks expects fiscal 2026 global same-store sales to grow 3% or higher, compared with estimates of a 2.94% rise.

In November, Starbucks sold control of its operations in China to Boyu Capital after years of struggling with weak sales in the region.

Sales in the region rose 7% in the quarter, compared with a 2% rise in the preceding three-month period.

Still, margins continued to shrink, hurt by import tariffs on key coffee exporters such as Brazil last year.

While Trump has rolled back tariffs on coffee, raw bean costs are already high due to the duties paid over last summer. Tariffs, as well as the company’s investment in its store operations, contracted its margins by 290 basis points in the reported quarter.

The company expects fiscal 2026 adjusted profit to be $2.15 to $2.40 per share, the midpoint of which is below estimates of $2.35. It expects tariff pressure to start easing in the back half of the year.

Starbucks reported a 4% rise in first-quarter global comparable sales, compared with estimates of 2.25%, according to data compiled by LSEG.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Sriraj Kalluvila)