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    SBUX
    Earnings call· Sep 2025(Q4 FY25)

    STARBUCKS CORP SBUX

    Oct 29, 2025 Source

    Executive summary

    Starbucks Q4 FY25 — Turnaround Gaining Momentum with Positive Global Comps

    Starbucks concluded FY25 with a strong Q4, achieving its first positive global comparable store sales growth in seven quarters, driven by the 'Back to Starbucks' strategy. The company is seeing positive momentum in U.S. comps and strong international performance, despite continued margin pressure from inflation and strategic investments. Management is focused on executing its plan, with an emphasis on customer experience, store optimization, and menu innovation, aiming for sustained top-line growth followed by earnings improvement.

    Highlights

    5

    • Global comparable store sales grew 1% in Q4 FY25, marking the first positive quarter in seven quarters.

    • North America company-operated comps improved to flat year-over-year, with U.S. comp sales turning positive in September and remaining positive through October.

    • International segment delivered 3% comp sales growth, led by strong performance in China (2% comp growth), Japan, the U.K., and Mexico.

    • U.S. delivery business expanded nearly 30% year-over-year in Q4 FY25, surpassing $1 billion in sales for the full fiscal year.

    • Brand affinity accelerated to its highest point since 2023, and Starbucks' first-choice ranking reached a 5-year record high.

    Concerns

    5

    • Consolidated operating margin contracted by 500 basis points year-over-year to 9.4% in Q4 FY25, primarily due to inflation (coffee prices, tariffs) and investments in labor hours.

    • Q4 FY25 EPS was $0.52, down 34% from the prior year, reflecting significant investments in the business.

    • U.S. company-operated transaction comps were down 1% in Q4 FY25, despite sequential improvement.

    • U.S. licensed store portfolio revenue declined in Q4 FY25, primarily due to trends in grocery and retail channels.

    • Coffee prices are expected to remain a headwind through at least the first half of FY26.

    Guidance & targets

    6
    CategoryTargetConfidence
    Uplift renovation program completion
    More than 1,000 uplifts
    medium materiality
    High
    Clover Vertica brewer rollout completion
    Nearly complete
    low materiality
    High
    G&A expenses
    Lower than fiscal 2023 levels
    medium materiality
    High
    U.S. company-operated comps
    Should build through the year
    high materiality
    Medium
    Q1 FY26 North America same-store sales
    Led by positive transaction comps
    high materiality
    Medium
    Coffee prices
    Headwind through at least half a year
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Global
    Consolidated revenue reflecting 2% net new company-operated store growth and 1% increase in global comparable store sales.
    Comparable store sales growth: 1%
    		$9.6B5%——
    North America
    Company-operated comps improved to flat year-over-year, driven by flat U.S. comp and positive comp growth in Canada. Transaction comps improved sequentially from Q3.
    Company-operated comparable store sales: Flat YoYCompany-operated store counts: Declined ~1% net in FY25
    		————
    U.S. Company-Operated
    Flat comparable store sales, with ticket growth offsetting transaction decline. September and October saw positive sales comps driven by transactions, benefiting from Green Apron Service and fall launch timing.
    Comparable store sales: Flat YoYTicket: Up 1%Transaction comps: Down 1% (4th consecutive quarter of improvement)Sales comp in September: Positive (transaction-driven)Sales comp in October: Positive
    		—Flat——
    U.S. Licensed Store Portfolio
    Revenue declined primarily due to trends in grocery and retail channels. Travel (airports) and college/university segments were bright spots with positive transaction and ticket growth.
    		—Declined——
    International
    Record revenues and strong comp sales performance led by China, Japan, the U.K., and Mexico. Continued global expansion with significant net new store openings.
    Comparable store sales growth: 3%Net new coffeehouses in Q4: 316Total net new coffeehouses in FY25: >900Total stores: All-time high of $7.8B (revenue for the year)
    		$2.1B9%——
    China
    Second consecutive quarter of positive comp growth, driven by product innovation and a fast-growing delivery business. Focus on optimizing product and pricing architecture in a dynamic market.
    Comparable store sales growth: 2%Comparable transactions: Up 9%Total stores: Crossed 8,000
    		—2%——
    Channel Development
    Net revenues grew due to higher revenue from the Global Coffee Alliance. Starbucks remains market share leader in North America at-home and ready-to-drink coffee categories.
    		—16%——

    Operational metrics

    20
    Consolidated operating margin
    9.4%Contracted 500 bps YoY
    Q4 FY25

    Primary drivers for the contraction were inflation and investments in support of the Back to Starbucks strategy.

    Consolidated G&A
    6.6%Decreased 2% YoY
    Q4 FY25

    G&A decreased versus prior year, reaching approximately 6.6% of revenues.

    Diluted EPS
    $0.52Down 34% YoY
    Q4 FY25

    Reflects investments in the business to execute the strategy.

    U.S. delivery business sales growth
    Nearly 30%YoY
    Q4 FY25

    Rapid expansion of the delivery business in the U.S.

    U.S. delivery business sales
    $1B
    FY25

    Total sales for the full fiscal year.

    Coffeehouses with positive transaction comps
    More than tripledYoY
    Q4 FY25

    Percentage of coffeehouses showing positive transaction comps compared to a year ago.

    Morning daypart transactions
    Flat
    Q4 FY25

    Outpaced overall recovery in Q4, indicating winning the morning.

    Hourly partner turnover
    Record low
    Q4 FY25

    Result of investments in staffing and hours for Green Apron Service.

    Cafe service times
    4 minutes or less
    Q4 FY25

    Achieved by most stores following Smart Queue sequencing algorithm implementation.

    Drive-thru service times
    Still below target
    Q4 FY25

    Indicates area for continued improvement.

    Uplift renovations completed
    Nearly 70
    Q4 FY25

    Small sample size, but encouraged by improvements to sales and transactions.

    Brand affinity
    Highest point since 2023
    Q4 FY25

    Measure accelerated in the quarter, with biggest gains in service time, connection, and care perceptions.

    First choice ranking
    5-year record high
    Q4 FY25

    Starbucks' ranking as customers' first choice.

    Non-Starbucks Rewards customer transactions growth
    Grew YoY2nd consecutive quarter
    Q4 FY25

    Validating approach to marketing across all dayparts.

    Value perception
    Strengthened
    Q4 FY25 and FY25

    Driven by Green Apron Service, condiment bar return, simplified pricing, and removal of non-dairy milk charges.

    Starbucks Rewards active members
    34.2MGrew 1% QoQ and YoY
    Q4 FY25

    Led by higher reengagement and fueled by seasonal favorites and new offerings.

    Protein drink expansion
    8 additional markets
    2025

    Following successful 2024 launch in the U.K., with expectations for further expansion in 2026, including the U.S.

    Dividend increase
    Announced15th consecutive year of increase
    Q4 FY25

    Token of confidence in sustainable, durable long-term growth.

    Coffee prices
    Elevated
    Q4 FY25

    Remains a dynamic headwind, company is finding offsets.

    Store-level KPIs
    5 KPIsSimplified from nearly 2 dozen metrics
    FY26

    New scorecard to correlate with comp growth and empower leaders.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales comps1%%
    Net unit growth development pipeline316coffeehouses

    Product announcements

    4
    ProductTypeDetails
    Protein Cold Foam and Protein Latteslaunch
    Up-level bake caseroadmap
    Matcha menu optimizationroadmap
    Rewards program and mobile app improvementsroadmap

    Deals & partnerships

    1
    Future partner (unnamed)Strategic partnership to unlock future growth potential in China

    Strong interest from multiple high-quality partners who see significant value in the Starbucks brand and team. Starbucks expects to retain a meaningful stake in Starbucks China.

    Risks & headwinds

    4
    Inflation from coffee prices and tariffsExpected to be a headwind through at least H1 FY26.

    Contributed to 500 bps operating margin contraction in Q4 FY25; coffee prices remain elevated.

    Mitigation: Investments in Green Apron Service, streamlining support organization, finding offsets in the business.

    Turnaround forecasting difficultyFY26

    Recoveries are not always linear.

    Mitigation: Focus on disciplined cost management, driving top-line growth, and managing controllable costs.

    Macro pressures on younger consumersNear term

    Discussed as a broad concern, but Starbucks has seen a nice response in transactions and sales across generational cohorts.

    Mitigation: Delivering a great experience and value proposition to ensure customers feel their spending is 'worth it'.

    Increased competition from emerging beverage brandsOngoing

    Not quantified, but acknowledged.

    Mitigation: Focus on 'best offense' by emphasizing craft, customer connection, and experience across all access modes (drive-thru, mobile, cafe) where Starbucks already has scale.

    What to watch in Q1 FY26

    5

    U.S. company-operated comps

    FY26
    CurrentPositive in Sep/Oct (Q4 FY25)
    TargetBuilding through FY26

    Why it matters

    Indicates the sustained success of the 'Back to Starbucks' strategy and transaction recovery.

    Turnarounds are difficult to forecast, and while we have good reason to believe that our U.S. company-operated comps should build through the year, we also know that recoveries are not always linear.

    Q&A highlights

    6

    Does 'Back to Starbucks' focus too much on the in-cafe experience, potentially neglecting other channels like mobile and drive-thru, and will it generate enough comp energy? Are comps differing by order type?

    Brian Niccol clarified that 'Back to Starbucks' is comprehensive, defining the brand's soul around customer connection and craft across all access points (cafe, mobile, drive-thru, delivery). The Green Apron Service standard supports this holistic approach, and the company is seeing positive transaction-driven comps since its August launch, indicating it's working across channels.

    “So what I would actually say is the thing that I love about where we are with Back to Starbucks is we've now established a new Green Apron Service standard. And that standard, okay, is going to be able to support the simple idea of what makes Starbucks, Starbucks, which is great craft, great connection. And that craft and connection can happen in mobile order, it can happen in drive-thru, and it can happen in the cafe.”

    asked by David Palmer · answered by Brian Niccol

    2 min read6 chapters

    Detailed Narrative

    01

    Back to Starbucks Strategy Progress

    Starbucks' 'Back to Starbucks' strategy, launched a year ago, is showing meaningful progress, culminating in the first positive global comparable store sales growth in seven quarters during Q4 FY25. The plan focuses on exceptional craft, connection, and welcoming coffeehouses, with accelerated execution in key areas. This turnaround is evident in improved U.S. comps and strong international performance, setting a stronger foundation for FY26.

    02

    Green Apron Service Rollout and Impact

    The Green Apron Service standard was fully rolled out across U.S. company-operated stores in August, involving investments in staffing and extended operating hours. This led to strong partner engagement, record low hourly partner turnover, and improved customer experience scores. The Smart Queue sequencing algorithm has resulted in over 80% of U.S. cafes achieving service times of 4 minutes or less, contributing to transaction-led comp sales growth in September.

    03

    North America Portfolio Optimization and Prototypes

    A reassessment of the North American portfolio led to a net decline of approximately 1% in company-operated store counts in FY25 due to closures of unprofitable or non-standard coffeehouses. The company is piloting a new prototype with lower build costs and optimized space, including a small-format conversion in New York. The uplift renovation program aims to complete over 1,000 renovations by the end of FY26, with early results showing improved sales and transactions.

    04

    Marketing, Menu Innovation, and Value Perception

    Overhauled marketing and menu innovation, including the successful launch of Protein Cold Foam and Protein Lattes, are driving stronger customer perception and market share growth in the U.S. Brand affinity reached a 5-year record high, and value perception strengthened across all generations. This is attributed to Green Apron Service, the return of condiment bars, simplified pricing, and removal of extra charges for non-dairy milks.

    05

    International Growth and China Strategy

    The International segment achieved record revenues of $2.1 billion in Q4 FY25 and opened 316 net new coffeehouses, totaling over 900 in FY25. China delivered 2% comp growth, driven by transaction improvement, product innovation, and a growing delivery business, with its portfolio exceeding 8,000 stores. Starbucks expects to retain a meaningful stake in Starbucks China while seeking a partner to unlock future growth potential in the region.

    06

    Financial Performance and Cost Management

    Q4 FY25 consolidated revenue grew 5% to $9.6 billion, with a 9.4% operating margin, contracting 500 bps due to inflation and investments. Consolidated G&A decreased by 2% year-over-year, reaching 6.6% of revenues. The company expects FY26 G&A to be lower than FY23 levels, partially offsetting 'Back to Starbucks' investments. The focus remains on driving top-line growth and managing costs to achieve sustainable long-term growth, evidenced by a recent dividend increase.

    AI-generated summary of the company’s earnings call. Not investment advice.