In This Article:
Some consumers may opt to grab their morning coffee from a local spot rather than a popular chain. It could be because many coffee chains prioritize efficiency and speed to generate more profits, sometimes leading them to forget why they started their businesses in the first place.
Starbucks was one of the few that caught on to this consumer trend, but it might have been a little too late.
💵💰 Don't miss the move: Subscribe to TheStreet's free daily newsletter 💵💰
Over the last few months, Starbucks has made multiple changes to its coffee shops and operations as part of a turnaround plan to return the coffee chain to its roots and create a "third place" for customers by personalizing its in-store experience.
As Starbucks (SBUX) CEO Brian Niccol stated, "This is back to the core of what makes Starbucks a unique experience."
Related: Starbucks makes shocking pricing move customers will love
Niccol provided a six-month update in March about the progress of the company's turnaround plan, claiming more of its medium-term goals had already been enacted and were showing signs of improvement.
However, Starbucks' positive words might have just been contradicted by its undeniably "disappointing" earnings results.
Starbucks stock drops after delivering 'disappointing' results
Although Niccol remains optimistic that the "Back to Starbucks" plan is the right strategy to turn the business around, Starbucks' latest earnings results seem to signal otherwise.
The coffee chain's comparable store sales fell 2% in the second quarter of 2025, marking the fifth consecutive quarterly decline.
Comparable transactions were down 2% compared to last year, while traffic continues to report negative numbers with a 4% decline.
Related: Starbucks CEO announces new requirement for workers
These results caused Starbucks' stock to drop nearly 7% during extended trading hours on April 29, the day the earnings were reported. Although the shares have stabilized, the stock has declined over 11% year to date as of May 1.
Starbucks CEO warns about what's to come for the company after unveiling earnings
The results were not as positive as expected overall, but Starbucks CFO Cathy Smith emphasized during an earnings call that the company's turnaround plan is a work in progress.
She states that the plan has not yet been fully implemented, so completely reversing declining numbers will take time and will not happen until all changes, including long-term ones, have been made.
"While our financial results are far from Starbucks' potential, we are working to build back a better business," said Smith. "We are developing new muscles to test, iterate, and scale quickly, in service of long-term, durable growth and strong returns on invested capital," Smith added.