Starbucks same-store sales decreased by 2% in the U.S. during the brand’s fiscal Q3, according to an earnings release, marking the sixth consecutive quarter of declining same-store sales.
CEO Brian Niccol said on the chain’s earnings call that he sees the quarter’s results as evidence that the Back to Starbucks turnaround plan is working and claimed that Starbucks is ahead of its internal expectations.
To speed up Starbucks’ turnaround process, Niccol said, the chain will accelerate the deployment of a new operations model — Green Apron Service — across its system next month. The Green Apron protocols emphasize what Cathy Smith, the brand’s CFO, called “repeatable, consistent and scalable standards,” and five key moments of connection with customers.
Smith said this deployment will be part of an additional $500 million in labor allocation across the next year. The coffee giant will also deploy new managerial analytics, dubbed the Grow Report, in fiscal Q1 2026, which give store-level managers more insight into key drivers of same-store sales growth, according to the earnings call, Niccol said.
“It will provide sharper insights to improve our outlier performance and incentivize retail leaders,” Niccol told analysts.
Refreshes and new prototypes are coming
Starbucks is also slowing down new construction and major renovations to rollout a package of store-level changes that cost $150,000 per location.
“Uplifts are intended to quickly replace thousands of seats we removed and introduce greater texture, warmth and layer design,” Niccol said.
The brand anticipates completing at least 1,000 such design changes by the end of calendar year 2026, which would amount to a roughly $150 million investment and cover about 9% of the brand’s 11,453 company-operated North American stores.
Starbucks has also developed a new prototype for standalone units “that has 32 seats, a drive-thru and a roughly 30% lower cost to build,” Niccol said. This prototype will start opening in fiscal year 2026. It also has a small format version with 10 seats under construction in New York City that will open in a few months, he added.
“We believe this new prototype will deliver an exceptional customer experience, improve unit economics and unlock growth opportunities in more markets,” he said. “We plan to complete an evaluation of our North American portfolio by the end of this fiscal year to ensure we have the right coffeehouses in the right locations to drive profitability and deliver the Starbucks Experience.”
Changes yield early positive signs
The coffee chain has made a large number of changes in recent months: asking corporate employees to return to in-office, making some new menu items official, and increasing managerial presence on the shopfloor, as it builds on initial changes to brand positioning, store experience and strategic priorities made in Niccol’s first six months as CEO.
Niccol said the chain is seeing positive indicators from these changes in operational metrics, with yearly barista turnover at less than 50%, and shift completion rates at 98%.
Non-rewards members saw year-over-year transaction growth for the first time since before the COVID-19 pandemic, Niccol said. International markets were a bright spot for the chain, with flat comps overall and 2% same-store sales growth in China.
Given the scale of investment in labor hours and renovations, Starbucks is looking to alter its cost structure and find ways to offset these changes, Niccol said. The brand has also shifted its executive compensation to incentivize cost-cutting. Earlier this year, the chain laid off about 1,100 corporate employees, or about 7% of its non-cafe workforce.
However, specifics on changes to the company’s cost structure may have to wait for next year’s investor day, Niccol said in response to investor questions.
Combined with Chipotle’s same-store sales decrease, Starbucks’ decline — driven by a 4% decrease in transactions — is a worrying signal for the overall restaurant industry, indicating a difficult quarter for many chains.
Clarification: This story was updated to provide more precise details about the Green Apron Service.
