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Starbucks Q1 FY2026 Earnings: What Management Revealed on the Call About Turnaround and Cost Cuts

16 Things Starbucks Management Revealed on the Q1 FY2026 Earnings Call That Weren’t in the Press Release

Starbucks’ Q1 FY2026 earnings showed improving comparable sales, positive transaction recovery, and early turnaround momentum. While margins remain under pressure due to labor and cost investments, management reaffirmed full-year guidance and said the turnaround is ahead of schedule.

Below is a quick snapshot of the key Q1 FY2026 results before diving into what management revealed on the earnings call.

Starbucks (SBUX) Q1 FY2026 Earnings Highlights Snapshot

Key Financial Performance

Metric Q1 FY2026 Result
Revenue USD 9.9B (+6% YoY)
Global Comparable Sales +4%
U.S. Comparable Sales +4%
China Comparable Sales +7%
Non-GAAP Operating Margin 10.1%
GAAP EPS USD 0.26
Non-GAAP EPS USD 0.56

Customer & Demand Trends

Metric Result
Global Transactions +3%
Average Ticket +1%
U.S. Active Rewards Members 35.5M

Segment Performance

Segment Revenue Comp Sales Margin
North America USD 7.3B +4% 11.9%
International USD 2.1B +5% 13.7%
Channel Development USD 523M 41.3%

Store & Strategy

Category Result
Net New Stores +128
Global Store Count 41,118
Key Strategy Back to Starbucks turnaround

FY2026 Guidance Snapshot

Metric Guidance
Comparable Sales Growth ≥3%
Revenue Growth In line with comps
Margin Slight improvement expected
EPS USD 2.15 – 2.40
New Stores 600 – 650

Key Guidance Context
• Margin recovery expected to lag revenue recovery
• China expected to remain company-operated in H2 FY2026
• Cost pressure from labor, coffee prices, and tariffs continues near term

2. The Turnaround Strategy Is “Revenue First, Earnings Later”

Management made it explicit: the priority is rebuilding transactions and top-line growth first, then margins and EPS will follow.

This sets expectations that profitability recovery will lag revenue growth during the turnaround.

3. Transaction Growth Is Now Broad-Based

For the first time since FY2022:
• Rewards customer transactions are growing
• Non-rewards customer transactions are growing faster

This shows brand relevance is expanding beyond loyalty members.

4. Only a Small Portion of Comp Growth Came From Store Closures

Management revealed only about 0.5 percentage points of comp growth came from sales transferring from closed stores.

Most growth is coming from real demand recovery.

5. Green Apron Pilot Stores Are Already Beating the Fleet

About 650 pilot stores are outperforming the system by roughly 200 basis points in comps.

This strongly validates the operating model change.

6. Starbucks Is Running a $2 Billion Cost Reduction Program

Management disclosed a multi-year program targeting around $2B in savings across:
• G&A
• Procurement
• Technology-driven efficiency

This was not quantified in the press release.

7. The Menu Has Already Been Cut By Roughly 25–30%

Starbucks simplified the menu significantly to improve speed, training, and consistency.

This is a major structural operating change.

8. The Company Is Moving To Platform-Based Innovation

Instead of one-off products, Starbucks is building repeatable innovation platforms:
• Health and wellness (protein)
• Personalized energy drinks
• Premium artisanal bakery

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9. Protein Beverages Are Driving New Traffic, Not Just Upselling

Management said protein drinks are bringing in new visits and showing strong repeat rates.

This suggests incremental demand, not just mix shift.

10. Afternoon Is Now a Major Strategic Growth Focus

Starbucks defined customer behavior clearly:
Morning = routine ritual
Afternoon = reset moment

Expect more innovation around energy drinks, snacks, and indulgent beverages.

11. Digital Menu Boards Will Unlock Daypart Revenue Optimization

Systemwide digital menus will allow real-time merchandising by time of day.

This is a major future revenue lever.

12. New Store Formats Are Being Designed for Cost Efficiency

Starbucks is rolling out multiple prototype formats designed to reduce build cost and improve returns while supporting full channel access (café + drive-thru + mobile).

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13. Long-Term Throughput Goal Is Sub-4-Minute Service All Day

Management said peak performance is improving, but the real goal is sub-4-minute service across the full day.

14. Coffee and Tariff Cost Pressure Should Peak in Q2 FY2026

Management gave timing guidance:
Cost pressure expected to ease in the second half of FY2026.

15. China JV Could Improve Long-Term Margins

The China joint venture structure could be about 40 basis points margin accretive long term, even if near-term revenue declines.

16. Starbucks Is Permanently Shifting Spending From Discounts to Brand Marketing

Management said marketing will remain structurally higher, funded partly by reducing discounting.

This signals confidence in brand strength vs promo-driven traffic.

The simple takeaway

What This Means For Investors

The transcript shows Starbucks is not just trying to boost short-term sales.

The company is rebuilding its entire operating system:

• Simplified menu
• Faster service
• Stronger brand positioning
• Technology-enabled labor efficiency
• New store economics
• Platform-based product innovation

This is a multi-year operational transformation, not a quick earnings rebound story.

Thank you for reading this post. If you enjoy this post, please share it with your friends or family members. Let’s get life transformed together! Many thanks.

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