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Back of Napkin

Starbucks Corporation SBUX

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Starbucks closed 627 stores in a single quarter, took $755.0M of restructuring charges, and its operating margin fell to 2.9%.

Four quarters later comparable sales are running +7.9% with transactions up 4.5%, which is the first genuine traffic recovery in three years.

SBUX · price with moving averages

Daily · 6MWeekly · 3Y
$70$82$94$107$119 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Starbucks sells coffee out of 41,304 stores, roughly 41% of them company-operated and the rest licensed. It also sells packaged coffee and ready-to-drink products through grocery. The business had been in a slow decline: fewer visits, longer waits, and a menu that had grown to the point where the store could not execute it.

The fix has been operational rather than strategic. Fewer items, faster service, and closing the stores that could not be repaired. None of it required a new product or a new market, which is why it could be done quickly and why it shows up first in how many people come in rather than in what they spend.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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