Starbucks Beats Earnings but Warns of Revenue Decline as AI Push Begins

Key points

• Adjusted EPS hit 80 cents vs. 72 cents expected; revenue missed at $9.14B vs. $9.23B expected.
• Global same-store sales grew 7.2%, with U.S. stores up 7.7% and international up only 0.9%.
• Niccol announced $1B in share buybacks and plans for AI-assisted drive-through ordering.
• Fiscal 2027 guidance projects EPS of $3.15-$3.25 but a 1% revenue decline, below analyst expectations of 1.4% growth.
• China operations were sold to Boyu Capital for $4B, shifting to a joint venture model.

Background

In October 2026, Starbucks denied rumors of acquiring Chipotle, reaffirming its focus on internal turnaround. Earlier in the year, it sold control of its Chinese operations to Boyu Capital for $4 billion to accelerate regional growth. The current results follow two years of menu simplification and staffing improvements under CEO Brian Niccol.

How outlets are covering it

CNBC highlighted the mixed results, noting strong U.S. performance but international weakness, with same-store sales missing estimates in non-North American markets. Yahoo Finance emphasized the earnings beat and Niccol's confidence in the 'plan working,' while noting the revenue miss. The New York Post focused on Niccol's shift from 'turnaround' to 'growth' rhetoric and detailed the specific AI technologies planned for 2027, such as personalized digital menus and drive-through assistance. Analysts were divided: Michael Gunther cited strong sales but warned of losing younger customers to 7 Brew, while Brian Jacobsen viewed the weak guidance as a strategy to set low expectations.

Why it matters

The results signal that Starbucks' operational fixes are stabilizing the brand, but the revenue decline and international weakness suggest structural challenges remain. The pivot to AI and tech modernization indicates a long-term strategy to maintain competitiveness against rising costs and changing consumer preferences, particularly in the U.S. market where demand for affordable indulgences is high.

What to watch

Starbucks will focus on deploying AI systems for drive-through orders and personalized digital menus in 2027. The company plans to launch delivery services within its app in Q2 2027 and aims to open approximately 5,000 new coffee houses in North America over time. It will also continue closing about 250 underperforming stores in North America as part of its restructuring.