Coffeehouse chain Starbucks (NASDAQ: SBUX) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 8.8% year on year to $9.53 billion. Its non-GAAP profit of $0.50 per share was 13.6% above analysts’ consensus estimates.
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Starbucks (SBUX) Q1 CY2026 Highlights:
- Revenue: $9.53 billion vs analyst estimates of $9.14 billion (8.8% year-on-year growth, 4.3% beat)
- Adjusted EPS: $0.50 vs analyst estimates of $0.44 (13.6% beat)
- Adjusted EBITDA: $1.19 billion vs analyst estimates of $1.18 billion (12.5% margin, 0.8% beat)
- Operating Margin: 8.7%, up from 6.9% in the same quarter last year
- Free Cash Flow was $91.8 million, up from -$297.2 million in the same quarter last year
- Locations: 41,129 at quarter end, up from 40,789 in the same quarter last year
- Same-Store Sales rose 6.2% year on year (-1% in the same quarter last year)
- Market Capitalization: $111.5 billion
Company Overview
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $38.47 billion in revenue over the past 12 months, Starbucks is one of the most widely recognized restaurant chains and benefits from customer loyalty, a luxury many don’t have. Its scale also gives it negotiating leverage with suppliers, enabling it to source its ingredients at a lower cost. However, its scale is a double-edged sword because there are only a finite of number places to build restaurants, making it harder to find incremental growth. For Starbucks to boost its sales, it likely needs to adjust its prices, launch new chains, or lean into foreign markets.
As you can see below, Starbucks grew its sales at a mediocre 6% compounded annual growth rate over the last seven years.
This quarter, Starbucks reported year-on-year revenue growth of 8.8%, and its $9.53 billion of revenue exceeded Wall Street’s estimates by 4.3%.
Looking ahead, sell-side analysts expect revenue to grow 1.3% over the next 12 months, a deceleration versus the last seven years. This projection is underwhelming and indicates its menu offerings will face some demand challenges.
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Restaurant Performance
Number of Restaurants
The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.
Starbucks operated 41,129 locations in the latest quarter. It has opened new restaurants at a rapid clip over the last two years, averaging 3.7% annual growth, much faster than the broader restaurant sector.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Starbucks’s demand within its existing dining locations has barely increased over the last two years as its same-store sales were flat. Starbucks should consider improving its foot traffic and efficiency before expanding its restaurant base.
In the latest quarter, Starbucks’s same-store sales rose 6.2% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.
Key Takeaways from Starbucks’s Q1 Results
We were impressed by how significantly Starbucks blew past analysts’ revenue expectations this quarter. We were also excited its same-store sales outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 5.1% to $102.22 immediately following the results.
Starbucks may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
