Coffeehouse chain Starbucks (NASDAQ: SBUX) reported Q2 CY2026 results exceeding the market’s revenue expectations, but sales fell by 1.4% year on year to $9.32 billion. Its non-GAAP profit of $0.85 per share was 30.8% above analysts’ consensus estimates.
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Starbucks (SBUX) Q2 CY2026 Highlights:
- Revenue: $9.32 billion vs analyst estimates of $9.18 billion (1.4% year-on-year decline, 1.5% beat)
- Adjusted EPS: $0.85 vs analyst estimates of $0.65 (30.8% beat)
- Adjusted EPS guidance for the full year is $2.60 at the midpoint, beating analyst estimates by 8.8%
- Operating Margin: 10.5%, in line with the same quarter last year
- Free Cash Flow Margin: 14.5%, up from 4.6% in the same quarter last year
- Locations: 41,304 at quarter end, up from 41,097 in the same quarter last year
- Same-Store Sales rose 7.9% year on year (-2% in the same quarter last year)
- Market Capitalization: $117.5 billion
“Our Back to Starbucks plan was built on the belief that an extraordinary cup of coffee, human connection and customer experience win the day, every day. Our third quarter results are proof they do,” commented Brian Niccol, chairman and chief executive officer.
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
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.
With $38.34 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. To expand meaningfully, Starbucks likely needs to tweak its prices, start new chains, or enter new markets.
As you can see below, Starbucks’s 5.7% annualized revenue growth over the last seven years was tepid.
This quarter, Starbucks’s revenue fell by 1.4% year on year to $9.32 billion but beat Wall Street’s estimates by 1.5%.
Looking ahead, sell-side analysts expect revenue to decline by 1.4% over the next 12 months, a deceleration versus the last seven years. This projection doesn’t excite us and suggests its menu offerings will see some demand headwinds.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations influences how much it can sell and how quickly revenue can grow.
Starbucks operated 41,304 locations in the latest quarter. It has opened new restaurants quickly over the last two years, averaging 3% annual growth, 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
A company’s restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. 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 7.9% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Starbucks’s Q2 Results
We were impressed by how significantly Starbucks blew past analysts’ same-store sales expectations this quarter. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 9.1% to $112.42 immediately after reporting.
Sure, Starbucks had a solid quarter, but if we look at the bigger picture, is this stock a buy? 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).
