A year and a half into a promised turnaround, Starbucks CEO Brian Niccol had some good news for investors on Tuesday. The Seattle-based coffee giant’s quarterly results beat estimates for profits and revenues.

In its second quarter, Starbucks posted sales of $9.5 billion, up nearly 9% from a year ago, while profits, which lagged recently, hit $511 million, a 33% increase from the same quarter a year ago.

Shares jumped 7%, to $104.54, in after-hours trading before settling slightly as investors poured over a better-than-expected quarter and signs that Niccol’s ambitious strategy to restore Starbucks’ former profitability is taking hold.

“Q2 marked a milestone for the business. We delivered growth on both the top and bottom line for the first time in more than two years,” Niccol told analysts during a conference call after earnings were posted.

“Clearly we have more work to do, but I do believe you’ve seen a turn in our turnaround,” he added.

‘Back to Starbucks’

Niccol credited his “Back to Starbucks” plan for the improved performance. The plan, introduced in September 2024, focuses on reviving the company’s traditional coffeehouse experience, with upgraded stores, more staffing, smoother operations and reduced consumer wait times.

Niccol said 80% of the company’s stores were hitting their performance goals on wait times and he expected continued improvement from AI-driven ordering technology.

The company recently unveiled its new incentive rewards program for hourly coffeehouse employees, which entails potential $300 quarterly bonuses and tipping alternatives.

“This is the Starbucks our customers deserve and the Starbucks we believe will deliver long-term growth and value for our partners and shareholders as we execute consistently, at-scale,” Niccol said in a statement Tuesday.

In the second quarter, which ended March 29, Starbucks opened 11 net new stores, bringing the total number of locations to about 41,000. The company expects to add 150 to 175 net new company operated coffee houses in the U.S. this year. The latest earnings showed that global comparable store sales jumped 6%, with U.S. store sales rising 7%.

At Starbucks’ investor day in January, executives looked as far forward as fiscal year 2028. Their long-term goals included net revenue growth of 5% or more and over 2,000 net new stores, with 400 in the U.S.

“Starbucks is back,” Niccol said in a statement at the time.

Recent changes at Starbucks

The company has been on the minds of Seattleites, who wonder as of late: Will the coffee giant remain in its hometown?

These musings were prompted by Starbucks’ planned expansion to Nashville, Tenn., where its new southern corporate office will host up to 2,000 employees over the next five years.

Starbucks confirmed shortly after the announcement last month that there were no plans to move its headquarters out of Seattle, where Starbucks was founded 55 years ago.

Niccol made no reference to the Nashville office during Tuesday’s earning call, but he has a reputation for disrupting the status quo. One of his first moves at his last job, as CEO of Chipotle, was to move that company’s headquarters from Denver to Newport Beach, Calif.

Under Niccol’s leadership, Starbucks has implemented other changes, including a push to cut costs by $2 billion over two to three years.

That has resulted in a slew of layoffs and store closures, including in Seattle. The relationship between the company and its union, Starbucks Workers United, remains fraught.

More than 200 stores nationwide went on strike in November, as employees pressed Starbucks for increased hours, a boost in take-home pay and the resolution of labor law violations. Most of the striking workers returned to work in December.

Baristas at Seattle’s Pike Place coffeehouse — the company’s oldest outpost — filed for their union election earlier this month.

Brewing optimism

Niccol and Cathy Smith, Starbucks’ chief financial officer, highlighted concerns in the coming year, including the risk that higher fuel cost would dampen consumer spending and the lingering impact of tariffs on coffee prices.

But they also pointed to signs of growing momentum.

Starbucks has clinched a win in its global affairs after closing a joint venture with Chinese private equity firm Boyu Capital in April. Boyu Capital now holds the majority stake in the coffee giant’s Chinese retail operations, which is made up of 8,000 coffeehouses.

Their goal is to expand to as many as 20,000 stores, per an announcement this month.

“We’re thrilled to embark on an exciting new growth chapter for Starbucks China,” said Molly Liu, CEO of Starbucks China, in a statement at the time, “and look forward to unlocking the significant growth opportunities by driving hyper-localization.”

The company is also seeing encouraging trends with a new loyalty program and positive consumer response to a stepped-up marketing and advertising campaign.

Starbucks reported solid responses to its marketing campaigns and products among younger consumers.

“Brand affinity continues to rise in the second quarter, reaching five year highs in consideration and purchase intent,” Niccol said. Gains were led by Gen Z and millennials and more customers now believe their Starbucks purchase is worth it compared to a year ago.”

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