Starbucks (SBUX) Q4 2025: Green Apron Rollout Drives 30% Delivery Growth, Signals Turnaround Momentum
Starbucks’ Q4 marked a pivotal inflection as the company’s “Back to Starbucks” strategy began translating into measurable operational gains, with delivery revenue surpassing $1 billion and broad-based transaction improvement across formats. Intensified investment in staffing, service standards, and menu innovation is restoring customer connection, but persistent margin pressure and a disciplined approach to store closures underscore a pragmatic recovery. The next phase will test whether these foundational shifts can deliver sustained transaction-led growth amid competitive and cost headwinds.
Summary
- Service Model Reset: Green Apron service standard and staffing investments are rebuilding customer experience and transaction momentum.
- Disciplined Portfolio Pruning: Net store count in North America declined as unprofitable units were closed to strengthen the base.
- Turnaround Inflection: Positive comps in September and October signal early success, but margin recovery will lag top-line gains.
Performance Analysis
Starbucks delivered 5% global revenue growth in Q4, with the first positive global comparable sales in seven quarters, underscoring an inflection in its multi-year turnaround. North America’s company-operated comps improved to flat, while international outperformed with 3% comp growth, led by Japan, China, the UK, and Mexico. The U.S. business showed sequential transaction improvement, notably tripling the percentage of coffeehouses with positive transaction comps year-over-year, with morning daypart performance outpacing the overall recovery.
Delivery revenue in the U.S. grew nearly 30% for the quarter and surpassed $1 billion for the year, reflecting Starbucks’ ability to expand across channels. However, operating margin contracted by 500 basis points to 9.4%, driven by coffee price inflation, tariffs, and significant labor investments tied to the Green Apron service rollout. Meanwhile, the North America store portfolio was pruned by 1%, with 107 net global closures targeting underperforming locations, a move expected to be margin accretive as sales transfer to healthier stores.
- Transaction-Led Recovery: September marked the first month of positive U.S. comps driven by transactions, a key turnaround milestone.
- International Strength: International revenue hit a record $2.1 billion, with China delivering 2% comp sales growth and a 9% jump in transactions.
- Margin Pressure Persists: Cost inflation and labor investments weighed on operating margin, with earnings lagging top-line gains.
Starbucks is prioritizing top-line rebuild and customer experience, with management emphasizing that earnings will follow as operational improvements take hold and cost headwinds moderate.
Executive Commentary
"We took the significant step of scaling several key pieces of work during the quarter, and it's clear from our results that our plan is working and our turnaround is taking hold. We set a plan, we're working the plan, and the plan is working."
Brian Nickel, Chairman and Chief Executive Officer
"Q4 was a turning point, having delivered the first quarter of global comp growth in seven quarters, and we're encouraged by our trends to date in Q1. We're focused on driving our top line and managing the costs that are within our control, giving us confidence in our path to sustainable, durable, long-term growth."
Kathy Smith, Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Green Apron Service Standard: Customer Connection as a Differentiator
Starbucks’ Green Apron service standard, a staffing and operational overhaul, is now fully implemented in the U.S. company-operated portfolio. By investing in more floor hours, optimizing scheduling, and rolling out SmartQ order sequencing, Starbucks has improved service speed and customer engagement. Early data shows improved customer experience scores, record-low partner turnover, and growing transaction momentum in pilot stores, supporting the thesis that service is a primary lever for sustainable growth.
2. Portfolio Rationalization: Closing Unviable Units to Strengthen Core
Starbucks closed 107 stores globally in Q4, with a net 1% reduction in North America company-operated store count for the year, targeting locations that failed to meet profitability or brand experience standards. This move reflects a disciplined approach to capital allocation, as management seeks to ensure all units contribute to brand equity and financial returns. Sales transfer from closures has outperformed expectations, supporting margin accretion and improved density.
3. Menu Innovation and Value Perception: Protein Platform and Pricing Discipline
Menu innovation is driving incremental traffic and improved value perception, with the launch of protein cold foam and lattes showing strong customer uptake and positive value scores. Starbucks is leveraging customization and premiumization to attract less frequent customers, while maintaining pricing discipline. Management signaled a targeted, data-driven approach to future price increases, with a focus on preserving value perception across demographics.
4. International Expansion: Resilient Growth in China and Beyond
International operations remain a growth engine, with China posting its second consecutive quarter of positive comps and the store base surpassing 8,000. Product innovation and delivery expansion in China are driving transaction gains, while unit economics remain healthy. Starbucks is exploring partnerships to unlock further value in China, aiming to retain a meaningful stake and secure future royalty streams.
5. Channel Diversification: Delivery and At-Home Coffee
Starbucks’ U.S. delivery business grew nearly 30% in Q4, and the channel development segment posted 16% revenue growth, led by the Global Coffee Alliance. Ready-to-drink and at-home coffee remain market share leaders, with new protein drinks expanding internationally. The multi-channel model provides diversification and incremental growth beyond the cafe footprint.
Key Considerations
Q4 marked a strategic pivot as Starbucks operationalizes its turnaround plan, but the road ahead remains complex given margin pressures and evolving consumer dynamics.
Key Considerations:
- Staffing and Service Model Execution: Sustaining improved service levels and partner engagement is critical for transaction growth and competitive differentiation.
- Margin Rebuild Timeline: Operating margin recovery will trail top-line gains as labor and commodity inflation persist into early 2026.
- Store Portfolio Health: Continued rationalization and disciplined new builds will shape the profitability and growth trajectory of the North America base.
- Innovation Pipeline and Value: Menu innovation, including the protein platform, is attracting new and lapsed customers, but value perception must be closely managed as pricing levers are selectively used.
- International Leverage: China and other key markets offer white space for expansion, but require agile execution and strong local partnerships.
Risks
Margin recovery is vulnerable to persistent coffee price and tariff inflation, which management expects to remain a headwind through at least the first half of 2026. The turnaround is not guaranteed to be linear, with transaction rebuild and consumer demand susceptible to macro volatility and intensifying beverage competition. Execution risk remains high as Starbucks scales new service standards and navigates evolving consumer preferences, especially among younger cohorts.
Forward Outlook
For Q1 2026, Starbucks guided to:
- Positive transaction comps continuing from September and October trends
- Top-line growth leading with earnings lagging as Green Apron investments annualize
For full-year 2026, management will provide detailed guidance at Investor Day in January, but early signals include:
- Continued focus on transaction-led comp growth and gradual margin improvement
- Disciplined capital deployment and further cost structure optimization
Management highlighted that recoveries are not always linear and that the benefits of store portfolio and cost structure changes will accrue over multiple years, with near-term focus on sustaining transaction momentum and managing inflationary headwinds.
Takeaways
Starbucks’ Q4 results offer tangible evidence that its turnaround plan is gaining traction, but the sustainability of transaction-led growth and path to margin normalization remain key watchpoints.
- Operational Reset: The Green Apron service model is restoring customer experience and transaction growth, but requires ongoing execution and partner engagement to scale impact.
- Portfolio Discipline: Store closures and new build prototypes reflect a pragmatic approach to optimizing unit economics and brand consistency.
- Outlook Watch: Investors should monitor transaction trends, margin recovery pace, and the effectiveness of menu innovation in driving sustained traffic across channels and dayparts.
Conclusion
Starbucks turned a critical corner in Q4 2025, with early signs that its strategic reset is resonating with customers and partners. While operational and financial headwinds remain, the company’s renewed focus on service, disciplined growth, and innovation positions it for a measured return to sustainable, profitable growth.
Industry Read-Through
Starbucks’ turnaround underscores the necessity for large-scale foodservice operators to invest in service, staffing, and experience, not just product innovation, to regain transaction momentum. The company’s disciplined portfolio pruning and channel diversification signal a shift toward quality-over-quantity growth strategies, which may influence peers facing similar post-pandemic traffic and margin challenges. The persistent impact of commodity inflation and tariffs is a cautionary signal for the broader restaurant and beverage sector, while Starbucks’ success with delivery and at-home channels highlights the value of multi-channel models in capturing incremental demand. Competitors will need to balance operational excellence with menu innovation and value perception to maintain relevance with increasingly discerning consumers.