Seattle’s coffee giant Starbucks took a hit this quarter, with profits sinking sharply, but company brass are doubling down on their claim that a turnaround plan is starting to perk. On April 29, 2025, the chain reported a net income of $548 million for the second quarter, a gut-punch drop of nearly 50% from last year’s $1.08 billion. Revenue wasn’t spared either, sliding 2.7% to $8.76 billion, missing Wall Street’s hopes of $8.82 billion. Earnings per share? A meager 41 cents, falling short of the 49 cents analysts had pegged.
The numbers paint a rough picture. Same-store sales in the U.S. fell 4%, driven by fewer customers walking through the doors—foot traffic dropped by the same percentage. Higher labor costs, coupled with pricier coffee beans and supply chain snags, squeezed margins. Promotional discounts, once a reliable lure, didn’t move the needle as inflation-weary consumers tightened their belts. Even the usually resilient China market, a key growth engine, stayed sluggish, though executives noted glimmers of improvement there.
Still, CEO Laxman Narasimhan isn’t flinching. In a call with investors, he called the results “disappointing” but leaned hard into the narrative that Starbucks is on the mend. The “Back to Starbucks” plan, rolled out to fix operational hiccups and win back lapsed customers, is showing “momentum,” he said. New equipment, like faster espresso machines, is being tested to cut wait times. Labor tweaks—better scheduling, more staff during peak hours—are starting to smooth out service snarls. The company’s even rethinking its store designs, aiming to shave construction costs and dodge looming tariff hikes.
Narasimhan pointed to early wins: non-loyalty customers, the ones who don’t live for their daily latte fix, are coming back, stabilizing traffic. Discount-driven sales, which erode profits, are down—a shift the company sees as a plus. Starbucks also suspended its financial guidance for the year, a move that raised eyebrows among investors wary of uncertainty. Shares slid in after-hours trading, reflecting the market’s unease.
The road ahead isn’t exactly steaming with promise. Rising costs and cautious consumers continue to loom large. Yet Starbucks leadership is betting on operational fixes and a leaner, meaner store model to pull them through. Whether that’s enough to reheat investor confidence remains to be seen. For now, the coffee chain’s brewing a bold plan, but the proof will be in the profits.