On September 10, 2026, CNBC reported that Starbucks Corporation (NASDAQ:SBUX) CEO Brian Niccol declared “Starbucks is back” two years into his tenure and outlined the next phase of the company’s turnaround, centered on renovating thousands of cafes and further improving customer service. More than 1,000 stores have already been refreshed over the past nine months. The company is targeting 1,500 or more completed renovations by the end of fiscal 2026. It reportedly plans to spend about $1 billion to remodel up to 9,000 company-operated North American locations.
Bull Case
Starbucks Corporation (NASDAQ:SBUX) now has stronger sales momentum to support the next stage of Brian Niccol’s turnaround. Global comparable sales increased 7.9% in fiscal Q3. It marks the fourth consecutive quarter of improvement. North American comparable sales rose 8.1% as transactions increased 4.5%. The improving traffic suggests that the “Back to Starbucks” strategy has started bringing customers back, giving management a stronger foundation for further investments in cafes and service.
Starbucks is pairing its cafe makeovers with operating improvements that could make the customer experience more consistent. The business has already completed more than 1,000 renovations and plans thousands more during the next fiscal year. Its Green Apron Service program focuses on stronger interactions between baristas and customers. Starbucks has also accelerated service, with most U.S. cafe and drive-through orders now reaching customers within four minutes. It shows that management is improving operations alongside the physical store environment.
Stronger sales and improving operations could give Starbucks room to rebuild earnings as the turnaround progresses. Management targets an operating margin of up to 15% by fiscal 2028 and annual earnings per share of $3.35 to $4. Higher traffic, improved store productivity and more efficient cafe operations could create operating leverage if Starbucks maintains its revenue momentum while controlling the costs behind the turnaround.
Bear Case
Starbucks Corporation (NASDAQ:SBUX) has spent heavily to restore customer traffic, and those investments continue to challenge profitability. The company has spent at least $500 million on labor investments as part of the turnaround. Its operating margin stood at 12.9% in fiscal Q3 compared with 15.8% two years earlier. The firm now needs stronger sales to produce enough operating leverage to justify those investments and rebuild profitability.
The next phase also raises the execution burden as Starbucks expands its makeover program across thousands of more cafes. The company has completed more than 1,000 renovations over nine months and now plans thousands more during the next fiscal year. Management must scale those upgrades while maintaining service quality, improving productivity and sustaining the customer traffic that fueled the recent sales recovery.
Starbucks still needs to prove that its customer recovery can make competitive shareholder returns. The stock has gained about 30% since Starbucks announced Niccol as CEO, while the S&P 500 has climbed roughly 42% over the same period. That gap shows investors still want stronger evidence that higher traffic, store investments and better customer service can turn into sustainable earnings and margin growth.
Hedge Fund Sentiment
Starbucks Corporation (NASDAQ:SBUX) hedge fund count held roughly steady at 64 funds in the second quarter versus 65 in the first, with position value rising to $2.63 billion from $1.98 billion, according to Insider Monkey’s database. McDonald’s, a fellow consumer chain investing in its own store refresh programs, saw holders decline to 79 from 83, with position value falling to $4.01 billion from $4.96 billion.
Conclusion
Starbucks Corporation (NASDAQ:SBUX) has entered a stronger phase of its turnaround as rising traffic, 7.9% global comparable sales growth and faster service show that Niccol’s customer-focused strategy has started producing tangible results. The next stage gives Starbucks an opportunity to boost its coffeehouse identity through thousands of cafe renovations while using better service and operating improvements to deepen customer loyalty. But management must now convert those investments into stronger margins and sustainable earnings growth. Investors should watch whether Starbucks can maintain its sales momentum while improving store productivity and rebuilding profitability as it scales the next phase of the turnaround.
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