Starbucks CEO Brian Niccol built his reputation at Chipotle Mexican Grill by following one formula: fix operations, rebuild customer traffic, and wait for margins to follow.
That playbook produced a stock return of more than 770% during a six-year tenure that more than doubled annual revenue and saw restaurant-level margins climb from about 19% to nearly 29%, Chipotle’s quarterly results showed.
Less than two years into his role at Starbucks (SBUX), the early data suggest the same recovery pattern is emerging across the chain’s U.S. locations.
Customer visits are rising, same-store sales have accelerated for three consecutive quarters, and the company recently raised its full-year earnings outlook.
The stock sits near a 52-week high, however, and the market has priced in a completed turnaround that hasn’t reached the income statement yet.
U.S. foot traffic surge mirrors the early stages of Niccol’s Chipotle recovery
U.S. comparable-store sales jumped 7.1% in the fiscal second quarter of 2026, with customer transactions rising 4.3%, according to Starbucks’ earnings release.
Global comparable sales grew 6.2% over the same period, with transactions up 3.8% and the international segment adding 2.6% growth on higher traffic.
The result marked the third consecutive quarter of positive global comparable sales, extending the recovery that began in Q4 fiscal 2025. At that time, Starbucks had broken a seven-quarter stretch of declining same-store results, a slump that began before Niccol arrived and continued through his first year at the helm.
Revenue reached $9.5 billion in the period, up 9% from a year earlier, and adjusted earnings per share climbed 22% to $0.50, Starbucks reported.
“Our second quarter marked the turn in our turnaround as our Back to Starbucks plan drove both top and bottom line growth,” Niccol said.
Niccol used the same operations-first approach to revive Chipotle after its food safety crisis
Niccol became Chipotle’s chief executive in March 2018, inheriting a company still reeling from food safety scandals that had cratered customer traffic.
He focused on digital ordering, faster throughput, and a simplified menu, and restaurant-level margins climbed from about 19% to nearly 29%.
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Chipotle’s split-adjusted stock rose more than 770% during Niccol’s six-year tenure, with the pre-split share price climbing above $3,000, as reported by Yahoo Finance.
He left for Starbucks in September 2024, and the chain added more than 1,000 new locations during his time at the helm, Chipotle’s annual filing showed.
At Starbucks, the formula looks similar: heavy investment in store labor, faster service targets, and a rebuilt in-store experience through the Green Apron Service model.
Nick Setyan, analyst at Mizuho Securities, noted that Niccol received full latitude to invest in stabilizing the business, including the costly staffing changes, CNBC reported.
Starbucks’ profit sits at half its peak, despite stock trading near 52-week high
Starbucks earned $1.63 per share under generally accepted accounting principles (GAAP) in fiscal 2025, down 51% from $3.31 the year before, the annual filing showed.
Net income fell to roughly $1.9 billion from $3.8 billion, and the GAAP operating margin contracted 710 basis points to 7.9% for the full year.
Restructuring charges, additional labor hours tied to Back to Starbucks, and inflation in coffee and dairy costs drove the drop in profitability.
Although margins are expected to begin improving in fiscal 2026, they will not reach the targeted range of 13.5% to 15% until 2028, Starbucks CFO Cathy Smith said at the company’s January 2026 Investor Day.
While we’re moving fast, some of our work, like in supply chain and store development, is going to take some time and will only begin to contribute fully several years out. The work underway isn’t incremental, it’s transformational.
At roughly $105 a share, Starbucks trades at about 45 times the midpoint of its adjusted earnings per share guidance range of $2.25 to $2.45, Starbucks’ earnings release reported.
That valuation assumes continued traffic gains, meaningful margin expansion beyond current levels, and a turnaround that plays out fully over the coming years.
Wall Street targets climb leading up to July 29 Starbucks earnings report
Wells Fargo lifted its target to $120 on July 16, Morgan Stanley moved to $111 on July 15, and Citi raised its number to $108 on July 14, according to TipRanks analyst research disclosures.
Setyan at Mizuho kept a neutral rating with a $110 target, acknowledging the comparable-sales improvement but stressing that margins need to begin expanding more meaningfully, The Motley Fool noted.
Of the 35 analysts covering Starbucks, 14 carry strong buy ratings, while 15 rate the stock a hold, Yahoo Finance data show.
The consensus 12-month price target sits near $106, and analysts project adjusted earnings per share of $0.65 for the fiscal third quarter.
Tougher comparisons, rising input costs could pressure Starbucks’ growth
Coffee costs are running about $1 per pound higher than a year ago, with tariff-driven inflation also pressuring packaging and freight, CFO Cathy Smith noted.
The Chipotle recovery took several years to reach full earnings power, and Starbucks faces a larger challenge given its global scale and supply chain complexity.
Traffic-driven recoveries tend to outlast those built on pricing alone, which supports the case for continued patience, Setyan noted on CNBC.
But with the stock trading at about 45 times adjusted earnings, there’s little room for the recovery to slow down.
