Starbucks CEO Credits Human Connection for Turnaround Success

(SeaPRwire) –   On Tuesday, Starbucks CEO Brian Niccol offered a straightforward reason why his coffee behemoth is regaining customers across all income groups—even as competitors grapple to figure out the same formula: Make people feel valued.

“I think what we’re observing with customers is that when you provide them with an experience they perceive as one-of-a-kind, distinct, and special—a small dose of luxury—it has a lasting impact,” Niccol told analysts during the company’s fiscal 2026 second-quarter earnings call. “And we’re witnessing this unfold across every income group.”

Niccol’s remarks coincided with Starbucks announcing its first concurrent growth in both top-line (revenue) and bottom-line (profit) results in over two years: revenue increased by 9% year-over-year to $9.5 billion, and net earnings jumped 33% to $510.8 million. In premarket trading, the company’s shares rose approximately 4.6%.

The most notable figures were at the store level. U.S. same-store sales rose 7.1%, fueled by transaction growth of over 4%—the strongest performance in this area in three years. Morning foot traffic, which has long been the backbone of Starbucks’ business model, returned to roughly fiscal 2022 levels. Global same-store sales grew 6.2%, and all 10 of Starbucks’ biggest international markets (including China) recorded positive same-store sales for the first time in nine quarters. Niccol noted this reflects “the fact that more customers are drawn to beverage experiences, whether as part of their morning routines or afternoon moments.”

The human touch

At the core of the recovery is a distinctly low-tech factor: baristas who are better trained, more adequately staffed, and more motivated. Since assuming leadership in late 2024, Niccol has focused on resolving a range of customer grievances—from extended wait times for drinks to insufficient seating—through a strategy he terms “Back to Starbucks.” The company’s internal “Grow” dashboard, which monitors performance in areas like sales, order speed, staffing levels, customer satisfaction, and food safety, has seen a more than 30-percentage-point increase in the share of U.S. stores meeting its standards since the program started in October.

These results have shifted one of the ongoing concerns about the Starbucks brand: that its premium pricing would falter amid pressure from consumers facing cost constraints. This worry is well-founded: The K-shaped economy has become more distinct, with Bank of America data indicating that households earning less than $75,000 are spending less on non-essential items compared to 2019, while those making over $150,000 are increasing their spending. Some economists now caution that this divide is worsening into an “E-shaped” economy, where even middle-class consumers are feeling the pinch.

The splurge thesis

Although some analysts were concerned about lower-income customers cutting back on spending, Niccol stated that Starbucks saw an increase in visits across all income brackets. For lower-income shoppers who view Starbucks as a small “splurge,” Niccol said the company is putting in effort to maintain that perception. For those who make Starbucks a daily or semi-daily “ritual,” Niccol noted that feedback has been positive regarding speed and consistency.

“For lower-income customers, where Starbucks is viewed as a small splurge or indulgence,” he explained, “we absolutely need to offer the drinks they desire, and then deliver an experience that makes them feel their hard-earned money was well spent.”

This idea aligns with a larger trend in retail’s luxury-affordability gap: Brands that provide emotional or experiential value are outperforming those that lack distinction, as consumers across all income groups are becoming more selective about where they choose to splurge.

It also dovetails with a thought-provoking argument from University of Chicago behavioral economist Alex Imas, who noted earlier this month that as AI makes more parts of the economy commoditized, spending will shift toward what he calls the “relational sector”—products and services where the human component, experience, and social significance are most important. Imas even used Starbucks as his key example: people will pay for items with a distinct human touch, and future middle-class consumption habits will resemble those of today’s wealthy. Niccol, with his Green Apron baristas and his “little touch of luxury” approach, seems to be placing the same bet.

The Starbucks Rewards program is also performing strongly again. The number of 90-day active members reached a record 35.6 million in Q2, a 4% increase year-over-year—defying the usual seasonal slowdown in sign-ups for this quarter. A new 60-star redemption level has become the most popular reward, making up about one-third of all redemptions.

Reasons for caution

However, Niccol and CFO Cathy Smith were cautious about declaring complete success. The U.S.-Iran conflict and its ripple effects on gas and utility prices were a looming, uncontrollable variable during the call.

“We haven’t seen many macroeconomic effects impact consumer behavior related to Starbucks yet,” Niccol said. “But we want to proceed carefully because we don’t know how these issues will unfold as they continue.”

Smith shared the same concern: “While our brand has historically proven resilient during periods of high gas prices, the current macroeconomic environment introduces greater uncertainty to our operating context and consumer behavior overall.”

It’s important to note that aspirational spending is usually the first area consumers cut when gas prices rise and economic anxiety increases. Starbucks experienced this firsthand in fiscal 2024 and 2025, when its same-store sales plummeted. The company has worked diligently to rebuild trust, but it hasn’t yet shown it can maintain traffic growth during a true macroeconomic downturn.

Inflation in coffee costs (currently nearly $1 per pound higher than last year) and tariff pressures are additional near-term challenges, though both are expected to subside in the second half of the fiscal year. Due to the strong quarter, Starbucks increased its fiscal 2026 same-store sales growth forecast to 5% or higher.

“We think this quarter marks the turning point in our turnaround, but we recognize there’s more work ahead,” Niccol said. “We know the road forward won’t be straight, but it’s clear the changes we’re implementing and the momentum we’re building are beginning to accumulate.”

For this article, journalists utilized generative AI as a research tool. An editor confirmed the accuracy of the information prior to publication.