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• CosMc’s afterlife: McDonald’s secret weapon to take on Starbucks and Dutch Bros
• Starbucks faces shareholder pressure over its labor battles

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CosMc’s, which was McDonald’s (MCD) first investment in a new restaurant concept in the U.S. since Chipotle (CMG), was named after a McDonaldland space alien character who appeared in ads in the 1980s. Launched in late 2023, the small‑format, beverage‑led concept is built around highly customizable, flavor‑forward cold drinks and a limited snack menu. Its lineup emphasized fruity refreshers, crafted sodas, cold coffee drinks, and energy‑style beverages enhanced with add‑ins like flavor syrups, vitamin boosts, and popping boba, targeting the fast‑growing “treat” and energy drink occasions rather than traditional meal pairings.

The CosMC’s test allowed the fast-food chain to experiment with compact footprints and drive‑through/digital‑heavy service optimized for beverage‑only and afternoon traffic. Notably, McDonald’s (MCD) used the sandbox to test new equipment, customization flows, and throughput without disrupting the core restaurant base. After running a small cluster of test units, McDonald’s decided in 2025 to close all CosMc’s locations and shift the focus to importing its most successful ideas into existing restaurants.

During McDonald’s earnings conference call earlier in February, management highlighted the success of the CosMc’s test and how it plans to expand the McCafé lineup in 2026.

“So we are — obviously, we’re really excited about the beverage launch in the U.S. later this year, and we are going to do it under the McCafe brand. So we obviously learned a lot through the CosMc’s test, and those learnings have been applied to how we’ve decided to set up this new beverage range, but we are going to be launching under the McCafé brand. And just to give you a little bit more color. The results did exceed expectations for the entirety of the program. It did drive incremental occasions. These were mostly snack, dinner and evening. And we also saw higher average check. So the financials are really playing out well.

We learned a lot about the recipes. We offered a range of recipes across indulgent coffees, refreshers, energy and soda — crafted sodas. All did well, particularly the crafted sodas, refreshers and energy.”

McCafé was originally launched by McDonald’s in Melbourne in 1993 as a café‑style extension of McDonald’s (MCD). Over the 2000s and 2010s, it expanded from core espresso and brewed coffee into iced coffees, blended frappés, smoothies, and seasonal limited‑time offers, positioning McDonald’s (MCD) closer to coffeehouse competitors while leveraging its value and drive‑through advantages. With beverages now elevated alongside hamburgers and a popular kids’ menu as part of its core strategic pillar, the chain could have a stronger platform to compete more directly with Starbucks (SBUX) and Dunkin’ in cold and specialty coffee, as well as with Dutch Bros (BROS) and regional coffee chains, particularly in the afternoon daypart with the anticipated inclusion of Red Bull beverages.

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The group of long-term investors is asking other shareholders to vote against the reelection of Jørgen Vig Knudstorp, the lead independent director, and Beth Ford, the chair of the nominating and corporate governance committee.

Seattle-based Starbucks (SBUX) is still embroiled in a labor dispute with the Starbucks Workers United union. Contract negotiations that began in early 2024 have stalled, with the union demanding higher pay (a $20/hour base with 5% annual raises), better staffing, more consistent schedules, and resolution of hundreds of unfair labor practice charges. In November, workers launched the “Red Cup Rebellion” strike, which expanded to over 670 stores and 12,000 workers as of early 2026. Workers have filed over 125 new unfair labor practice charges since January 2025, and Starbucks paid a record $38.9 million settlement to New York City over workweek law violations.

“We have a world-class board of directors with deep, relevant expertise, who are supporting our management team in driving a business turnaround,” stated a Starbucks spokesperson on the developments. The company also continues to defend its workplace policies, employee benefits, and wage structure.

Shares of Starbucks (SBUX) are up more than 13% on a year-to-date basis.

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Starbucks (SBUX) also announced major changes to its Starbucks Rewards loyalty program. The program will now feature a three-tier structure of Green, Gold, and Reserve levels. The new program will launch on March 10.

The update shifts earning and redemption mechanics to emphasize activity and spend, rather than just payment method, with Stars now accruing based more directly on what customers purchase, while still offering bonus Stars for digitally reloading a Starbucks Card and other engagement behaviors. The green tier will cover newer or less frequent members (under 500 Stars in a 12-month period) and includes core benefits such as a free birthday item, personalized offers, early access to select menu items, in-app games, and the new “Free Mod Mondays,” which grant one complimentary drink customization on a selected Monday each month. Stars at the green level generally have a six-month life but can be kept active with monthly activity like making a purchase, reloading, or redeeming a reward.

Starbucks’ (SBUX) Gold tier of its rewards program starts at 500 Stars within a year and includes all the Green benefits plus non-expiring Stars, a longer seven-day redemption window for the birthday reward, more frequent Double Star Days, and a higher earning rate.

The top Reserve tier of the new program is reached at 2,500 Stars in 12 months and layers on premium perks such as exclusive merchandise and experiences, access to a global merchandise shop, a personalized Reserve card, at least six additional Double Star Days annually, and the highest earn rate at 1.7 Stars per dollar.

Starbucks (SBUX) expects to boost engagement with an already considerable and growing loyalty base with the changes. The company disclosed that its Starbucks Rewards program reached a record 35.5M active members in the U.S. by the end of Q4.

On the guidance front, Starbucks (SBUX) said it expects FY28 revenue growth of 5% or greater, 3% or greater global and U.S. comparable store sales growth, a non-GAAP consolidated operating margin of 13.5% to 15.0%, and non-GAAP earnings per share of $3.35 to $4.00. “Starbucks has enduring strengths, and we are building on them,” stated CFO Cathy Smith. “Our financial framework shows how we will translate our ‘Back to Starbucks’ strategy into sustainable, profitable growth and compelling shareholder returns,” she added.

Shares of Starbucks (SBUX) were down 1.4% in early afternoon trading.

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Management View

• Brian Niccol, Chairman & CEO, emphasized the company’s “continued progress…on our Back to Starbucks plan and the momentum we’ve built across the business through Q1 fiscal 2026.” Niccol highlighted that “our turnaround plan is coming to life in the way we envision. First, turn around the top line and then earnings growth will follow.” Global revenue increased by 5% to $9.9 billion in Q1, with global comparable store sales up 4%. Niccol reported 128 net new coffeehouses globally, operating margins of 10.1%, and EPS of $0.56. North America revenue grew 3% to $7.3 billion, and international revenue rose 10% to $2.1 billion.
• Niccol noted, “transaction growth has shown us continued opportunities to strengthen our supply chain and reevaluate menu offerings to ensure product availability while reducing future waste.” He also pointed to technology investments and the hiring of a new CTO, Anand Varadarajan, to drive improvements across platforms.
• Green Apron Service and menu innovation were cited as catalysts for positive customer experience, with Starbucks Rewards 90-day active members reaching a record 35.5 million. Niccol stated, “Brand affinity in the U.S. remained strong during the quarter with continued improvements in visit consideration and Starbucks ranking as a customer’s first choice.”
• On the international front, Niccol highlighted a new partnership with Boyu in China and expansion goals in India, Latin America, and Mexico, stating, “International remains a powerful growth engine for amplifying the Starbucks brand.”
• Catherine Smith, Executive VP, CFO & Principal Accounting Officer, stated, “Our Q1 consolidated revenue was $9.9 billion, up 5% to the prior year, reflecting 1% net new company-operated store growth and a 4% increase in global comparable store sales, driven by strong performance across both our North America and International segments.”

Outlook

• Smith provided guidance for fiscal 2026: “we expect 3% or better global comp sales growth, led by 3% or better comp sales in the U.S. as well.” Starbucks plans for “approximately 600 to 650 net new coffeehouses,” with “150 to 175 net new U.S. company-operated coffeehouses” and “450 to 500 net new international coffeehouses, of which China comprises close to half.”
• The company expects “consolidated net revenues to grow at a similar rate to global comp growth for the full fiscal 2026.”
• Operating margins are expected to “grow slightly year-over-year, driven by improvements in the back half of the year.”
• EPS guidance for fiscal 2026 is set at “$2.15 to $2.40,” with Smith noting, “our guidance contemplates business as usual China operations in the second half of fiscal 2026.”

Financial Results

• Consolidated revenue for Q1 was $9.9 billion, up 5% year-over-year, with global comparable store sales up 4%.
• North America revenue reached $7.3 billion, up 3%, with 49 net new coffeehouses, and international revenue was $2.1 billion, up 10%.
• Operating margin was 10.1%, down 180 basis points from the prior year, mainly due to “investments in support of Back to Starbucks” and “product and distribution cost inflation, led by tariffs and elevated coffee pricing.”
• Q1 EPS was $0.56, down 19% from the prior year. Consolidated G&A in the quarter decreased 7%.
• Smith explained the impact of the China joint venture: “Upon closing, we expect Starbucks China’s retail operations will fully deconsolidate…and we expect to convert our 8,011 company-operated coffeehouses to licensed stores within our International segment.”

Q&A

• David Tarantino, Baird: Asked about North America traffic and the benefit from sales transfers after store closures. Niccol responded, “about 0.5 point was driven by…the sales transfer in the comp is what we’re seeing. So the strength really is broad-based.” Niccol also noted pilot stores with Green Apron Service “continue to outperform the fleet by about 200 basis points in comp.”
• Brian Harbour, Morgan Stanley: Inquired about cost savings. Niccol stated, “We’ve got a clear plan in place to basically track down about $2 billion of costs…over the next 2 years in front of us.”
• David Palmer, Evercore ISI: Asked about the earnings guidance range. Niccol replied, “the thing that gets us to the higher end is maintaining the performance on comp, first and foremost…it’s going to be driven by comp.”
• Lauren Silberman, Deutsche Bank: Asked about same-store sales momentum between rewards and non-rewards customers. Niccol explained, “our rewards customer user base is getting bigger…it’s through better engagement that we’re getting people to be active, not through discounting and couponing.”
• John Ivankoe, JPMorgan: Asked about daypart execution and competition. Niccol discussed plans to “daypart the menu” and focus on “customized energy” and “indulgent drinks” for the afternoon.

Sentiment Analysis

• Analysts maintained a positive to slightly positive tone, congratulating the company on progress and frequently seeking clarification on the trajectory of recovery, cost savings, and growth levers.
• Management projected confidence during prepared remarks, using phrases such as “we are pleased with our progress, and we believe we remain ahead of schedule, and we’re confident on our path forward.” In the Q&A, Niccol maintained an optimistic tone while addressing risks, repeatedly stressing “confidence” and the success of the turnaround plan.
• Compared to the previous quarter, both management and analysts displayed increased optimism, with greater emphasis on the sustainability of transaction gains and cost reduction initiatives.

Quarter-over-Quarter Comparison

• Management’s tone shifted from cautious optimism in Q4 2025 to more assertive confidence in Q1 2026, citing accelerating transaction and comp growth.
• Q1 saw the announcement of a $2 billion cost savings initiative, compared to a focus on foundational investments and store closures in Q4.
• Store traffic and transaction growth became more prominent, with Q1 marking “year-over-year for the first time in 8 quarters” for U.S. company-operated transaction comps.
• Guidance moved from preliminary comments in Q4 to specific fiscal 2026 targets in Q1.
• Analysts’ questions evolved from seeking assurance about the turnaround to probing the sustainability and scalability of new initiatives.

Risks and Concerns

• Smith warned that “our work isn’t done. We remain focused on driving top line performance and managing our costs to deliver sustainable, profitable long-term growth.”
• Ongoing risks include “product and distribution cost inflation, led by tariffs and elevated coffee pricing,” and the transition of China operations to a joint venture structure, which may introduce “variability in our results.”
• Management acknowledged that “the path forward [may not] be linear,” and that strategic investments “will take time to flow through to sustainable earnings growth.”

Final Takeaway

Starbucks management highlights sustained top line growth, robust transaction gains, and record Starbucks Rewards membership as evidence the Back to Starbucks turnaround plan is working. The company expects to deliver 3% or better global comp growth, expand its store base, and implement $2 billion in cost savings over the next two years. While investments and the China joint venture transition may temporarily weigh on margins and earnings, leadership remains confident in its strategy to drive durable, profitable long-term growth globally.

Read the full Earnings Call Transcript

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Notably, Starbucks (SBUX) plans to open 600 to 650 net new company-owned and licensed cafes during the fiscal year.

During the earnings conference call, Starbucks (SBUX) management pointed out that its brand affinity, visit consideration, and connection scores with customers improved without the chain relying on discounting. “We’re seeing exactly what we want to see in our top line at this point in our turnaround,” updated CFO Cathy Smith.

The general vibe on Wall Street about the Starbucks (SBUX) earnings report was generally positive.

Bank of America noted that the EPS miss was due to tax rate considerations. “We are encouraged by strong transaction growth across regions (+3% in N. America and International, +5% in China), reflecting a combination of better service (Green Apron), innovation (protein), and advertising. Modest ticket growth (+1% globally) speaks to the sustainability of the SSSG compared to the more ticket-driven comp of previous years,” updated analyst Sara Senatore. Crucially, BofA sees the guidance issued by SBUX as conservative and beatable.

Baird was also optimistic about the report. “The FQ1 report was positive in many respects, with SBUX showing better-than-modeled comps momentum and issuing better-than-feared F2026 guidance that may include some conservative underpinnings,” updated Baird analyst David Tarantino.

Seeking Alpha analyst Luca Socci highlighted that Starbucks (SBUX) finally managed to report domestic growth for the first time in two years. “However, this was obtained at the expense of profits, which we clearly see when we read that its operating margin declined by 480 bps. In other words, Starbucks is subject to the volume for profits trade-off,” warned Socci, who said he remains skeptical about the sustainability of its multiple.

Shares of Starbucks (SBUX) were up 4.6% at 10:02 a.m. and crossed over the $100 level for the first time since March of 2025.

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The company is expected to post earnings of $0.59 per share on revenue of $9.65B, which translates to a nearly 3% year-on-year rise.

Analysts at UBS have projected first-quarter same-store sales growth of 3% in North America, including ticket growth of 1% and transactions of 2%. Same-store sales were likely uplifted following recent store closures, they added. The brokerage has projected FY26 North America same-store sales of 3.9%.

UBS expects the company’s ‘Back to Starbucks’ plan to support growth. It will also be tracking the progress of Starbucks’ ‘Green Apron Service’ model, with the expectation for further improvement in service and better customer and staff experience.

It expects to see a transaction improvement in FY26 driven by contributions from menu innovation, including Protein Latte and Cold Foam Drinks, marketing events like Red Cup Day, and a solid pipeline of new menu items and marketing like the Kardashian Khloud Popcorn partnership and Beast Games.

Over the last 3 months, EPS estimates have seen 2 upward revisions and 17 downward moves, and revenue estimates have seen 6 upward revisions and 11 downward moves. Over the last 2 years, Starbucks has beaten EPS estimates 13% of the time and has beaten revenue estimates 38% of the time.

On a YTD basis, the stock has appreciated by over 14% compared to a 1.53% rise in the broader markets.

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Analysts are expecting to see improving sales trends, cost savings, and for Investor Day, a focus on FY26 guidance and 3-year targets.

“We believe the event could be a positive catalyst for shares given recent sales momentum,” UBS analyst Dennis Geiger said in a note to clients.

More immediately, fiscal first quarter results could show the first domestic comparable sales gain in two years, which should set the brand up for a return to positive full-year comparable sales gains in FY26, says William Blair’s Sharon Zackfia.

She expects 1% comp gains (versus +2% consensus estimates) for the first quarter and 2% growth for the full year (versus 3% estimates), translating into continued improvement in two-year comp trends, while UBS projects a more optimistic increase of 3% to 4% in comp sales for the first quarter. This likely reflects improved operations, effective marketing, easier comparisons to previous quarters, contributions from the holiday menu, and a “notable” uplift from recent store closures.

However, the bigger question for investors at this point is margin recovery.

Zackfia cites the 13.4% decline in Americas margin in FY25 before half a billion dollars of incremental labor expenses expected in FY26 for continued concerns over profitability.

UBS’s Geiger also sees margin pressures extending in the near to medium term, reflecting increased labor hours, rollout of the Assistant Store Manager program, and investments in the Green Apron service model.

Offsets should come in the form of cost savings as well as supply chain efficiencies, improving transaction and sales growth, all of which are “key factors” to strengthening margins.

“We continue to believe the ‘Back to Starbucks’ plan should support a sales and earnings recovery,” Geiger says, with tailwinds from store closures and existing and new sales initiatives supporting U.S. same store sales inflection and momentum going forward.

Zackfia sees a path to consolidated operating margin recovery “within spitting distance of 2023 levels by 2030, implying a 15% to 20% EPS CAGR over the next five years,” she notes.

Accordingly, Geiger maintains his Neutral rating on Starbucks (SBUX) until there is better visibility into the recovery trajectory in sales growth, margin improvement, and earnings upside.

William Blair’s Zackfia, however, upgraded the coffee chain to Outperform from Market Perform to reflect the “optimism already baked in given the stock’s 15% year-to-date increase.”

“We believe a credible case exists for the stock to reach more than $140 by 2029, assuming a 30x P/E multiple off a 2030 estimate of more than $4.70, implying the opportunity for a ~10% CAGR in share appreciation over the next four years,” she notes.

Shares of Starbucks Corp. (SBUX) are up 1.5% on Friday, adding to a 15% gain since the beginning of 2026.

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