Starbucks’ previously underperforming afternoon segment is showing promising signs of growth, with the company identifying significant opportunities beyond traditional morning hours.
“As you move through the day, we continue to see transaction growth, just not quite at the same level as what we’re seeing in the morning,” said Starbucks CEO Brian Niccol during the company’s late Wednesday earnings call with Wall Street analysts.
To capitalize on this trend, Starbucks is pursuing a strategic approach combining beverage innovation and food offerings while refining afternoon operational routines. “Improving the afternoon business requires a combination of beverage and food, then also just getting better at our routines in the afternoon,” Niccol explained.
Analysts note substantial potential in the afternoon market, which generates $11 billion in sales after 11:00 a.m., according to Starbucks’ April blog post data.
Building on this momentum, Starbucks launched new energy drinks—formally known as Refreshers—in April and continues expanding its afternoon offerings. The company is currently testing wraps and preparing to introduce a line of sparkling beverages.
“There’s still lots of space to add more transactions both in the morning and in the afternoon. We’ve made tremendous progress in both day parts, but there still is a lot of room for growth,” Niccol noted.
This focus on operational excellence and extended-day opportunities contributed to Starbucks’ strongest quarterly performance in recent memory. Global comparable-store sales increased 7.9%, significantly exceeding Wall Street expectations and marking the company’s fourth consecutive quarter of same-store sales growth under Niccol’s turnaround strategy.
Financial results highlighted the effectiveness of cost management and operational improvements:
– Adjusted earnings reached $0.85 per share, surpassing analyst projections of $0.66
– Operating margin expanded to 14.4% from 10.1%
– Raised full-year guidance reflecting continued positive trajectory
Shares responded favorably, rising 6% in early Thursday trading. The stock has outperformed the S&P 500 by nearly four times this year, delivering approximately 30% gains.