The news: Starbucks’ “Back to Starbucks” turnaround strategy is gaining momentum, underscored by its better-than-expected quarterly results.

• US comparable store sales rose 7.1% YoY, driven by a 4.3% increase in transactions—marking the second consecutive quarter of traffic growth after two years of declines.
• Consolidated net revenues rose 9% to $9.5 billion in Q2 2026, which ended March 29, while non-GAAP EPS rose 22% to $0.50.
• The company raised its FY2026 global and US same-store sales guidance to growth of at least 5%, up from 3%, and adjusted EPS to $2.25 to $2.45, up from $2.15 to $2.40.

Zooming out: The results are the clearest sign yet that the turnaround is gaining traction, though two structural challenges remain.

In North America, margin pressure highlights the cost of the recovery. Operating margin contracted 170 basis points YoY to 9.9%, reflecting labor investments tied to “Back to Starbucks,” mix shifts, and inflation from tariffs and higher coffee prices.

In China, the company has relied on discounts to drive traffic. Comparable store sales rose just 0.5%, as a 2.1% increase in transactions was partially offset by a 1.6% decline in average ticket. Intensifying local competition is pushing Starbucks to rely more on discounting to drive visits.

The loyalty factor: The recent overhaul of Starbucks’ loyalty program adds another variable to the recovery. With roughly 60% of sales tied to loyalty, member response will be a key test of whether the company can sustain momentum.

Implications for marketers: Starbucks’ recovery shows there are still ways to drive traffic in a constrained spending environment. Tactics like handwritten names on cups, latte art, ceramic mugs for in-café orders, free refills, and the return of the condiment bar are helping rebuild the in-store experience—spurring both visits and spending without heavy discounting. That’s notable given the competitive backdrop hasn’t eased, with challengers like Dutch Bros and 7 Brew continuing to gain momentum.

China, meanwhile, underscores the limits of structural changes. Starbucks recently transferred 60% of its China retail operations to a joint venture with Boyu Capital, retaining a 40% stake. While that reduces financial exposure, it doesn’t solve the brand positioning challenge in a market where local competitors price more aggressively and move faster.

Ultimately, sustaining the turnaround will depend on whether Starbucks can scale its experience-led strategy without eroding margins or ceding ground to faster-moving, lower-priced competitors.

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