With operating profit down 45%, the “Back to Starbucks” plans aren’t bearing any fruit yet

Brian Niccol has a tough gig on his hands, with Starbucks shares dropping sharply after a weak quarter.

4/30/25 8:34AM

Starbucks is promising a four-minute wait time for customers to get their grande latte, but investors might have to wait longer for the coffee giant to deliver the results they were hoping for when Brian Niccol took the top job at Starbucks in September.

The world’s largest coffee chain posted a 45% decline in quarterly operating income yesterday, its fifth straight quarter of declining same-store sales, with SBUX shares opening down 10% in premarket trading this morning.

Since being poached in September for his star-studded track record at Chipotle, CEO Brian Niccol has been brewing a bold turnaround strategy to reverse Starbucks’ yearlong sales slump. So far, that “Back to Starbucks” plan has involved writing names on to-go cups, bringing back ceramic mugs, and requiring a purchase for customers to loiter in stores.

But the investment is coming at a cost: while Niccol touted some “real momentum” with his magnum opus on Tuesday, Starbucks also said the additional labor poured to support the plan is grinding down on the coffee giant’s profitability — an expense that the chain is seemingly willing to double down on, with plans to hire even more baristas.

Double shot

Starbucks’ slumping profitability, down to become the worst non-Covid quarter in more than a decade, is another bitter shot of disappointment for the already struggling coffee chain, which has been juggling weak consumer spending and skyrocketing costs of coffee beans (thanks to a certain Diet Coke enthusiast) domestically while being squeezed out by strong competitors in China — a region that had been the Starbucks growth engine for much of the last two decades.

Max Knoblauch10/24/25

Premium seats help push airlines higher following third-quarter results

Shares of American Airlines are climbing toward the carrier’s best trading day since August 12, when ultra-budget rival Spirit issued its initial warning about its ability to survive. American’s shares are up more than 7% on Friday afternoon.

Investors’ optimism comes a day after American posted a better-than-expected full-year earnings forecast. In a call with investors, American said that it’s ramping up its premium cabin offerings.

“Our ability to grow capacity in premium markets will be further supported as we take delivery of new aircraft and reconfigure our existing fleet. These efforts will allow us to grow our premium seats at nearly two times the rate of main cabin seats,” CEO Robert Isom said. American CFO Devin May said that nose-to-tail retrofits of certain wide-body jets will bump the number of premium seats available on those planes by 25%.

Extra legroom has been a boon for major carriers, particularly this quarter. Delta Air Lines said its premium product revenue grew 9% in Q3, compared to a 4% drop in economy seat revenue. Similarly, United Airlines said its premium revenue grew 6%, outpacing economy. Shares of both airlines were up more than 3% on Friday.

Carriers with less exposure to first- and business-class tickets like Southwest Airlines and JetBlue didn’t see the same amount of momentum on the day.