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As 2026 approaches, Starbucks is in full restructuring mode under CEO Brian Niccol.
“We need to be a learning organization. We need to be an experimental organization,” Nicol said on Yahoo Finance's Opening Bid Unfiltered podcast at Dreamforce in San Francisco (listen below, see video above).
This includes keeping up with developments in artificial intelligence and integrating it into Starbucks' systems. One use so far is Green Dot Assist, a virtual assistant platform that helps employees solve problems in real time.
“So if you have a problem with a piece of equipment or how to make a certain drink, this is a very quick way for us to empower them with artificial intelligence to get them to the right answer faster or find the right solution faster,” Nicol explained.
The company is also looking at menu innovation and new ways to increase morning traffic, including adding “protein-forward” breakfast items and artisan pastries. Starbucks is investing in more protein drinks and improving its apps.
“I think there's a real opportunity for voice ordering with the app. I also think there's a real opportunity to be more predictive of what we know you're going to order,” he said.
On September 16, Starbucks CEO Brian Niccol took the stage at the 2025 Fast Company Innovation Festival in New York. (Eugene Gologusky/Getty Images) · Eugene Gologursky, Getty Images
In late September, Starbucks revealed plans to close unprofitable stores and cut corporate jobs in an effort to boost profit margins and reallocate resources to store worker time and product innovation.
The company plans to reduce the number of stores in Canada and the United States by about 1% this fiscal year. The company's total number of operated and licensed stores in the United States and Canada will be close to 18,300 by the end of the year, down from about 18,842 at the end of the fiscal third quarter.
Starbucks will also eliminate 900 non-retail jobs and close open positions. The entire restructuring effort will cost approximately $1 billion.
These efforts come as Nicole restores the condiment bar, retrains staff, rebuilds menu innovation, rebrands on television and searches for a business partner in China. Starbucks has also pledged to remodel 1,000 stores to restore seating and even plants as it bets consumers want to have a place to gather again.
“I think it's like you're part of a community and if you sit there and see your community coming in and out, you can say hello to your neighbors or friends or family,” Nicol said.
Signs of Starbucks turning a profit have so far proven elusive as consumers eat out less often due to higher prices for food and basic needs like rent and medical bills.
U.S. same-store sales fell 2% in the fiscal third quarter due to a 4% drop in customer traffic. Earnings per share fell 46% from the previous year. Operating margin fell 660 basis points year over year.
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Investors are still holding on to the positives Nicholl noted during the earnings call in late July. These include low double-digit same-store sales growth at university locations, improving U.S. trading trends through the end of the quarter, and a “wave” of beverage and food innovation over the next 12 months. Starbucks will also spend $500 million to increase workforce investment next year, down from about $1 billion rumored on Wall Street.
The company even said operating margins were likely to peak again.
Starbucks shares are down 10% year to date, while the S&P 500 index (^GSPC) is up 14%.
Starbucks will report fiscal fourth-quarter earnings later this month.
“What was supposed to be a 'own event' type of print, with weak comparable sales/U.S. store closures behind the brand and the recent launch of a major new sales platform (protein), the fiscal fourth-quarter earnings set-up is complicated by: (1) closures that may have disrupted noise from protein launches, and (2) growing signs that broader industry demand has softened,” Citi analyst Jon Tower wrote in a note.
Tower added: “This weakness, coupled with the still-pending decision on China, may mean that management will wait until an investor day planned for February 2026 to provide fiscal 2026 guidance and long-term algorithms, and, without reliable data to support it, share price performance may continue to track one year of U.S. same-store sales data.”
Brian Sozzi is the executive editor of Yahoo Finance and a member of the Yahoo Finance editorial leadership team. Follow Sozzi on X @bryansozzi, Instagramand LinkedIn. Tips for the story? Email [email protected].
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