Is Starbucks' Store Portfolio Reset Enhancing Unit Economics?

Starbucks Corporation SBUX is strategically reshaping its store base in North America, with management positioning strategic closures and portfolio pruning as a lever to improve underlying unit economics. Throughout fiscal 2025, it recorded a net decline in company-operated store count, with approximately 107 global net closures in the fiscal fourth quarter, reflecting a reassessment of the cafe portfolio.

Management stated that the stores selected for closure were operationally underperforming and lacked a clear path to profitability under current operating conditions. By eliminating these locations, Starbucks expects operating margins to be slightly accretive, with a portion of lost sales transferring to nearby, higher-productivity cafes. This dynamic — shifting volume toward stronger locations — underscores the company’s effort to improve revenue density per store.

The store closures form part of a broader shift toward improving unit-level economics and capital efficiency. Starbucks is investing in targeted cafe renovations and piloting lower-cost, capital-efficient store prototypes designed to enhance customer experience while optimizing space utilization. Management indicated that future new store development will be more disciplined, prioritizing locations and formats that can deliver stronger unit economics and better align with local demand trends.

These actions reflect a broader emphasis on portfolio quality over quantity. As Starbucks works to rebuild traffic — particularly in key dayparts such as the morning segment — a leaner and productive store base could help improve how incremental revenues flow through to profitability. Although management emphasized that margin recovery will be gradual, early improvements in comparable transactions, combined with a more rationalized store network, support the view that the company’s operational reset is oriented toward strengthening unit-level profitability over time.

How It Stacks Up to Competitors

Starbucks’ portfolio reset places it alongside, but distinct from, the growth-oriented strategies currently being pursued by Dutch Bros Inc. BROS and Chipotle Mexican Grill, Inc. CMG.

Dutch Bros continues to emphasize unit expansion, supported by record AUVs and strong early productivity in new shops, with management expressing confidence that transaction growth can sustain attractive four-wall economics as the system scales.

Chipotle is likewise accelerating development, guiding to 350-370 new restaurant openings in 2026, while simultaneously navigating softer traffic trends and near-term margin pressure. Management has framed operational efficiency and throughput initiatives as key offsets, aiming to preserve long-term unit economics despite a more challenging consumer backdrop.

Within this landscape, Starbucks is pursuing a more portfolio-driven approach, prioritizing store rationalization and revenue density over incremental unit growth. By exiting underperforming cafes and reallocating demand toward higher-productivity locations, the company is emphasizing margin durability and capital efficiency. While this strategy may constrain near-term expansion relative to Dutch Bros and Chipotle, it reflects a deliberate effort to strengthen unit-level profitability.

SBUX’s Price Performance, Valuation & Estimates

Shares of Starbucks have declined 4.1% in the past year compared with the industry’s fall of 3.1%.

SBUX Stock’s One-Year Price Performance

From a valuation standpoint, Starbucks trades at a forward price-to-sales ratio of 2.56, below the industry’s average of 3.52.

SBUX’s P/S Ratio (Forward 12-Month) vs. Industry

The Zacks Consensus Estimate for SBUX’s fiscal 2026 earnings per share (EPS) implies a year-over-year uptick of 8.9%. The EPS estimates for fiscal 2026 have declined in the past 30 days.

EPS Trend of SBUX Stock

Starbucks stock currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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