Starbucks runs about 40,990 stores across 89 countries and makes most of its money one cup at a time. A customer orders a latte, pays at the counter or through the Starbucks app, and that transaction is the engine. Company-operated stores generated 83% of total revenue in fiscal 2025, meaning Starbucks owns and staffs the majority of its locations directly rather than handing them to franchisees. The rest comes from licensed stores, where partners pay royalties and buy Starbucks coffee and equipment to resell, and from the Channel Development segment, which sells packaged coffee and ready-to-drink beverages through grocery stores and partnerships with Nestlé and PepsiCo. Beverages alone account for 73% of what customers buy inside stores, so every shift in how people feel about their morning coffee habit hits Starbucks immediately. The diagram below traces where the money goes.

Five years of financial data tell a story of growth followed by a sharp stumble. Revenue climbed from $29.1 billion in fiscal 2021 to $37.2 billion in fiscal 2025, which looks healthy on the surface. But the way that growth happened matters enormously.

Revenue growth nearly stalled between fiscal 2023 and fiscal 2024, rising just $200 million. Fiscal 2025 added another $1 billion, but comparable store sales, which measure performance at stores open at least 13 months, actually declined 1%. That means the headline revenue number was propped up by new store openings, not by existing stores getting busier. Comparable transactions fell 2%, and only a 1% rise in average ticket, driven largely by prior-year price increases carrying over, kept the decline from being worse. Meanwhile, the cost structure moved in the wrong direction.

In fiscal 2024, Starbucks converted 15 cents of every revenue dollar into operating profit. In fiscal 2025, that fell to less than 8 cents. Operating income dropped from $5.4 billion to $2.9 billion in a single year. The company recorded $892 million in restructuring and impairment charges tied to store closures and reorganizing its support staff. Store operating expenses as a share of company-operated store revenue rose from 51.4% to 55.5%. Labor investments made as part of the Back to Starbucks strategy added cost before they could rebuild customer traffic.

Free cash flow, which is the cash left after the company pays for its capital spending, tells a similarly uncomfortable story. It was $4.5 billion in fiscal 2021. By fiscal 2025 it had fallen to $2.4 billion, less than half. Net debt, meaning borrowings minus cash on hand, rose from $8.2 billion in fiscal 2021 to $12.9 billion in fiscal 2025. The company still returned $2.8 billion to shareholders through dividends in fiscal 2025, but it stopped repurchasing shares entirely, a significant change from the prior year when it spent $1.3 billion buying back stock.

The Back to Starbucks plan is a genuine reset, not a minor adjustment. The company closed 627 stores in the fourth quarter of fiscal 2025 alone. It launched a new in-store operating model called the Green Apron Service Model across all U.S. company-operated stores. It brought in a new CEO, a new CFO, and a new chief operating officer, all within roughly 12 months. And it signed a new strategic joint venture with Boyu Capital to accelerate growth in China, where the company already operates 8,009 stores. These are expensive moves made during a period of compressed margins.

Five specific risks are documented in the company's own filings and are worth understanding clearly. First, the Starbucks brand is unusually sensitive to public perception. Food safety incidents, employee misconduct, or viral criticism online can damage customer trust quickly, and the filing notes that even false or unfair criticism can spread and cause real harm. Second, coffee prices have risen steadily over the past five years, with significant increases in the last two. Coffee is the core input, and price spikes are hard to pass on fully to customers without losing transactions. Third, 74% of revenue comes from North America. A sustained slowdown in the U.S. market leaves little cushion elsewhere. Fourth, wages and benefits are among the largest costs, and union contracts now cover partners in approximately 6% of U.S. company-operated stores, which limits how quickly Starbucks can adjust scheduling or staffing policies. Fifth, the entire Back to Starbucks strategy depends on executing store improvements, technology upgrades, and new product launches simultaneously, and the filing acknowledges that construction delays, staffing shortfalls, or underperforming new stores could cause the plan to fall short.

The most important unresolved question about Starbucks right now is whether the Back to Starbucks investments will actually bring customers back to existing stores. Comparable transactions fell 4% in North America in fiscal 2025. The Green Apron Service Model only went live across the full U.S. portfolio in the fourth quarter of fiscal 2025, so its effect on traffic has not yet shown up in a full year of numbers. The company says it expects the store closures to be slightly accretive to operating margins over time, as sales shift to nearby locations that remain open. That prediction has not yet been tested.