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Can Starbucks' $2 Billion Cost-Savings Plan Accelerate EPS Growth?
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Key Takeaways
SBUX's Q2 revenues rose 9% YoY to $9.5B, and EPS climbed 22% to $0.50.
SBUX's operating margin rose 110 bps YoY to 9.4%, its first consolidated expansion since Q1 FY24.
SBUX targets $2B gross savings through FY28, expects near-term G&A impact and raises FY26 EPS to $2.25-$2.45.
Starbucks Corporation (SBUX - Free Report) is placing greater emphasis on cost discipline as it works to convert stronger sales momentum into more durable earnings growth. In the second quarter of fiscal 2026, consolidated revenues rose 9% year over year to $9.5 billion, while global comparable sales increased 6.2%. Operating margin expanded 110 basis points to 9.4%, marking the company’s first consolidated margin expansion since the first quarter of fiscal 2024. SBUX’s fiscal second-quarter earnings per share (EPS) increased 22% year over year to 50 cents, marking its first year-over-year earnings growth in more than two years.
Starbucks’ consolidated margin improved in the fiscal second quarter, but cost pressure remained visible in North America. The segment’s operating margin contracted 170 basis points to 10.2%, reflecting Green Apron Service investments, higher product and distribution costs, tariffs, elevated coffee prices and legal accruals. These pressures were partially offset by progress on operating leverage and cost discipline, underscoring the role of efficiency efforts in supporting margin performance.
Starbucks remains on track with its $2 billion gross cost-savings plan through fiscal 2028, with savings expected across product and distribution costs, operating expenses and G&A. The company expects the near-term savings impact to show most clearly in G&A, with Back to Starbucks investments offsetting much of the realized savings across the P&L.
The pace of savings flow-through remains central to the company’s fiscal 2026 earnings trajectory. Starbucks expects slight year-over-year growth in consolidated operating margin for fiscal 2026, supported by sales leverage, cost-savings initiatives, easing coffee and tariff pressures in the back half of the year and the margin-accretive China JV structure.
With EPS returning to year-over-year growth in the fiscal second quarter and the savings program remaining on track through fiscal 2028, cost discipline is likely to remain a key lever for stronger profit conversion. Reflecting this improved setup, Starbucks raised its fiscal 2026 EPS guidance to $2.25-$2.45 from its prior $2.15-$2.40 range.
How It Stacks Up to Competitors
Dutch Bros Inc. (BROS - Free Report) is managing cost pressure through operating leverage, more disciplined labor deployment and overhead efficiency rather than a formal multiyear savings program. The company improved company-operated labor costs by 120 basis points as a percentage of shop revenues in the first quarter of 2026, supported by better alignment of staffing with customer demand. Efficiency also showed up in corporate overhead, with adjusted SG&A improving 100 basis points as a percentage of revenues. BROS expects about 80 basis points of adjusted SG&A leverage for 2026, although higher coffee costs, food rollout expenses and increased occupancy costs tied to its build-to-suit lease strategy remain margin headwinds.
McDonald’s Corporation (MCD - Free Report) , by comparison, is using scale, supply-chain discipline and ownership optimization to manage margin pressure. The company said its supply-chain teams, supplier partnerships and hedging strategies position it to navigate food, paper and energy inflation in 2026. MCD also acknowledged that U.S. company-operated margins were not acceptable and is reviewing both ownership mix and development returns, including dropping locations that no longer meet return thresholds.
Compared with BROS and MCD, Starbucks’ cost story is more structured and turnaround-driven. BROS is leaning on sales leverage and overhead efficiency, while MCD is using supply-chain scale, disciplined development and ownership optimization. Starbucks, meanwhile, has a defined $2 billion savings plan through fiscal 2028, making cost discipline a more explicit lever in its effort to convert stronger comps into faster EPS growth.
SBUX’s Price Performance, Valuation & Estimates
Shares of Starbucks have gained 5.1% in the past year against the industry’s 10.8% decline.
SBUX’s One-Year Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, SBUX trades at a forward price-to-sales (P/S) multiple of 3.21, below the industry’s average of 2.74.
SBUX’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SBUX’s fiscal 2026 earnings per share (EPS) implies a year-over-year increase of 12.7%. The EPS estimates for fiscal 2026 have increased in the past 30 days.
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Can Starbucks' $2 Billion Cost-Savings Plan Accelerate EPS Growth?
Key Takeaways
Starbucks Corporation (SBUX - Free Report) is placing greater emphasis on cost discipline as it works to convert stronger sales momentum into more durable earnings growth. In the second quarter of fiscal 2026, consolidated revenues rose 9% year over year to $9.5 billion, while global comparable sales increased 6.2%. Operating margin expanded 110 basis points to 9.4%, marking the company’s first consolidated margin expansion since the first quarter of fiscal 2024. SBUX’s fiscal second-quarter earnings per share (EPS) increased 22% year over year to 50 cents, marking its first year-over-year earnings growth in more than two years.
Starbucks’ consolidated margin improved in the fiscal second quarter, but cost pressure remained visible in North America. The segment’s operating margin contracted 170 basis points to 10.2%, reflecting Green Apron Service investments, higher product and distribution costs, tariffs, elevated coffee prices and legal accruals. These pressures were partially offset by progress on operating leverage and cost discipline, underscoring the role of efficiency efforts in supporting margin performance.
Starbucks remains on track with its $2 billion gross cost-savings plan through fiscal 2028, with savings expected across product and distribution costs, operating expenses and G&A. The company expects the near-term savings impact to show most clearly in G&A, with Back to Starbucks investments offsetting much of the realized savings across the P&L.
The pace of savings flow-through remains central to the company’s fiscal 2026 earnings trajectory. Starbucks expects slight year-over-year growth in consolidated operating margin for fiscal 2026, supported by sales leverage, cost-savings initiatives, easing coffee and tariff pressures in the back half of the year and the margin-accretive China JV structure.
With EPS returning to year-over-year growth in the fiscal second quarter and the savings program remaining on track through fiscal 2028, cost discipline is likely to remain a key lever for stronger profit conversion. Reflecting this improved setup, Starbucks raised its fiscal 2026 EPS guidance to $2.25-$2.45 from its prior $2.15-$2.40 range.
How It Stacks Up to Competitors
Dutch Bros Inc. (BROS - Free Report) is managing cost pressure through operating leverage, more disciplined labor deployment and overhead efficiency rather than a formal multiyear savings program. The company improved company-operated labor costs by 120 basis points as a percentage of shop revenues in the first quarter of 2026, supported by better alignment of staffing with customer demand. Efficiency also showed up in corporate overhead, with adjusted SG&A improving 100 basis points as a percentage of revenues. BROS expects about 80 basis points of adjusted SG&A leverage for 2026, although higher coffee costs, food rollout expenses and increased occupancy costs tied to its build-to-suit lease strategy remain margin headwinds.
McDonald’s Corporation (MCD - Free Report) , by comparison, is using scale, supply-chain discipline and ownership optimization to manage margin pressure. The company said its supply-chain teams, supplier partnerships and hedging strategies position it to navigate food, paper and energy inflation in 2026. MCD also acknowledged that U.S. company-operated margins were not acceptable and is reviewing both ownership mix and development returns, including dropping locations that no longer meet return thresholds.
Compared with BROS and MCD, Starbucks’ cost story is more structured and turnaround-driven. BROS is leaning on sales leverage and overhead efficiency, while MCD is using supply-chain scale, disciplined development and ownership optimization. Starbucks, meanwhile, has a defined $2 billion savings plan through fiscal 2028, making cost discipline a more explicit lever in its effort to convert stronger comps into faster EPS growth.
SBUX’s Price Performance, Valuation & Estimates
Shares of Starbucks have gained 5.1% in the past year against the industry’s 10.8% decline.
SBUX’s One-Year Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, SBUX trades at a forward price-to-sales (P/S) multiple of 3.21, below the industry’s average of 2.74.
SBUX’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SBUX’s fiscal 2026 earnings per share (EPS) implies a year-over-year increase of 12.7%. The EPS estimates for fiscal 2026 have increased in the past 30 days.
EPS Trend of SBUX Stock
Image Source: Zacks Investment Research
SBUX’s Zacks Rank
SBUX stock currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.