On September 9, 20024, Brian Niccol took the helm of a beleaguered Starbucks as its CEO, amid much hope for a reversal of its flagging fortune. One year later, Starbucks is digging itself out of a hole, one pumpkin spice latte at a time.

Here’s our take on Starbucks’ growth prognosis and strategy for 2025 and beyond:

Foundational, Not Transformational

A $35 billion company with over 40,000 stores does not get rebuilt in a year. Brian Niccol’s one-year tenure has been about laying the foundation and stabilizing the company — and the results are showing — Starbucks has returned to growth. Yet same-store sales are down, both globally and in the US (albeit not as dramatically as they had been in the last couple of years), indicating Starbucks is not out of the woods yet.

Headwinds Are Par For The Course

As Niccol sets about transforming Starbucks, the business must contend with myriad headwinds like tariff-related uncertainty, input cost increases, dampening consumer sentiment, unionization pressure, and Gaza-related boycotts, particularly in global markets. But these types of pressure are endemic in any business; the exact nature changes depending on the environment — Niccol must take them in his stride. In any case, this is a time to sow; the benefits come later. This transformation, like any transformation of this scale, has resulted in significant margin compression, and today’s bottom line has rightly taken a back seat to the promise of future growth and profitability.

The Experience Is Changing

Niccol’s first strike has been at the heart of the operations, which has not only addressed cost and efficiency, but also customer experience. A new “Green Apron Service” model focused on enhancing speed, accuracy, and operational fluidity is hitting its efficiency targets and cutting down on customer wait time. Starbucks is converting pick-up only stores to ones with a cafe experience and is testing a new prototype closer in spirit to the cozy community cafe. For now, this is all cost and effort and a burden on financials, but they will likely bear fruit in the second year of Niccol’s tenure.

The New Product Portfolio Will Drive Profitable Growth

One of Niccol’s primary efforts has been to shed complex and underperforming products that bog down the operational workflow, aggravate customers, and hurt revenue and margins. A leaner portfolio will make room for lean operations, a better experience, and improved financials. A leaner portfolio will also create space for smart innovation in high-margin, highly popular items like protein-based offerings, which will drive frequency and margin.

Starbucks Needs To Figure Out Who They Want To Be

Any transformation of this magnitude is also about transforming the character of a brand. Starbucks created a cafe culture with a veneer of affordable exclusivity and the promise of a “third place,” then eroded it with frenetic stores and serpentine drive-through lines. As Starbucks embarks upon yet another transformation, it must decide whether it can find a happy medium between a community cafe where, like in “Cheers,” everybody knows your name, and the frill-free efficiency of a Dunkin. More importantly, is there a place on this spectrum that will deliver the requisite financial results to shareholders?

It’s Only Been A Year, But It’s The Long Game That Matters

Habits are hard to break, and customers broke their Starbucks habit. More than anything else, this undoing of habit spelled doom for Starbucks. It is no longer the routine first stop on the way to work. It isn’t where you hash out a presentation with your coworker. Your realtor doesn’t meet you there to discuss house comps. Habits are sticky because they are what Daniel Kahneman would call “fast thinking” — you skip the rational and go with the emotional. Starbucks needs to win back these habits, and doing that requires time and the determination to rebuild meaningful, differentiated, and credible equity.

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Learn more: The Starbucks growth strategy closely aligns with Forrester’s Five Levers Framework for growth — salience, product, price, experience, and access.

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