Starbucks (SBUX): What This Company Actually Does

How Starbucks makes money

Starbucks buys green coffee beans, roasts them itself, and sells finished drinks and food directly to consumers through more than 40,990 stores worldwide, split between company-operated and licensed locations. On top of that store revenue, Starbucks earns a second income stream from the same brand: royalties from licensed store partners (airports, grocery chains) and from Nestlé and other retailers selling bottled Starbucks coffee and bagged beans on grocery shelves. A loyalty rewards program feeds both channels by keeping customers coming back.

Source: 10-K FY2025, p.7 (store revenue composition), p.79 (Channel Development definition).

Where the revenue comes from

North America dominates by revenue share, but the smallest segment by far — Channel Development, the royalty business on grocery-store products — is by far the most profitable, at a 47.3% operating margin versus roughly 12% for the store segments.

Source: 10-K FY2025, p.79 (segment revenue), p.32–35 (segment operating margins).

Geographically, the U.S. accounts for 72.9% of revenue ($27.1B), leaving the company heavily exposed to U.S. consumer spending. China is 8.5% ($3.16B) — a stake set to change materially in early 2026 (see risks below).

Source: 10-K FY2025, p.79 (revenue by geography).

Customers and competitors

95% of revenue comes from direct-to-consumer (B2C) store sales, and no single customer accounts for 10% or more of total revenue, so customer concentration risk is low.

• McDonald's McCafé — undercuts on price for the same commuter-coffee occasion.
• Dunkin' — competes on speed and a lower-priced menu lineup.
• Luckin Coffee — in China, pushed Starbucks back with an ultra-low-cost, app-order, no-storefront model.

Source: 10-K FY2025, p.79.

The metric that matters most in this sector

Comparable (same-store) sales growth shows whether existing stores are actually selling more — not just whether the company opened new ones. When this number turns negative, it means brand strength is fading even as the store count keeps growing.

Source: 10-K FY2021 p.26, FY2022 p.26, FY2023 p.28, FY2024 p.39, FY2025 p.32 (North America segment); SBUX Q3 FY2026 earnings call transcript (Jul 29, 2026).

Leadership and ownership

Brian Niccol has been Chairman and CEO since September 2024. He previously ran Chipotle (2018-2024, during which revenue roughly doubled) and, before that, Taco Bell (2015-2018). Founder Howard Schultz is no longer involved in management — this isn't a founder-led company. Combined insider ownership is under 1%; the largest shareholders are institutional index and asset managers Vanguard (10.0%), Capital Research Global Investors (6.7%), and Capital World Investors (6.6%).

Source: DEF 14A 2026, Beneficial Ownership of Common Stock (as of Jan 16, 2026).

Capital returns

Starbucks has raised its dividend every year covered here — $2.16/share (FY2023) to $2.32 (FY2024) to $2.45 (FY2025) — and raised it again in July 2026 to a $0.62 quarterly rate, yielding about 2.32% at the current price. But the company repurchased zero shares in FY2025, a sharp contrast to $980M (FY2023) and $1.27B (FY2024) in prior-year buybacks. With free cash flow down 26% year over year, some market commentary has questioned whether continuing to raise the dividend while buybacks stop is sustainable.

Source: 10-K FY2025, p.47 (statement of changes in equity, dividends and buybacks); web search, Investing.com/Businesswire (Jul 2026 dividend announcement); stockanalysis.com (Aug 21, 2026).

How this company could fail

• Turnaround failure risk — if the "Back to Starbucks" strategy (announced Q4 FY2025) doesn't translate into faster service and a better in-store experience, the comparable-sales declines already seen in FY2024 and FY2025 could become entrenched.
• Labor costs and unionization risk — expanding U.S. store unionization and rising labor costs keep pressuring operating margin; in FY2025, labor cost increases and deleverage alone cut operating margin by more than 500 basis points.
• China restructuring risk — in November 2025, Starbucks agreed to sell up to 60% of its China retail business to private-equity firm Boyu Capital (valuing the venture at roughly $4 billion). If the deal doesn't close as planned, or China results are only partially reflected in consolidated revenue once Starbucks holds just 40%, its presence in its second-largest international market could become less visible.

Source: 10-K FY2025, p.11–21 (Item 1A Risk Factors); p.30 (drivers of operating expense change); p.82 (Note 19, China JV subsequent event).

Five-year financials

FCF = operating cash flow minus capital expenditures. Source: 10-K FY2025 p.29 (highlights), p.30 (operating expenses), p.43 (income statement), p.45 (balance sheet), p.46 (cash flow statement), p.81 (restructuring costs); 10-K FY2022 p.41–45 (FY2021-FY2022 figures).

What we still don't know

• Whether the turnaround is real or a base-effect bounce — Q3 FY2026's +7.9% comparable sales could reflect genuine structural improvement from "Back to Starbucks," or simply an easy comparison against a weak prior year. It requires one to two more quarters to judge.
• The exact final terms of the China joint venture — the Boyu Capital deal (up to 60% stake sale) was expected to close in early 2026; the final ownership percentage and how results get consolidated need confirmation from subsequent filings.
• Whether dividend growth is sustainable — with buybacks paused, whether continuing to raise the dividend is sustainable depends on free cash flow recovering over the next several quarters.