From the Grounds Up: A Comeback May Be Brewing at Starbucks
By:Gus Downing
Starbucks (SBUX) has been channeling since before COVID, with no sustained period of growth in over five years. But the company hired former Chipotle (CMG) CEO Brian Niccol in September 2024 to address the stagnation, and he’s already made immense headway in the nine months since he started.
Now, I believe the stock to be at a turning point; Niccol’s ideas have been integrated, the company culture has shifted and it seems everyone has bought into the new leadership. If the cataclysmic growth Niccol generated at Chipotle is any indication, Starbucks could be about to enter a new and incredibly profitable chapter.
Niccol served as CEO of Chipotle from 2018 to 2024, driving a mind-boggling 1,300% growth in share price in his time at the helm. He came to Starbucks in September 2024, giving its share price an immediate bump as investors put their faith in his leadership.
His primary initiative since joining the company is a process he called “Back to Coffee,” cutting back on experimentation and less-popular products in favor of leaning into Starbucks’ identity as a coffee-first brand. This also emphasizes efficiency because a smaller menu enables baristas to prepare drinks more quickly.
By immediately tightening brand messaging and simplifying the menu, Niccol improved operational clarity within months of taking over. Early signs have pointed to a strong employee reception and a better internal understanding of the company’s direction — a stark contrast to the indecision that plagued the company after Howard Schultz’s departure.
Investors can see echoes of Chipotle’s post-2018 rebound, with some analysts citing Niccol’s leadership as a “bullish X-factor.”
More recently, Niccol instituted a major initiative called the “Four-Minute Rule,” which aims to serve every customer in under four minutes. This goal is driven by doubling down on digital ordering (over 30% of US orders are now placed via mobile), tech integration and staffing efficiency.
Starbucks is now piloting AI-assisted order routing, giving baristas real-time suggestions to speed up fulfillment and reduce bottlenecks during peak hours. This simultaneously boosts throughput at busy locations while reducing burnout and stress among employees — a key issue in recent union tensions.
Holistically, Niccol has emphasized a “reliability before reinvention” model, with fewer gimmicks and more consistent delivery.
Shares in Starbuck’s have traded in the $70-$125 range since mid-2019; that’s years of consolidation without a sustained breakout. At the time of this writing, the stock is trading at around $90, nearly dead center in that range, creating low downside risk and high potential reward.
The company also has not made all-time highs since mid-2021, almost four full years ago now, and currently trades more than 20% below that peak, even after their recent operational improvements.
From a risk/reward perspective, I view this current level as a base-building phase, with upside toward $115-$125 resistance levels in the next 12-18 months, and potentially even a break through at those levels, reaching higher highs.
When Niccol joined Starbucks, it was a stagnant company with no clear direction or culture. Nine months later employees have fully bought in to a new direction and culture at the company, and growth seems inevitable.
I believe these new policies are going to do wonders for Starbucks’ profitability and, consequently, the share price. The fruit of all these changes will be borne in the next 12-18 months, and I’m happy to have some of the company’s stock in my portfolio to take part in the ride.
Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus
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