Foot Traffic Provides Support While Unit Prices Face Pressure; Starbucks Q2 Comps Growth Slows

Against the backdrop of a general recovery in its global business, Starbucks China's rebound has appeared more restrained.

On April 28, Starbucks released its financial results for the second quarter of fiscal year 2026, ended March 29, 2026. The company reported global revenue of $9.5 billion for the quarter, a 9% year-over-year increase; non-GAAP earnings per share were $0.50, up 22% year-over-year, marking the first year-over-year growth in more than two years.

The North American market served as the primary driver, with Comps rising 7.1%, accompanied by simultaneous improvements in transaction volume and average ticket size.

In contrast, the pace of recovery in the Chinese market has slowed significantly.

During the quarter, Starbucks China generated revenue of $800 million, an 8% year-over-year increase; however, comparable store sales grew by only 0.5%, the lowest level in recent quarters.

Meanwhile, the total store count stood at 7,991, a decrease of 20 from the end of the previous quarter. With revenue maintaining growth while same-store performance flattened, this reflects marginal changes in single-store operational momentum.

Prior to this, Starbucks China had recorded positive comps growth for four consecutive quarters.

More concerning is the structure of this growth. Improvement in transaction volume was nearly consistent throughout, while average ticket size remained under long-term pressure, recording only a 2% positive growth in the first quarter of fiscal 2026.

The latest quarterly data further reinforces this divergence: transaction volume increased 2.1% year-over-year, while average ticket size declined 1.6%, creating a typical scenario of "rising volume but falling prices."

In other words, consumers are returning to stores, but their consumption patterns have changed. Whether through more frequent small-ticket purchases or a preference for promotional and discounted products, these trends are diluting the value per transaction.

This shift in consumer demand is closely linked to the price competition that has characterized China's freshly brewed coffee market in recent years.

Since 2023, local brands such as Luckin Coffee and Cotti Coffee have used "9.9 yuan coffee" as a lever, pushing the industry into a more affordable price range; by 2025, subsidy competition centered on delivery channels further solidified this price anchor.

The drastic change in the competitive landscape has forced Starbucks to accelerate its localization pivot.

In April this year, after completing the joint venture transaction with Boyu Capital, the company proposed a "Thousand Stores, Thousand Faces" strategy.

From lightweight stores of approximately 10 square meters to mobile coffee carts at scenarios like concerts, and from modular convenience stores within office buildings to over 800 Reserve and themed stores, Starbucks China is adapting to differentiated consumption scenarios through a richer mix of store formats.

Under the expansion plan proposed after Boyu's entry, which aims to add more than 12,000 new stores, how to maintain brand pricing power while accelerating store openings remains a key trade-off.

This is the challenge that Starbucks China must face as it enters a new stage.