Starbucks At A Crossroads, Analyst Sees Chipotle-Like Potential But Warns Of Declining Value Perception

TD Cowen analyst Andrew M. Charles reiterated the Hold rating on Starbucks Corporation (NASDAQ:SBUX) with a price forecast of $90.

While acknowledging the potential for a turnaround under CEO Brian Niccol, similar to Chipotle’s success, the analyst expressed caution in a recent report.

The precedent set by Brian Niccol’s successful revival of Chipotle now serves as a key benchmark for his leadership at Starbucks.

Also Read: Starbucks Teams Up With OpenAI To Launch ‘Green Dot Assist’, A Virtual Barista Tool That Helps Staff Customize Drinks, Troubleshoot Issues And Speed Up Service

Alternative data for Starbucks’ North America segment is showing signs of improvement, with investor expectations for fiscal 2025 third quarter (June) hovering between -1% and -2%, slightly better than the -2.3% estimate from Consensus Metrix, the analyst mentioned.

He added that while there’s enthusiasm around the accelerated rollout of the Green Apron program and its potential sales boost, concerns remain about its return on investment, as proprietary surveys point to declining value perceptions that could limit pricing flexibility.

Charles also observed that in the current risk-on environment, investors appear to be rotating into Starbucks from other large-cap restaurant names like McDonald’s Corporation (NYSE:MCD), Restaurant Brands International Inc. (NYSE:QSR), and Yum! Brands, Inc. (NYSE:YUM). This shift is happening alongside renewed optimism around CEO Brian Niccol, boosted by the ongoing Starbucks Leadership Experience 2025 in Las Vegas.

On the flipside, Charles tempered optimism with caution, suggesting Starbucks may have over-earned in the years following COVID-19, as the company now appears to be holding back on pricing and increasing labor hours.

The analyst asserted that the business is still recalibrating to a new earnings baseline, in contrast to consensus expectations that view 2025 as a temporary dip before margins recover.

He added that risks to U.S. same-store sales remain elevated due to declining value perceptions, narrowing quality gaps versus competitors, the company’s historical underperformance during downturns like 2008–09 and 2020, and rising competition from fast-growing drive-thru coffee chains.

Price Action: SBUX shares are trading higher by 0.18% to $94.50 at last check Friday.

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