Starbucks will need more time to get its unit growth back in gear

Starbucks still believes it can add another 5,000 shops in the U.S. It will just take a bit to get started.

The coffee shop giant, whose U.S. same-store sales rose 7.7% last quarter, expects a slower pace of development in the current fiscal year. The goal, CEO Brian Niccol told investors last week, is to rebuild the company’s development pipeline.

“Rebuilding our pipeline will take time, which means we expect fewer company-operated openings in fiscal 2027, and a stronger, healthier pipeline beyond that,” Niccol told analysts last week.

Growth Challenges

Starbucks was seemingly on a path to becoming the most prolific restaurant chain in the U.S., but sales challenges in 2024 and 2025, and a strategic shift under Niccol to emphasize more in-shop visits, halted that momentum.

The company closed shops in each of the past two years, shedding underperforming locations and those that did not fit with the brand’s strategy. That included the closure of 250 locations last quarter alone.

Starbucks peaked at the end of its 2024 fiscal year at 16,941 locations, including company-owned and licensed units in places like Target and airports.

By the end of its 2026 fiscal year, which ended Sept. 27, it was down to 16,781 locations, a reduction of 160 shops in two years.

Expansion Plans

Starbucks has maintained that it can keep adding locations, and that didn’t change on the company’s earnings call last week. “We see significant long-term white space in North America, with the opportunity to build around 5,000 additional coffeehouses over time,” he said. “We’re focused on making disciplined decisions today that sets us up for stronger, more durable growth in the future.”

The company expects to build more of these locations in the Midwest and the South, which is one reason it opened another corporate support facility in Nashville.

Starbucks does expect to return to growth this fiscal year. The company expects to open a net of 90 to 100 new locations this year, about half of which will be licensed locations. But that is a much slower pace than the chain’s growth rate in recent years.

Fron 2016 through 2024, the company averaged 471 new locations every year.

Future Outlook

Once the company does rebuild its pipeline, however, Starbucks expects to get back toward a stronger rate of growth. Niccol said that the company will ramp up development in 2028 with 300 or more locations.

“Obviously, we had to do some closures,” he said. “It takes a little bit of time to reset the pipeline, but I believe now we have done all the hard work. Now it’s in the business of executing against the pipeline and getting units built.”

To be sure, location count projections are difficult, at best, because various events can change a company’s trajectory. That’s true even for the largest chains. Subway Founder Fred DeLuca once famously projected that his chain would reach 50,000 locations by 2017.

That never happened. The company peaked at about 43,000 locations.

Still, Niccol isn’t necessarily stopping at 5,000 more locations. “We’ve got a clear line of sight on the 5,000,” he said. “Obviously, as we get closer down the road, I’m guessing there’s going to be more upside to that number. But for now, as we’ve done all the market planning, we feel really good about saying we see line of sight on the 5,000 additional units.”

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