Starbucks (SBUX) is reporting earnings again soon, on Oct. 28, and its stock is under some pressure heading into the report. SBUX shares closed at $94.71 on Friday, Oct. 2, down about 10.5% over the past month.
CEO Brian Niccol’s plan to turn the company’s situation around is also facing some scrutiny from Wall Street.
However, Bank of America still maintains its stance on the stock. On Oct. 1, BofA analyst Sara Senatore kept her Buy rating on Starbucks and her $143 price target. That is about 51% above where the stock closed on Oct. 2.
She maintained her outlook because BofA just conducted a survey that showed how customers feel about Starbucks’ AI tools in the mobile app and ordering process. The results from the survey were better than many investors would expect.
Senatore’s bullish case for Starbucks before earnings
Senatore has covered consumer and restaurant stocks for more than 20 years and spent years at Bernstein before joining Bank of America Securities. Her ratings draw a lot of attention from both other analysts and major institutional investors.
Also read: Starbucks changes iconic recipe, angering customers again
In her note, she argued that technology is becoming a real growth driver for Starbucks, even though customer traffic hasn’t really been stable.
“Starbucks is using technology and AI to simplify operations and personalize digital interactions,” Senatore wrote. “The technology frees up partners to spend more time on customer service and hospitality.”
Starbucks earns most of its money from company-run stores that sell coffee, tea, food, and bottled drinks. The rest of its profits come from licensed stores and packaged products sold in grocery stores through Nestlé.
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The results of BofA’s AI survey
According to a BofA global research report shared with me, 66% of people who order before going to the store said the whole process felt faster, and 67.5% of customers said the time they spent waiting to pick up their orders felt shorter than when they visit the store directly.
The survey also showed that 59.8% of users felt more confident that their drink was ready because the app showed an estimated wait time.
Related: Starbucks CEO reveals what he thinks will keep customers coming back
The company’s personalized recommendations strategy also got some positive feedback. About 63.1% of users said the suggestions made them consider trying new product options.
That is good news for a company trying to increase the average amount people spend per visit. Only a few people, about 4.1%, found the recommendations distracting.
The preferences of different age groups are also worth noting. Senatore said Gen Z customers cared most about accuracy, while Millennials prioritized speed. Gen X customers were the least likely to try something new just because the app suggested it.
Why the Starbucks cafe experience still needs work
In September, I ran a LinkedIn poll asking Starbucks customers if the chain’s planned $1 billion cafe remodel would keep them coming back. Most people said no, while about 18% were not sure.
Some of them gave their reasons in the comments.
Alexander Smith said he visits cafes for the kind of “human experience” people get in Europe. “The problem is that in America today, it’s painfully clear that keeping the drive thru window line moving is the top priority,” he wrote. He also said that “SBux doesn’t prioritize the ‘cafe’ experience and that’s why it Sux!”
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Brand L. Elverston, a frequent Starbucks visitor who travels across the U.S., said his biggest frustration is walking in and feeling ignored at the counter while employees rush to fill drive-thru and app orders.
“Walk in customers should be valued,” he wrote.
Jessica Gibson said she cares more about Starbucks’ “employee/labor union relations than what the inside of the cafes looks like.”
The BofA survey also supports this. Across every demographic group, customers cared more about product quality and accuracy (62.6%) than about fast pickup (21.6%). Surprisingly, rewards and offers barely registered at 3.6%.
What to watch when earnings land
Starbucks’ most recent third-quarter report, released in July, showed a consolidated net revenue of $9.3 billion. While that was 1.4% lower than the previous year, it still beat Wall Street’s expectations on both revenue and earnings per share, the chain reported. The company also raised its fiscal 2026 outlook in the same release.
On the next earnings call, investors should pay attention to the company’s North American comparable store sales, customer traffic, and how well Niccol’s “Back to Starbucks” plan is going.
Niccol has already said Starbucks is no longer giving heavy discounts, which means the variety of products it offers, the speed of service, and the digital tools Senatore highlighted will play a more important role in the company’s future.
The BofA survey shows that Starbucks’ digital investments could pay off. But the LinkedIn feedback reminds us that the cafe experience still matters to some customers.
During the next earnings call, investors should be able to see which sentiment actually affects the number of people visiting stores.
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