Starbucks says higher gas prices aren't yet dampening customers' enthusiasm

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Starbucks says higher gas prices aren't yet dampening customers' enthusiasm

2026-04-29 05:52 Last Updated At：06:01

Higher gas prices may be changing some consumer spending decisions, but they don't appear to be dampening consumers' appetite for Starbucks.

Starbucks said Tuesday that its global same-store sales for the January-March period rose 6.2%. That was higher than the 4% increase Wall Street was anticipating, according to analysts polled by FactSet. In the U.S., same-store sales jumped 7%.

Unlike fast food companies, which have been piling on discounts to win back lower-income consumers, Starbucks said it continues to see traffic from people of all ages and income levels.

“What we see with folks is, when you give them an experience that they feel is unique, differentiated, special, a little touch of luxury, it goes a long way. And we’re seeing that play out with every income cohort,” Starbucks Chairman and CEO Brian Niccol said during a conference call with investors. “We have to demonstrate to people that it’s worth it.”

Still, Niccol said the company is being cautious with its financial guidance because it's not sure how consumer behavior might change if costs continue to rise.

“As you know, these issues continue to happen, whether it shows up in gas prices or utilities in other ways or other input costs,” he said.

Starbucks said it now expects both global and U.S. same-store sales to rise 5% for the full year, up from previous guidance of 3%. The company also raised its full-year earnings guidance to $2.25 to $2.45 per share, up from $2.15 to $2.40 per share.

Starbucks shares rose more than 5% in after-hours trading.

Over the last year, Starbucks has been adding employees to stores during rush times and using technology to better sequence its in-store and mobile orders. Niccol said 80% of U.S. company-owned stores are now meeting Starbucks' goal of in-store or drive-thru service within 4 minutes and mobile order pickups within 12 minutes.

It has also encouraged friendlier service and is redesigning stores and adding seating to give them a cozier, coffeehouse feel. Niccol said around 300 U.S. stores have been redesigned so far and 1,000 will get that treatment by the end of this year.

Starbucks has also shuttered underperforming stores and cut corporate jobs. Last year, the company closed hundreds of stores in the U.S., Canada and Europe and laid off at least 2,000 nonretail employees.

Niccol said that leaner structure is allowing the company to innovate more quickly. He cited premium bakery items that were introduced during the second quarter, including a strawberry matcha loaf and a yuzu-flavored croissant.

New drinks, like protein-enhanced lattes and energy refreshers, are also drawing in customers. Niccol said he isn't worried about growing competition from brands like McDonald's, which recently announced its own menu of refreshers and handcrafted sodas.

“What my experience has been is when the category starts being talked about, the market leader benefits. And, you know, that’s going to be us in this scenario,” Niccol said.

Starbucks said its revenue rose 9% to $9.5 billion for the second quarter. That was also ahead of analysts' forecast of $9.2 billion.

Adjusted for one-time items, the company earned 50 cents per share. That also came in ahead of analysts' forecast of 43 cents.

Agents armed with search warrants keep focus on Minnesota in public fraud probe

MINNEAPOLIS (AP) — Federal agents executed multiple searches in Minnesota on Tuesday, seizing records and other evidence in an ongoing fraud investigation by the Trump administration of publicly funded social programs for children, authorities said.

No details about possible crimes were disclosed, though armed agents were seen at childcare centers in the Minneapolis area. KSTP-TV said one crew even had a battering ram.

The searches occurred months after right-wing influencer Nick Shirley posted a video that said members of Minnesota’s Somali community were running fake childcare centers to collect federal subsidies. It caught the attention of the Trump administration and conservative activists, though inspectors said the centers were operating as expected.

Minnesota has been dogged by fraud: At least 65 people, many of them Somali Americans, have been convicted of ripping off a federal program that was meant to provide food to children. The investigation began during the Biden administration.

Separately, a federal prosecutor in December said as much as $9 billion in federal funds that supported 14 Minnesota-run programs since 2018 may have been stolen.

Democratic Gov. Tim Walz, who has been on the defensive about not doing enough to root out fraud, welcomed the raids Tuesday. Minnesota’s child welfare agency said it shared key information with law enforcement to “hold bad actors accountable.”

“We catch criminals when state and federal agencies share information. Joint investigations work, and securing justice depends on it,” Walz said.

The searches were being conducted at daycares, businesses and some residences, according to a person familiar with the matter who spoke to The Associated Press on the condition of anonymity because they were not authorized to publicly discuss the investigation.

Various state and federal agencies, including the Department of Homeland Security, participated in searches. At least two of the sites were in Shirley's video. Officers from Minnesota's Bureau of Criminal Apprehension were removing boxes at some locations.

“The American people deserve to know how their taxpayer money was abused. ... No stone will be left unturned,” said DHS, which also noted the cooperation of local and state authorities.

On social media, FBI Director Kash Patel mocked Walz for taking credit "while we smoke out the fraud plaguing Minnesota under your governorship.”

Jason Steck, an attorney who represents childcare centers, said some of the targeted businesses were operated by Somali immigrants. They were not his clients.

“A few childcare centers, a few autism centers, a few healthcare agencies of some type," Steck said, adding that it appeared to be a "particular sweep for fraud.”

The executive director of Child Care Aware of Minnesota, a nonprofit that serves childhood educators, said the publicity is unflattering.

“The majority are in business to do good business. You’re going to come across individuals who try to capitalize on systems that are broken and need to be fixed," Candace Yates said.

Walz ended his bid for a third term as governor in early January amid President Donald Trump’s relentless focus on fraud allegations and the state’s Somali community. Trump has used dehumanizing rhetoric, calling Somali immigrants “garbage” and “low IQ.”

Tensions between Walz and the federal government subsequently rocketed during an extraordinary immigration crackdown that led to the deaths of two people before Operation Metro Surge was eased in February.

In February, Vice President JD Vance said the government would temporarily halt $243 million in Medicaid funding to Minnesota over fraud concerns. Minnesota sued in response, warning it may have to cut healthcare for low-income families, but a judge on April 6 declined to grant a restraining order.

Walz told Congress in March that he wanted to work with the federal government in fraud investigations, but that the immigration surge had made it more difficult.

“The people of Minnesota have been singled out and targeted for political retribution at an unparalleled scale,” he said at the time.

Durkin Richer reported from Washington. AP reporters Steve Karnowski in Minneapolis and Corey Williams and Ed White in Detroit contributed to this story.