How SBUX (Starbucks) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a coffeehouse chain like Starbucks makes money is essential for investors and anyone interested in the business of quick-service restaurants. In this post, we break down Starbucks's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Starbucks Overview

Starbucks operates as a leading global coffeehouse chain, selling beverages, food, and packaged goods through company-operated stores, licensed stores, and consumer packaged goods channels. Revenue comes primarily from Beverage Revenue, Food Revenue, and Other Revenue by Product 1 such as packaged coffee and merchandise. The company focuses on premium coffee experiences, store expansion, and digital loyalty programs to drive customer traffic and sales.

Revenue Breakdown

• Total Revenue (Q4 2025): $9.91B (+5.4% YoY)
  • Beverage Revenue: $5.94B (60.0% of total)
  • Other Revenue by Product 1: $2.08B (21.0% of total)
  • Food Revenue: $1.88B (19.0% of total)
  • Growth is powered by modest increases across all segments, with Other Revenue by Product 1 leading at +8.0% YoY, reflecting strength in packaged goods and merchandise amid core beverage demand.

Gross Profit and Margins

• Gross Profit: $1.55B (15.6% gross margin)
  • Cost of Revenue: $8.36B (+17.8% YoY)
  • Starbucks maintains moderate margins due to a scalable store-based model with pricing power on premium products, though pressured by rising commodity costs like coffee beans and labor.
• Most costs come from cost of revenue (primarily food, beverage, and packaging ingredients), with no significant R&D allocation reported.

Operating Income and Expenses

• Operating Income: $0.91B (+-18.9% YoY, 9.2% margin)
• Operating Expenses: $0.64B (+-51.2% YoY)
  • R&D: Not applicable (N/A)
  • SG&A: $0.64B (+-4.1% YoY, 6.4% of revenue) — Covers store operations, marketing, and administrative costs, with reductions likely from efficiency gains and cost controls.
  • Starbucks continues to control costs while maintaining efficiency through optimized store operations and supply chain improvements.

Net Income

• Pre-Tax Income: $0.76B (+-25.2% YoY, 7.7% margin)
• Income Tax: $0.47B (61.7% effective tax rate)
• Net Income: $0.29B (+-62.4% YoY, 3.0% net margin)
• Starbucks converts a moderate portion of sales into profit due to efficiency in operations and pricing power, offset by elevated tax expenses and cost pressures.

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What Drives Starbucks's Money Machine?

• Beverage Revenue: 60.0%+ of revenue / Core driver from handcrafted drinks like lattes and frappuccinos sold in stores worldwide.
• Store Traffic and Loyalty Program: Digital app orders and rewards program boost same-store sales, supporting overall 5.4% revenue growth.
• Packaged Goods Expansion: Investments in retail channels for bagged coffee and merchandise, yielding fastest segment growth at 8.0% YoY.
• International Growth Areas: Emerging markets like China, though facing near-term headwinds from economic pressures—not yet fully profitable at scale.

Visualizing Starbucks's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs, 3.0% of revenue drops to the bottom line.

Key Takeaways

• Starbucks's money comes overwhelmingly from Beverage Revenue
• High gross and net margins illustrate the power of Starbucks's premium brand and store network
• Heavy investment in store operations, balanced by efficiency in operating costs
• Ongoing growth is driven by packaged goods and digital loyalty

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FAQ About Starbucks's Income Statement

1. What is the main source of Starbucks's revenue in 2025?

Starbucks generates over 60% of its revenue from Beverage Revenue. Additional revenue sources include Other Revenue by Product 1 21% and Food Revenue 19%.

2. How profitable is Starbucks in Q4 2025?

Starbucks reported net income of $0.29B in Q4 2025, with a net margin of approximately 3.0%, reflecting moderate profitability driven by pricing power offset by high cost of revenue growth and taxes.

3. What are the largest expense categories for Starbucks?

The biggest expenses on Starbucks's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A investment reached $0.64B in Q4 2025, as Starbucks prioritizes store operations and marketing.

4. Why does Other Revenue by Product 1 operate at a loss?

Other Revenue by Product 1, despite generating $2.08B in revenue, contributes to overall pressures as Starbucks aggressively invests in retail expansion and supply chain, believing these will drive long-term growth—even if margins are tight today.

5. How does Starbucks's effective tax rate compare to previous years?

Starbucks's effective tax rate in Q4 2025 was 61.7%, higher than previous years. This high rate is primarily due to international tax structuring and discrete items impacting the quarter.