Starbucks Was Supposed To Stage A Comeback This Year — Instead, 2 Coffee Rivals Brewed Up Bigger Gains

• Starbucks said it would close 1% of its stores in North America and lay off 900 corporate employees as part of a $1 billion restructuring plan.
• According to a CNBC report, as of mid-September, Luckin has opened 5 locations in New York City.
• For fiscal 2025, Dutch Bros said total system shop openings are targeted to be 160 with a back-weighted pipeline in the fourth quarter.

When Brian Niccol took the reins at Starbucks last year, investors hoped 2025 would mark the start of a turnaround for the struggling coffee chain. Instead, it appears there is still significant work ahead, with the recovery taking longer than expected.

In the meantime, two rival coffee companies have solidified their status as investor and consumer favorites, posting strong gains this year — one rebounding from a scandal-plagued period, and the other thriving on sustained drive-through demand.

Luckin Coffee had replaced Starbucks in China as the top go-to place for coffee in the region, even as its U.S. life was marked by accounting fraud and eventual bankruptcy. The company, which has now emerged from bankruptcy with new leadership, has been opening stores in the United States and has grown into the place people now look for coffee.

Along with Luckin, another coffee chain has seen a surge in demand. Dutch Bros has differentiated itself through protein drink offerings introduced in 2024, which have helped attract Gen Z consumers, whereas Starbucks added similar offerings to its menu only this year.

Starbucks Revamping, Luckin & Dutch Bros Expanding

While Starbucks has been working over the last year to bring its coffee house culture back under Niccol by cutting wait times to under four minutes, trimming menu items, and introducing more consumer-friendly products.

The company has now undertaken store closures in the United States and is also laying off some workers as part of the rehaul. It had said it would close 1% of its stores in North America and lay off 900 corporate employees as part of a $1 billion restructuring plan.

On the other hand, Luckin has been expanding rapidly in the U.S. According to a CNBC report, as of mid-September, Luckin has opened 5 locations in New York City.

Dutch Bros in the third quarter said it opened 38 new shops, 34 of which were company-operated, across 17 states. For fiscal 2025, the company said total system shop openings are targeted at 160, with a back-weighted pipeline in the fourth quarter.

Fundamentally Strong?

While Starbucks has seen a few quarters of struggling revenue and profit growth, Luckin and Dutch have steadily grown their revenues, with both hitting record sales numbers in the third quarter.

Luckin has been profitable in the last six quarters, and Dutch Bros has reported a net income for seven straight quarters. Starbucks, on the other hand, has seen its profit growth taper in the last year.

What Does Wall Street Think?

In mid-December, KeyBanc said that Dutch Bros represents one of the restaurant industry's most compelling growth stories, driven by mid-teens unit growth. While shares have outperformed peers in 2025, the performance has not fully reflected Dutch Bros' strong fundamentals, as sentiment around the fast-casual segment remains largely negative.

RBC Capital noted that the company has a long runway for unit growth in the U.S. with attractive unit economics, multiple long-term same-store sales drivers, and an opportunity to expand core profit margins. At the same time, its position as a "category creator of drive-thru only custom energy and coffee restaurants" resonates with Gen Z in particular.

In China, Starbucks has lagged in growth, and, as part of efforts to get back on track, the company recently said it would sell control of its operations in China to Boyu Capital in a deal that values the business at $4 billion.

In September, Macquarie analyst Linda Huang said China's coffee market is experiencing a boom as the number of coffee drinkers and per-capita consumption rise, and that Luckin has overtaken Starbucks as China's largest coffee chain, operating 26,000 stores as of mid-2025.

How Is Retail Reacting?

Retail sentiment on Starbucks jumped to ‘bullish’ from ‘bearish’ a month ago, with message volumes at ‘normal’ levels, according to data from Stocktwits. 

Sentiment on Luckin Coffee remained in the ‘bearish’ territory compared to a month ago, while on Dutch Bros, it was ‘bearish’ as well for the same period.

The number of Stocktwits users adding Dutch Bros to their watchlists rose about 26% over the past year, while Luckin saw a 9% increase over the same period.

Shares of Starbucks have declined nearly 7% so far this year, while Luckin’s OTC stock has gained over 33% and Dutch Bros’ shares have jumped 22% year-to-date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: Oklo Stock Is Exploding On AI-Energy Dreams — But Fundamentals Are Struggling To Keep Up

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