Starbucks built its empire on the morning coffee run, which has always been its biggest strength and its biggest blind spot.
That gap has been the focus of CEO Brian Niccol's turnaround plan since he took over, and on Thursday the company offered the clearest sign yet that the plan is starting to work.
Afternoon traffic in U.S. stores is climbing, with the biggest gains landing between 3 p.m. and 5 p.m., based on data the company shared with CNBC.
Mornings have always been Starbucks' stronghold, but the afternoon is where it has historically lost ground to fast-food chains and energy drink brands.
Refreshers - the company's lineup of cold, fruit-forward drinks - are now the second-best-selling beverage category behind espresso, and hours after 11 a.m. brought in $11 billion in U.S. sales in fiscal 2025.
That isn't a side hustle. It's a second business hiding inside the first one.
The latest traffic data covers the 90 days from February 15 to May 16, and company-wide traffic has now grown for the second straight quarter - a small but real signal that something is shifting in the chain's favor.
Niccol's view: He framed "building out an afternoon daypart" as "tremendous upside" for Starbucks during a January earnings call, arguing the chain has historically underperformed fast-food and beverage rivals later in the day.
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The afternoon coffee battle isn't only about Starbucks anymore, with Dutch Bros leaning into energy drinks and cold beverages aimed squarely at the post-lunch window.
Dunkin' has rolled out new beverages and snacks targeting the same crowd, which means everyone in the space sees the opportunity Niccol does - the question is who closes it.
TD Cowen upgraded Starbucks to buy from hold earlier this month and raised its price target to $120 from $106, with shares currently trading around $102 and up 21% year to date.
Analyst Andrew Charles said menu innovation, marketing, and digital menu boards should help drive ticket and traffic growth in the afternoon, supported by improved operations to keep Starbucks "top of mind for the coffee break."
That kind of consumer-stock setup is exactly the type of position a 60/40 portfolio investor would track closely heading into the back half.
The early traffic numbers are encouraging, but the real test is whether the lift holds through the rest of the year and whether ticket size - what each customer actually spends - climbs alongside it.
Niccol has spent months telling investors the afternoon was where the next chapter of growth would come from, and the latest data says that chapter is starting.
A coffee company that finally cracks the 3 p.m. slump is suddenly a very different business.
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