Investors are once again viewing the coffee chain as a growth stock, betting on its potential for a significant turnaround.

Starbucks is successfully winning back customers during the morning hours. To regain investor confidence, however, it must conquer the afternoon market. The revenue structure of a typical Starbucks store reveals a distinct two-part pattern. Stores are typically open from early morning until late at night, yet over half of the sales (approximately $12 billion annually) in U.S. company-operated locations occur before 11 a.m. Once the morning caffeine rush subsides, the company enters a period of significantly lower customer traffic. The lights remain on and the baristas stay busy, but the flow of customers noticeably declines. If CEO Brian Niccol can make the afternoon hours as efficient as the peak period from 7 a.m. to 9:30 a.m., he could not only improve the profitability model of each store but also potentially restart the stock's growth after nearly five years of stagnation.

The goal is ambitious, but investors are currently showing approval of its performance. Buoyed by early positive earnings signals, the stock has risen 14% this year. Starbucks recently reported its strongest U.S. comparable store sales growth in two years, indicating improvements in operational efficiency and transaction volume. At an investor event late last month, the company projected revenue growth of 5% or higher by fiscal year 2028. The problem is that the stock price already reflects a successful recovery, partly due to Niccol's reputation as a "turnaround expert." Its forward price-to-earnings ratio is approximately 37, significantly higher than peers like McDonald's and Chipotle. To justify such a premium valuation, Starbucks cannot rely solely on recapturing the morning rush and refilling its sparsely occupied seats. The company's long-term goal is to add up to 5,000 new coffee shops in the U.S., but in the short term, it must drive organic growth. The afternoon daypart represents its best opportunity, but the path is challenging. Starbucks has attempted for years to build the afternoon into a genuine consumption peak rivaling the morning. Current investments—including increased staffing, faster equipment, and redesigned seating to enhance store appeal—could elevate the business further. Failure, however, would prove the current stock valuation excessive. Some of the most successful turnarounds in the restaurant industry have come from unlocking new dayparts. Fixed costs like rent and utilities remain constant, making it far more profitable to increase traffic during slow periods than to squeeze more customers into already busy hours. McDonald's revolutionized the fast-food profitability model by expanding its breakfast menu, introducing items like the Egg McMuffin and coffee, which carry much higher margins than beef products. Breakfast was so successful that growth exploded when the company made it available all day. Starbucks is now attempting the reverse: transforming into a true all-day snack and beverage brand. This creates a strategic tension. Under Niccol's "Back to Starbucks" plan, the company is publicly steering the brand back to its roots, even reinstating the name "Starbucks Coffee Company." Ceramic mugs have returned, and the concept of the café as a warm "third place" is being revived. But cafes must contend with consumers' caffeine limits. As the day progresses, Americans often shift towards sparkling beverages, iced tea, or cold-brew energy drinks, according to David Henkes, a senior principal at foodservice consultancy Technomic. To succeed, Starbucks must perform a delicate balancing act: restoring the classic café ambiance while reminding customers it also offers a full suite of drinks and snacks tailored for the afternoon. In effect, it needs to operate two Starbucks stores simultaneously. There are clear signs the company recognizes this. Starbucks is rolling out digital menu boards nationwide to prominently feature products more suited for the afternoon—such as matcha beverages, scones, and protein energy balls—and gradually guide customers toward new habits throughout the day. Emerging brands have demonstrated that afternoon demand is real. The rapidly growing drive-thru chain Dutch Bros generates nearly two-thirds of its customer traffic after the morning peak. These customers are typically younger and prefer brightly colored, highly customized energy drinks. Their growth indicates that the afternoon daypart is not inherently weak, just harder to crack. "We were a little late to the game in areas where these customers were explicitly saying they wanted a beverage experience," Niccol recently admitted to investors. As always, the risk is that Starbucks tries to do too much at once. New food items must be genuinely appealing and high-quality, not stale-tasting or overly processed, says David Ferreira, a veteran food industry consultant. "The food has to look and feel less industrial and more like what people expect from a coffeehouse." Adjustments are underway, and the company appears to be hitting the right notes. New products previewed at the investor day, including a strawberry matcha toast, looked appealing and on-trend. Small tweaks—like removing sugar from the matcha base—have already boosted that category. The company says tea revenue has grown about 70% since fiscal 2021, and tea is naturally a better fit for the afternoon than hot coffee. The underlying rationale is simple: While customization adds operational complexity, it allows customers to tailor drinks to their health goals and taste preferences, making it a powerful driver of growth. This explains why the company is launching new beverage platforms, including a new chai recipe and an energy drink made from green coffee extract. These products allow customers to adjust sweetness levels, with the energy drink even offering adjustable caffeine concentration. Starbucks's afternoon business is already substantial. But given its growth-stock valuation, bridging the gap between the 8 a.m. latte and the 3 p.m. energy boost is not just a goal—it is an imperative.