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Starbucks has lost its way. I said so on this week’s Watson Weekly, and Jess spent the episode telling me I’m wrong. The numbers give her a decent case.

Global comparable store sales rose 7.9% in the quarter that ended June 28. Transactions were up 4.2% and average ticket was up 3.5%. Starbucks says that makes four consecutive quarters of comp growth. I pay most attention to transactions, because a price increase can’t produce them, and a 4.2% rise means more people came through the door.

North America comps were down 1.9% in the same quarter a year earlier. Add the two years together and North America is up about 6% (my math, 8.1% on top of minus 1.9%). That’s a recovery from a bad year, and I’d want to see another year of it before I call it growth.

Consolidated net revenue fell 1% to $9.3 billion, mostly because Starbucks moved its China stores into a licensed joint venture. Fewer company-run stores in China means less revenue on the top line, whatever comps do.

Niccol’s store uplift program puts rugs and comfortable seating into stores at roughly $150K each, and up to 9,000 company-owned North American stores could get one. Jess loves this. I have comfortable chairs at home. When I walk into a Starbucks I want good coffee, and I don’t want to wait 25 minutes for it behind a wall of mobile orders.

Niccol has also brought back handwritten Sharpie names on cups and rolled out a new six-point strategy. Most of what I hear from him is about service and the feel of the store, and very little is about making the coffee or the food better. A plan with six priorities tells me the company hasn’t decided which one comes first.

Jess thinks consistency is what keeps people coming back, along with cake pops for the kids and pink drinks for Gen Alpha. She may understand how most customers behave better than I do. I still think Starbucks has to choose what it wants to be.

It could accept being the McDonald’s of coffee, reliable and everywhere. It could go back upmarket through Reserve, closer to the brand that once sold the most expensive cup on the block. I lean toward a Yum Brands-style parent company that owns several chains. Starbucks can’t add many more stores in its home market without opening across the street from itself. Buying a second concept, maybe one that takes on Dunkin’ with donuts, would give it room to grow.

Investors have been cautious. Shares jumped about 21% the day Niccol was named CEO. CNBC puts the gain since he actually took over at roughly 9%, so most of the stock’s move came on the announcement and not much has followed in the two years since.

From here Starbucks laps quarters when Niccol’s comps were already growing, which makes the next increases harder to post. If they slow, I expect the board to start asking him harder questions. Jess disagreed with me on that as well, and we’ll come back to it after the next earnings report.

Amazon is closing the grocery partner storefronts it runs for other retailers on Amazon.com. The company confirmed the move to Grocery Dive this week but wouldn’t say how many storefronts are affected or which grocers own them.

Amazon blames customer friction, because shoppers faced different fees and delivery windows depending on which grocer’s storefront they used. I don’t buy that as the main reason. Those fees and windows were there when the partnerships started, and Amazon was happy to live with them while it lacked a fresh delivery network of its own. Now it has one, and the partner storefronts compete with it.

The replacement offer moves the grocer from seller to supplier. A grocer that hosts lockers is giving Amazon floor space and foot traffic, and one that moves onto AWS is paying Amazon for infrastructure. Neither option puts the grocer’s own products in front of Amazon shoppers. Amazon hasn’t named any grocer that has signed up, and none of the former partners has said publicly what it plans to do.

Miami Dinner
Date & Time: Tuesday, October 20th from 6-9p ET
Location: Miami
Host: ClearEngine
Eligibility: Manager+, full-time at multichannel eCommerce brands
Description: An evening over king crab at Klaw, trading notes on what actually moved the needle this year, and what didn't, with retail and ecommerce leaders who've been in the trenches.

Confirmed RSVPs: Function of Beauty, 5 SENS & More!

Request a seat here!