Raphael Stevens

Macy’s posted preliminary third-quarter results but delayed its full earnings report as it investigates an accounting issue.
The company said it discovered erroneous reporting of delivery expenses from one employee.
The retailer said third-quarter sales fell, and expects to post full-year guidance by Dec. 11.

A shopper carries a Macy’s bag on Market Street in San Francisco, California, US, on Wednesday, Nov. 13, 2024. 
David Paul Morris | Bloomberg | Getty Images

Macy’s on Monday posted preliminary third-quarter results and said it would delay its full earnings release as it completes an investigation of an accounting issue.
The company was slated to report its quarterly earnings before the opening bell on Tuesday.

In a statement Monday, Macy’s said its third-quarter sales fell 2.4% to $4.74 billion. Comparable sales for its owned and licensed businesses, plus its online marketplace, dropped 1.3%.
Macy’s did not post earnings figures for the third quarter. The retailer said it expects to release its full results, along with fourth-quarter and full-year guidance, by Dec. 11.

Macy’s said it found “an issue related to delivery expenses in one of its accrual accounts” while preparing its quarterly results. After an independent investigation, the company found that one employee who handled “small package delivery expense accounting” made erroneous entries to hide about $132 million to $154 million in delivery expenses from the fourth quarter of 2021 through this year’s fiscal third quarter. The company said it had about $4.36 billion in delivery expenses during that time.
The retailer added the actions did not affect its cash management and vendor payments, and said the employee no longer works at the company.
“At Macy’s, Inc., we promote a culture of ethical conduct. While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season,” CEO Tony Spring said in a statement.

In the news release, Spring touted progress on efforts to close struggling namesake stores and get back to growth. It has been stepping up staffing and merchandising efforts at 50 of its Macy’s stores and plans to open more locations of Bloomingdale’s and Bluemercury, its two stronger performing brands.
In the three-month period, the company said that comparable sales at the first 50 of its Macy’s stores to get additional investment rose 1.9% year over year. That marked the third consecutive quarter of growth at those stores.
At Bloomingdale’s, comparable sales rose 3.2% on an owned-plus-licensed basis, including the third-party marketplace. And Bluemercury comparable sales rose 3.3%, marking the 15th consecutive quarter of comparable sales growth for the beauty brand.
That owned-plus-licensed metric includes owned and licensed sales, which encompass merchandise that the retailer owns and items from brands that pay for space within its stores, along with the company’s third-party online marketplace.
Macy’s announced in February that the company would close about 150 – or nearly a third – of its namesake stores and invest in the roughly 350 locations that remain. It plans to close the locations by early 2027. It has been selling some of those mall anchor stores, but has not disclosed which ones.
In the release on Monday, Macy’s said asset sale gains totaled $66 million and were higher than its expectations.
At the Macy’s stores that will remain open, comparable sales were down 0.9% on an owned-plus-licensed basis, including the third-party marketplace.
Spring said comparable sales in November at all three brands are “trending ahead of third quarter levels.”
Macy’s credit card revenues dropped $22 million, or 15.5%, year over year to $120 million for the quarter. That was offset, in part, by growth of Macy’s Media Network, the company’s advertising business. Revenue rose by $5 million, or 13.9% year over year, to $41 million in the quarter.
Macy’s shares fell about 3% in premarket trading Monday.
This story is developing. Please check back for updates. More

After years of spending capital freely on all-electric and autonomous vehicles, automakers are starting to pull back.
It takes a significant capital investment every time an automaker launches a new product or updates current models, causing a spending ripple effect throughout the global supply chain.
Now, General Motors and Ford Motor are cutting billions in fixed costs, including laying off thousands of workers, while others such as Nissan Motor, Volkswagen Group and Chrysler parent Stellantis are taking even more drastic measures to reduce headcounts and trim spending.

Electric vehicle start-up Lucid on Sept. 28, 2021 said production of its first cars for customers has started at its factory in in Casa Grande, Arizona.

DETROIT — The auto industry has an addiction. It’s a “capital junkie” that’s been on a yearslong binge of unprecedented spending on all-electric and autonomous vehicles. And now, it’s waking up from the bender and entering rehab.
Automakers from Detroit to Japan and Germany are attempting to lower costs and reduce expenses amid economic concerns, billions of dollars wasted on self-driving vehicles and a prolonged, if not uncertain, return on investment in EVs amid slower-than-expected adoption.

Those issues come in addition to weakening consumer demand, higher commodity costs, and some Wall Street analysts sounding the alarm about global automotive sales and profits peaking, as China’s industry continues to expand.
General Motors and Ford Motor are cutting billions in fixed costs, including laying off thousands of workers, while other automakers such as Nissan Motor, Volkswagen Group and Chrysler parent Stellantis are taking even more drastic measures to reduce headcounts and trim spending.
“Western [automakers] are increasingly focusing on capital efficiency, meaning likely lower spending, more collaboration, and restructured EV portfolios to prioritize profits,” Morgan Stanley analyst Adam Jonas said in a September investor note.

The automotive industry is a global web of companies producing tens of thousands of parts to assemble a new vehicle. It requires significant capital investment every time an automaker launches a new product or updates current models, causing a spending ripple effect throughout the global supply chain.
But in recent years, automakers have put such investments in overdrive with self-driving and electric vehicles. Companies invested tens of billions of dollars into the technologies, most with little to no short- to midterm returns on their investments.

Research and development costs, as well as capital spending for the top 25 automotive companies, have increased 33% from roughly $200 billion in 2015 to $266 billion in 2023, according to auto consulting firm AlixPartners.
Such costs for GM increased about 62% from 2015 to 2023, to $20.6 billion (excluding sold European operations), despite a 38% drop in global sales during that time. That compares with other increases during that timeframe of 42% for Volkswagen; 37% for Toyota Motor; 27% for Fiat Chrysler’s successor Stellantis; and 18% for Ford.
EV startups Rivian Automotive and Lucid Group have burned through $16 billion and $8.8 billion, respectively, in free cash flow since 2022. Both companies are attempting to ramp up vehicle production and narrow their losses.
It’s not the first time the auto industry has blown through money to then attempt quickly to cut costs. These kinds of periods happen in cyclical industries such as autos, but could the spending have potentially been avoided — or at least alleviated — this time around?

Capital junkie

The latest cost-cutting cycle comes nearly a decade after an infamous Wall Street presentation by late-Fiat Chrysler CEO Sergio Marchionne called “Confessions of a Capital Junkie.” The April 2015 report highlighted the industry’s massive capital spending on overlapping or niche products that Marchionne was convinced could be solved through consolidation and shared capital spending.

Fiat Chrysler CEO Sergio Marchionne
Brendan McDermid | Reuters

The report, made by Marchionne amid failed merger attempts with Fiat Chrysler that included GM, has reemerged as automakers cut costs and announce tie-ups between companies such as Volkswagen and Rivian Automotive as well as GM and Hyundai Motor to share costs.
“We believe the concepts within this deck [are] highly insightful and as relevant today as ever,” Jonas said in a November 2023 investor note invoking Marchionne’s junkie manifesto, which he has continued to reference.

‘The Sergio Quotient’

Using a measurement called “The Sergio Quotient,” Jonas points out that the average S&P 500 company spends its market cap in capex plus research and development in about 50 years.
GM and Ford spend their market cap in 1.9 and 2.6 years, respectively. Only Volkswagen, at 1.8 years, was lower than GM among traditional automakers. Toyota was the best suited, at 14.4 years.
As of September, Ford and GM ranked 402 and 403 out of 406 nonfinancial companies in the S&P 500 regarding their capital spend compared with their market cap.
Former Ford executive Joe Hinrichs brought up Marchionne’s 2015 manifesto during an automotive conference this summer, condemning the industry for its capital waste.

“The auto industry is famous for destroying capital. That’s a bad thing,” said Hinrichs, now CEO of railroad company CSX. “If you waste billions of dollars on autonomous vehicles or billions of dollars on electrification, you should be held accountable. That’s shareholder money.”
Most capital spending by automakers isn’t wasted, but the industry isn’t as efficient as other sectors, with minimal return on invested capital.
The ROIC of traditional, mainstream automakers is roughly seven or less, while tech companies such as Google parent Alphabet are at roughly 22, according to FactSet.
“We’ve seen major CapEx spend with extended ROIs, given the slowdown … and low utilization in manufacturing plants,” said Rebecca Evans, a principal at management consulting firm Roland Berger. “We have been looking extensively at cost.”
In particular, automakers have not seen ROIC on autonomous vehicles and EVs.
GM continues to invest in its embattled autonomous vehicle unit Cruise despite already spending more than $10 billion on it since acquiring the company in 2016.
Ford also has wasted billions of dollars on warranty and recall costs as well as strategy shifts. It recently canceled production of a three-row electric SUV after significant development cost the automaker roughly $1.9 billion in expenses and cash expenditures. That included $400 million for the write-down of certain product-specific manufacturing assets.

Rehab

After years of spending, Nissan, Volkswagen and Stellantis are conducting massive business restructurings that include layoffs, production cuts and other cost-saving measures. Others such as Ford, GM, and EV startups Lucid and Rivian are attempting to lower costs but their efforts are not as severe as the others.
“Have we got to cut costs with every car we’re making? Absolutely,” Lucid CEO Peter Rawlinson told CNBC in October, citing the company’s cost-cutting task force. “We’re working assiduously on that.”

Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.
Andrew Kelly | Reuters

Volkswagen is in the midst of a massive cost-cutting program that uncharacteristically involves layoffs and potential plans to shutter plants in its home country of Germany.
VW Chairman and CEO Oliver Blume said in an interview published earlier this month that such actions are needed to remedy years of ongoing problems at the German carmaker, which reportedly expects to spend 900 million euros ($975.06 million) to execute the turnaround.
“The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW,” Blume told German paper Bild am Sonntag, according to Reuters.
The rise of Chinese automakers has been eating away at the profits of traditional automakers such as VW, GM and others that were once dominant players in China – the world’s largest car market that has quickly moved from being a consumer of vehicles to exporter.
Nissan, Honda and BMW, among others, also blamed declines in China for missing earnings expectations or restructuring needs. GM, which has raked in billions from China, is restructuring operations there, including attempting to renegotiate with its major Chinese partner, SAIC.

Stock chart icon

Stocks of GM, Ford and Chrysler parent Stellantis in 2024.

While losing ground in China, GM has been among the most aggressive in spending on EVs and self-driving vehicles. But, to its credit, remains highly profitable and had roughly $27 billion of free cash flow at the end of the third quarter. It remains one of the standouts in balancing investment and cost-cutting efforts, while remaining profitable.
GM CFO Paul Jacobson on Wednesday reconfirmed plans for the automaker to level capex to around $11 billion going forward.
“What we’ve established over the last couple of years, I think, is a pretty disciplined track record of capital expenditures,” Jacobson said during a Barclays conference. “You want to be in an organization that has more ideas than it can fund. Our job is to allocate that and prioritize it.”

Partnerships

Newer automakers such as Rivian and Lucid are cutting costs and raising capital to stay afloat as the companies continue to lose tens of thousands of dollars on each EV they sell.
Lucid’s largest shareholder, Saudi Arabia’s Public Investment Fund, has invested billions of dollars into the company, while Rivian has teamed up with Volkswagen for an up to $5.8 billion software deal, which is expected to close by the end of this year.

A provided image of Oliver Blume, CEO of Volkswagen Group and RJ Scaringe, founder and CEO of Rivian, as the companies announce joint venture plans on June 25, 2024.
Courtesy: Business Wire

GM and Hyundai this summer entered into an agreement to explore “future collaboration across key strategic areas” in an effort to reduce capital spending and increase efficiencies. The companies have not announced any actions since then.
Marchionne argued such partnerships were effective but not enough going forward. He said companies could save billions of dollars annually in capital by sharing costs involving commoditized parts such as transmissions, standardized safety equipment and advanced driver assistance systems.
“It’s fundamentally immoral to allow for that waste to continue unchecked,” Marchionne said in the three-hour conference call with global industry analysts in 2015. “Something needs to give. It cannot continue like this.”

Mary Barra, chair and CEO of General Motors, and Euisun Chung, executive chair of Hyundai Motor Group, during the signing of an agreement between the two companies to explore future collaboration across key strategic areas.
Courtesy image

Some things have changed, but there have not been large systemic shifts. Major automotive industry mergers and joint ventures don’t always result in long-term successes. Many fall apart before producing significant results.
Both VW and Rivian have experienced such failures with Ford in recent years. Rivian and the Detroit automaker canceled plans to codevelop EVs two years after Ford took a 12% stake in the startup in 2019. Around that time, VW also announced a $2.6 billion deal with Ford for autonomous vehicles that didn’t pan out.

Stellantis

Stellantis — formed through the merger of Fiat Chrysler and French automaker PSA Groupe in January 2021 — has proven that not all mergers enacted to produce scale guarantee a profitable company. After a record profit last year, the company has struggled in 2024.
While Stellantis CEO Carlos Tavares has touted achieving roughly $9 billion in cost reductions following the merger, the automaker has mismanaged the U.S. market — its prime cash generator — with a lack of investment in new or updated products, historically high prices and extreme cost-cutting measures.

Carlos Tavares, chief executive officer of Stellantis NV, speaks during a news conference at the Fiat automobile manufacturing plant in Kragujevac, Serbia, on Monday, July 22, 2024. 
Oliver Bunic | Bloomberg | Getty Images

When asked by Bernstein analyst Daniel Roeska about Stellantis not performing to “capital junkie” standards despite the massive merger, Tavares said the company achieved the scale needed to be more efficient but it’s still working on a product blitz and correcting mistakes in North America.
Tavares said Stellantis remains more profitable than Fiat Chrysler and PSA were on their own. He also cited impacts of “regulatory chaos,” a reference to U.S. and Europe standards for EVs and emissions.
“Stellantis is the concrete expression of the scale that you need to have to use the resources of your shareholders in a meaningful way. So, that’s what we did. FCA was too small,” Tavares said when discussing first-half results in July. “PSA was too small. Stellantis has the right scale. That’s an answer that I’m sure Sergio would recognize.”

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Mango, the privately held Spanish retailer, is in the middle of opening more than 60 new stores in the U.S. as part of a broad expansion plan.
The company is looking to position itself as a more premium brand and shed its fast-fashion identity.
“We are trying to elevate,” CEO Toni Ruiz told CNBC. “We think that our customer appreciates a lot this creativity, this design, this own style. So this is why we are pushing a lot, not only in terms of quality, design and also, why not prices?”

Mango flagship store on Fifth Avenue in New York City.
Courtesy: Mango

Spanish retailer Mango is embarking on a bold expansion plan in the U.S. as it looks to shed its fast-fashion image and position itself as a premium brand.  
The privately held company, headquartered in Barcelona, plans to open 42 new storefronts in the U.S. by the end of the year and aims to launch 20 more in 2025, primarily in the Sun Belt and Northeast, Mango CEO Toni Ruiz told CNBC in an interview. 

The $70 million expansion plan includes a new logistics center outside of Los Angeles and about 600 new jobs, bringing the company’s U.S. headcount to about 1,200 employees by next year. 
“This is a long-term commitment,” Ruiz said. “We have also the opportunity to have bigger stores in the U.S.,” he noted, adding Mango will open some multiline stores that feature men’s and kids’ items.
Mango’s sales grew more than 10% in the U.S. this year and the company expects to see double-digit growth again next year. 
Currently, Mango’s largest market is its home base in Spain. While the U.S. is among its top five markets, the company is aiming to grow sales in the region so it can breach the top three. The goal is part of a larger strategic plan at Mango focused on growing sales from about 3.1 billion euros annually to 4 billion euros by 2026.
Mango, known for its European chic basics, is looking to reposition itself as a premium brand and signal to consumers that it is not a fast-fashion label. Its design process takes between seven and eight months, and everything is designed in-house in Barcelona, Ruiz said. 

“Internally we have all the design, all the patterns, all the fittings — this is very important for us so 100% is done here. We also have 500 people taking care of the product from end to end,” said Ruiz. “We are trying to elevate. What does it mean, elevate? We think that our customer appreciates a lot this creativity, this design, this own style. So this is why we are pushing a lot, not only in terms of quality, design and also, why not prices? Because our proposal is getting better.” 
Ruiz said Mango’s U.S. growth plans are focused on stores because a physical presence will allow the company to get closer to its consumer and tell its story in a new way.
The company follows a string of other international competitors such as Sweden’s H&M, Spain’s Zara and Japan’s Uniqlo that have turned to the U.S. market for growth. They are all competing to win over the average American household, which spends on average about $2,000 annually on clothes, according to a Lending Tree study.
Mango has opened stores in Pennsylvania; Washington, D.C.; and Massachusetts, but has turned its sights to the Sun Belt for its next phase of growth, driven by insights from e-commerce.
Mango’s website now represents about 33% of overall sales and helps the retailer determine where its customers are shopping from and what they are buying, said Ruiz. 
“It’s a big challenge for us, because we have understood that every state in the U.S. is like a country in Europe, so because of the customer, because of the way of dressing,” said Ruiz. “It’s very important to understand the difference between the states. … So this is why we try to go step by step.” 

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Universal’s “Wicked” is expected to snare $114 million during its domestic opening, the highest debut of a Broadway adaptation in cinematic history, according to Sunday estimates.
Paramount’s “Gladiator II” is expected to open with $55.5 million in ticket sales domestically, according to Sunday estimates.
Although “Glicked” did not quite reach the same level as last year’s “Barbenheimer,” this weekend’s tally will help bolster the overall annual box office, which lags around 11% behind 2023 levels during the same period.

Cynthia Erivo and Ariana Grande star as Elphaba and Glinda in Universal’s “Wicked.”

The box office was a popular destination this weekend as Universal’s “Wicked” and Paramount’s “Gladiator II” arrived in cinemas.
“Wicked” is expected to snare $114 million during its domestic opening, the highest debut of a Broadway adaptation in cinematic history, according to Sunday estimates. Globally the film is set to take in $164.2 million.

Tracking projections for “Wicked” started around $80 million in late October, but rose to a range of $120 million to $140 million. Hollywood has struggled to market and make a profit on movie musicals in recent years. However, the industry has also seen fan-favorite IP-driven titles outperform. With “Wicked” being based on one of Broadway’s most popular musicals, box-office analysts found it tricky to predict where it would land.
However, at its $114 million tally, the film will earn the third-highest domestic opening of 2024 behind Disney and Marvel’s “Deadpool & Wolverine,” which took in $211 million in July, and Disney and Pixar’s “Inside Out 2,” which grabbed $151 million in June.
Meanwhile, “Gladiator II” is expected to open with $55.5 million in ticket sales domestically, according to Sunday estimates. This is lower than box office expectations, which called for a haul between $60 million and $80 million. Globally, the film is set to reach $221 million by the end of the weekend, after opening in international locations earlier this month.
“As arguably the most talked about weekend of 2024, this $200 million plus pre-Thanksgiving frame has delivered big with the one-two punch of ‘Wicked’ and ‘Gladiator II’ serving up a perfectly orchestrated, irresistible moviegoing combination with appeal to basically every demographic on the planet,” said Paul Dergarabedian, senior media analyst at Comscore.
Although “Glicked” did not quite reach the same level as last year’s “Barbenheimer,” the combo of Universal’s “Oppenheimer” and Warner Bros.’ “Barbie,” this weekend’s tally will help bolster the overall annual box office, which lags around 11% behind 2023 levels during the same period. Both films are expected to continue to drive ticket sales at theaters through Thanksgiving and Christmas.

“Once again, it’s clear that when healthy competition meets premium experiences, the marketplace thrives, and consumers win,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners. ” The success of movies like ‘Wicked’ and ‘Gladiator II,’ not to mention hearty presales already for ‘Moana 2,’ demonstrates just how much movie fans of all ages enjoy going to the movies.”
Disney’s “Moana 2” is expected to haul in $100 million over the five-day Thanksgiving period, according to box office analysts.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Wicked” and “Oppenheimer.” More

New Starbucks CEO Brian Niccol is tasked with reversing the coffee giant’s sales slump.
He said airports, where consumers often face long lines, are one area in particular that could be improved.
Airport concessions will be put to the test in what airlines expect to be the busiest Thanksgiving travel period ever.

Customers wait in a long line at a Starbucks cafe in a terminal at Miami International Airport, in Miami, Dec. 12, 2022.
Jeff Greenberg | Universal Images Group | Getty Images

Air travelers face a host of headaches on their journeys: slow security lines, long waits for plush lounges, the threat of delays or cancellations — and the airport Starbucks.
Many travelers, flight crews and even airport employees have at some point encountered long wait times for their Starbucks cappuccinos, cold brews and egg bites.

“They need to have a better system,” said Coresa Barrino, a Starbucks patron at New York’s LaGuardia Airport Terminal B earlier this month who said she had been waiting 10 minutes and counting for her coffee. The nursing assistant, who was taking a flight back to Charlotte, North Carolina, said the wait when she buys her coffee at a Starbucks in Charlotte is about two minutes.
The long waits have caught the attention of the coffee chain’s new CEO, Brian Niccol, who joined Starbucks from Chipotle in September, pledging to win back customers and reverse the company’s sales slump.
Niccol told investors he thinks that licensed locations, such as those inside Target stores or airports, are interested in following the company’s strategy of “getting back to Starbucks.”
“When I think about the airports and such, there’s such a huge opportunity for us to simplify some of the execution there so that we get people the great throughput that they want so they can get on their way,” Niccol said on the company’s quarterly conference call Oct. 30.
Starbucks’ airport location staff — and company technology — will be put to the test this week during some of the busiest travel days of the year. The Transportation Security Administration forecast a record number of travelers during Thanksgiving week and said Sunday, Dec. 1, could be the busiest day of the year, with more than 3 million people screened at U.S. airports.

The surge in air travel, especially during peak times such as Thanksgiving, has led to congestion in airport security lines, in lounges and at gates — problems that airlines and the federal government are trying to fix. For the aviation industry, bottlenecks at airport Starbucks are just another sign of soaring demand and overcrowded airports.
A record 1.05 billion people boarded airplanes going either to, from or between U.S. airports in 2023, narrowly topping the total in 2019, before the pandemic, according to the U.S. Department of Transportation.

Struggles and fresh approaches

Starbucks has recently struggled. Its sales fell for the third straight quarter in the period ended Sept. 30, as consumers pushed back against higher prices and ignored initiatives such as discounts and energy drinks aimed at bringing customers back. Same-store sales in the U.S. declined by 6% from a year earlier.
In late October, Niccol unveiled plans aimed at improving customers’ experiences and reviving the company’s sales, from bringing back condiment bars, to eliminating surcharges for dairy alternatives and cutting down the menu.
Cutting wait time is a key goal: He wants to trim service times down to four minutes, which would shrink long lines and improve the customer experience.
And while Starbucks started rolling out mobile order and pay to its airport locations in 2022, the change can sometimes add to the confusion and chaos at the cafe counter instead of resolving it. Plus, some travelers might not be regular Starbucks customers who already have the app downloaded.
Improving the coffee chain’s airport outposts could boost both sales and the brand’s reputation during a time when it needs it most. Even the customers Starbucks has lost might visit an airport location while they’re traveling.
With travelers returning in droves after the pandemic, it gives Starbucks and other restaurant chains a chance to boost sales.

Concessions contribute about 4% of U.S. airport revenue annually, according to the latest available Federal Aviation Administration data, but they’re an important feature to many passengers, who have limited time — and, often, energy — to fuel up before a flight.
At Dallas Fort Worth International Airport, revenue from food and beverage outlets is growing faster than passenger numbers, said Jennifer Simkins, the airport’s assistant vice president of concessions. The airport has become the world’s third-busiest for passengers, up from 10th place in 2019, according to Airports Council International.
Airlines are also packing more seats on their aircraft and in some cases are flying larger jets.
More passengers per plane means restaurants can become crowded during peak times with more customers waiting to be served and space limited, said Ursula Cassinerio, an assistant vice president at Moody’s Ratings who covers airports.
She noted that many airports have been undergoing major renovations, if not building new terminals. That means “more opportunities for revenue if you have more square footage for retail and restaurants,” she said.
The 25 busiest airports in the U.S. have an average of 80 food and beverage brands as options for travelers, according to data from market research firm Technomic.

Licensing model

A challenge for Starbucks is that licensees — not Starbucks itself – operate its airport locations.
Starbucks opened its first airport location with licensee HMSHost in 1991 at Seattle-Tacoma International Airport, which serves Starbucks’ hometown.
For nearly three decades, HMSHost operated the chain’s airport locations through an exclusive deal with Starbucks and gradually grew its airport footprint to roughly 400 outposts.
But in 2020, HMSHost ended the deal, giving the operator flexibility to offer more coffee options to airports.
While HMSHost still operates the overwhelming majority of Starbucks’ airport cafes, more operators, such as Paradies Lagardere and OTG, have since taken a swing at it.
HMSHost, Paradies Lagardere and OTG did not respond to requests for comment for this story.
“Airport locations are tricky because they can make good money, but operationally, at times, they can be very challenging,” said Mark Kalinowski, restaurant analyst and CEO of Kalinowski Equity Research.

Customers wait in line at a Starbucks cafe in a terminal at LaGuardia Airport in New York City, Nov. 11, 2024.
Leslie Josephs/CNBC

Licensing its stores saves Starbucks the hassles of operating inside an airport, such as staffing problems, high rents and security checkpoints. And though the coffee chain is used to handling a surge of undercaffeinated customers in the mornings, the swell in demand at an airport can be even more erratic.
“A plane lands, and all of a sudden there’s a hundred people when there were zero people there before,” said Kevin Schimpf, director of industry research for Technomic.
The trade-off is that Starbucks makes less money from those licensed restaurants.
The company has more than 16,300 locations in the U.S. as of Sept. 24. But it only runs about 60% of those cafes itself; licensees operate the rest. That number includes its cafes in 47 of the 50 busiest airports in the U.S., according to Starbucks. The company did not disclose its current airport store count to CNBC.
In fiscal 2024, licensed locations accounted for 12% of Starbucks’ revenue, or $4.51 billion. From those stores, Starbucks collects only licensing fees, a percentage of monthly sales through royalties, and payments for supplying its coffee, tea and food to licensees, according to company filings.
For every dollar spent in a licensed store, Starbucks generates about 7 cents of earnings before interest, taxes, depreciation and amortization, according to estimates from Bank of America analyst Sara Senatore. Company-owned stores make about 23 cents per dollar spent, Senatore wrote in a research note in September.

If its business partners and third-party providers slack off, Starbucks’ brand could be damaged, the company noted in the risk factors section of its latest annual filing.
“The vast majority of customers, they don’t know whether that is a company-owned Starbucks or a licensed Starbucks,” Kalinowski said. “They just want their Starbucks. They want it made properly. They want it quickly. And they’re in a situation of heightened stress because they’re trying to get to their gate.”
Airports themselves have been adopting more technology in their restaurants to help move lines along.
Labor challenges have led to more kiosks and tablets inside airport restaurants, for example.
“It’s harder and harder to staff a lot of these restaurants, so any front-of-house savings that you can make by having consumers order on kiosks or tablets or whatever, that really, really helps,” Schimpf said.
Laurie Noyes, vice president of concessions and commercial parking at Tampa International Airport, said that “sometimes the airports are a little bit behind the street.” But she said the airport has made strides in offering more digital options and now, travelers can order food ahead of time via Uber Eats, and pick it up at airport restaurants.
Dallas Fort Worth offers DFWOrderNow, a website and platform available at digital kiosks so travelers can order food ahead. Simkins said the airport’s platform will reroute Starbucks customers to Starbucks’ own platform. Starbucks offers more than 170,000 possible drink orders, according to the chain’s website. “We just found the value in keeping the familiarity for their customers,” Simkins said.
Simkins said the airport is developing robotic technology for delivery to speed up service. It’s also experimenting with offering meal and retail bundles from airport restaurants and shops, she said, so passengers “no longer have to plan their route for multiple stops” in an airport.
A local coffee company, Fort Worth, Texas-based Ampersand, plans to open a robotic barista at DFW’s Terminal C, Simkins said. It will be available 24/7, to accommodate flight crews arriving at off-hours. 
Simkins said popular chains still draw a crowd.
“There are some brands that people will line up for,” she said.
For Barrino, who was waiting for her coffee at LaGuardia, Starbucks is one of those companies.
“I just really love the brand,” she said. More