Starbucks didn’t fix sales. It fixed behavior.

Starbucks’ biggest sales day came from … a cup

Starbucks just posted its largest North America sales day ever driven by something trivial on the surface: a reusable cup.

Red Cup Day 2025 drove a +44.5% spike in traffic, beating even the viral Bearista Cup launch (+37.5%). Foot traffic exceeded both 2023 and 2024, a rare multi-year high for a brand that’s been fighting for relevance.

That matters because Starbucks has been in a real turnaround:

• First negative U.S. comps in years

• Throughput + mobile order breakdowns

• Youth relevance wobble

• Intensifying competition (Dutch Bros, indie cafés, matcha, functional beverages)

Enter Brian Niccol (ex-Chipotle), hired to restore ops discipline and brand heat. This is one of the first real proof points.

What actually worked
The Bearista Cup created frenzy: pre-dawn lines, sellouts, resale markets, viral clips.
Red Cup Day followed a week later and converted hype into sustained traffic, not just a one-day spike.

What this says about the consumer
Despite inflation and value sensitivity, demand still responds to:

• Scarcity + drop culture

• Small, accessible luxuries

• Products that double as social objects (Stanley, YETI, Labubu)

• Habit loops embedded in loyalty ecosystems

Starbucks still has unfair advantages:
40M+ Rewards members, frictionless mobile ordering, and seasonal ritual muscle memory.

If viral moments now meet improved store-level execution, Starbucks’ recovery narrative into 2026 gets real.

Is Costco taking the Trump administration to the Supreme Court?

What’s happening
Costco filed suit in the U.S. Court of International Trade challenging tariffs imposed under a self-declared national emergency.
Costco openly admits the final ruling will likely land at the Supreme Court.

Why this matters

• At Costco’s scale, tariff exposure is massive

• Even a low-probability SCOTUS win is economically rational

• Smaller importers don’t get this option; once they pay, it’s gone

The takeaway
Costco isn’t trying to change policy today.
It’s protecting its downside so if the tariffs fall later, it gets refunded.

This is balance-sheet warfare, not politics.

Dr. Jart+ and the great K-beauty reset

Estée Lauder is exploring a sale of Dr. Jart+, likely at a valuation far below the ~$1.7B it paid in 2019.

This feels like the clearest signal yet that the first wave of global K-beauty M&A is being repriced.

The arc

• 2005: Founded in Seoul

• 2015: Estée buys a minority stake

• 2019: Full acquisition at ~$1.7B, with expectations of $500M+ sales

2025 reality
Dr. Jart+ is now expected to do ~$150M in revenue.

What went wrong

1. Heavy exposure to China + travel retail

2. New-school K-beauty surged (Beauty of Joseon, COSRX, Laneige)

3. Assortment bloat + discounting eroded hero SKUs

4. Estée is refocusing on true global engines (La Mer, MAC, Le Labo, Jo Malone)

What happens next
The buyer pool won’t resemble 2019, but interest will come; especially from:

• Asia strategics (LG H&H, Shiseido, Amore-adjacent players)

• PE hunting distressed global beauty assets

🎙 Podcast Highlight: The New Consumer Landscape: Capital Cycles, Moats & Market Reality

That was one of the simplest, and truest, lines from our recent podcast with Shamin Walsh (BAM Ventures).

A few ideas worth sitting with:

• Capital is abundant. Good partners aren’t.
  2014: ~300 VC funds.
  Today: ~6,000.
  Founders choose value-add now, not just checks.

• Consumer psychology > CAC math.
  Honey, PrettyLitter, Merit Beauty all won by asking less of the customer.

• “Brand vs performance” is a false dichotomy.
  Meta doesn’t build emotion, but brand doesn’t require glossy shoots either.
  UGC, communities, and distribution-led brand building often outperform.

• Capital efficiency is a feature.
  PrettyLitter raised ~$1.5M, became profitable, and exited sub-$1B.
  More capital ≠ better outcome.

• If forced to choose: distribution > product.
  The best product no one sees doesn’t matter.

• Great founders preserve optionality.
  Tariffs, pandemics, supply shocks, something always breaks.
  Don’t run so tight the next shock is existential.
  
  🎧 Watch on YouTube, listen on Spotify.
  
  Thanks to sponsors:  
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  ✈️ Go to Passport - for international shipping, compliance and localization

Deal Alert: Viral golf equipment brand exploring an exit.

Highlights:
~$6M revenue
~$1M EBITDA
Doubling year-over-year

Built and operated as a side project to date (main business just raised VC round), looking for a market-multiple exit.

Email: fan [at] thehedgehogcompany.com

That’s it for this week.
If you liked this issue, forward to a friend who obsesses over brand strategy, capital flows, or exit timing.

In the Money – following the flow of capital in consumer

P.S. We love talking to brands interested in exiting in the next 3-18 months. If you know of any brands interested in exiting, or any firms trying to help port cos manage turnarounds, we'd love to share a POV.

fan [at] thehedgehogcompany.com