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6,600 | SBUX | 2 | 2,024 | 2024-04-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: And our next question comes from Peter Saleh with BTIG.
Peter Saleh: Great. I did want to ask about the Siren System. This was the focal point of the Investor Day a couple of years ago, and it seemed like it was put on the back burner for a little while, but now it seems like you're talking more bullish about this system going forward. So can you just give us an update? I think last we heard, it was going to be rolled out to less than 10% of the stores this year. What is the strategy now? And how does this help solve some of the issues you have? It sounds like some of the issues that you have are more in the supply chain and not necessarily within the four walls of the stores.
Laxman Narasimhan: Peter, just to respond to your question, first of all, the Siren System was never put on the back burner. In fact, we're on track to having the Siren System installed in less than 10% of the stores, much as we committed. So it's on track.
What we've added in here, though, is the underlying processes to ensure that we can reduce the wait time in the store, inside the four walls of the store. And that's what those processes are intended to do in the U.S. And so that's what the acceleration of the processes are that we have been testing. What we provide is a base on which we will continue to implement the overall Siren Systems that we showcased to you in the September Analyst Day when you were here with us and we talked to it.
Operator: Our next question comes from Lauren Silberman with Deutsche Bank.
Lauren Silberman: One quick -- a follow-up and then a question. First, can you just talk about the cadence of U.S. comp throughout the quarter? I know you mentioned lavender was extremely successful. It doesn't seem to be showing up in the comp just given the commentary on the exit rate. So just help us understand the performance of new products and whether that's driving incremental customers you're targeting. |
6,601 | SBUX | 2 | 2,024 | 2024-04-30 17:00:00 | Starbucks Corporation | 34,745 | And then just a quick one on like loyalty. It looks like active Rewards members declined quarter-over-quarter, which is very rare. Can you just talk about what you're seeing there given the commentary on the strength of the core customer?
Laxman Narasimhan: Do you want to take that one, Rachel?
Rachel Ruggeri: Sure. Yes. Thank you, Lauren. I'll start with the comp and what I spoke about in my prepared remarks about the exit rate. And lavender was quite successful for us. As you heard in Laxman's prepared remarks, what we are encouraged by is that lavender both to what our customers, particularly Gen Z and Millennial customers, are asking about, which is more new more often and a broader offering, so offering, meaning coffee, non-coffee, food, healthier choices. And so we hit squarely with that with lavender by having particularly our most popular offering in lavender was the Iced Lavender Matcha Latte and so that shows that when we innovate well, we exceed our own expectations.
That was later in the quarter. So it did do something for us in terms of driving customers into the afternoon. Largely, we saw that platform resonate well in the afternoon with our customers. The Latte, we'll tend to do more in the morning, but broadly, lavender, a hit in the afternoon. So we see that, that overall offering and how we're trying to address the customer -- more occasional customer with that worked well.
But what I would say is that it was later in the quarter. We've got more opportunities coming going forward. And as a result of that, our exit rate in the quarter still reflected continued headwinds, which we're reflecting in our guidance for the back half of the year. What we're expecting with the plans that we've outlined today will help us counterbalance some of those headwinds, particularly as we see those actions start to take place. |
6,602 | SBUX | 2 | 2,024 | 2024-04-30 17:00:00 | Starbucks Corporation | 34,745 | So I think it's important to think about there are consumer headwinds in there. Our plans will counterbalance that. And as we go after some of those challenges, I think the other thing to remember is that we are coming with a position of strength as it relates to the efficiencies around our Triple Shot as well as the growth we have in new stores and the strength we're seeing in our portfolio overall. We have a very strong portfolio, a profitable portfolio that will help us, and our brand is strong. So we look at all of that, and that's how we're thinking about the exit rates of comp as well as what we're seeing for comps in the back half of the year. So hopefully, that provides a little more texture.
Laxman Narasimhan: Brady, on loyalty?
Brady Brewer: Thank you, Lauren. You talked about the year-over-year increase but quarter-over-quarter declines of Starbucks Rewards members. And I think, just to be clear, that is in terms of 90-day frequency, so we still have a very large population of SR members. So it's about frequency of those customers.
So I think consistent with the consumer pullback, the more occasional and very occasional SR members, those ones visited less frequently within the quarter. As a result of that, we saw fewer 90-day actives quarter-over-quarter. That said, the 6% growth year-over-year, we're continuing to grow SR. MOP grew in the quarter, so we still have a very active customer base setting record high for MOP. Delivery grew double digits in the quarter, and we see a very active digital customer.
And I think as Laxman talked about with regard to how we're going to provide SR and traffic in the coming quarters, this is squarely aligned to this challenge. It's reactivating SR members, bringing them back and demonstrating value and driving frequency through the app and through SR. And we have a lot of great programs lined up [indiscernible] there.
Operator: Our next question comes from John Ivankoe with JPMorgan. |
6,603 | SBUX | 2 | 2,024 | 2024-04-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Our next question comes from John Ivankoe with JPMorgan.
John Ivankoe: Two parts if I may. I heard the word misinformation and I think some improving maybe scores around that. So I just wanted to get a sense how much of an opportunity in terms of sales lost that you think correcting this information might actually mean for Starbucks. I don't think you've quantified that, but that would be helpful.
And then secondly, regarding the Toyota Production System. I think I heard you said that it would help about a point. Correct me if I'm wrong, but that seems to be a fairly low number. And just talk about what kind of changes that would happen in the Toyota Production System.
And to us, one of the opportunities would be having food ready when the customer orders it. In other words, using food warming cabinets would be particularly effective for both Mobile Order & Pay and drive-thru. So is that something that may be -- as part of Siren, that can be accelerated before the entire Siren System goes into place?
Laxman Narasimhan: John, thank you for the question. I think on the question about misperception, misperception did have an impact on our business [indiscernible]. We haven't been -- we don't have a quantification for that. But what we do know is that our brand equity, the stores and the investment involved in the brand have certainly helped spending with overall perception of our brand [ we spend every year ].
In terms of the [indiscernible] system, what we're doing first is we're tracking how [ we do with the week ], so how we essentially work with deployment in the store, how we handle what happens at peaks in terms of where people are deployed. How do we essentially [ process ] customers? And what you see is [indiscernible] there. I know we've given you a quantification of 1 percentage point. That is a conservative estimate because when it fully gets deployed and it fits, you would see even bigger improvements that happen. |
6,604 | SBUX | 2 | 2,024 | 2024-04-30 17:00:00 | Starbucks Corporation | 34,745 | In regard to your question about the [ hot food, ] that is purely something suggesting and we're looking to accelerate. So it takes [indiscernible] to accelerate that with the work that we are doing.
Operator: And our next question comes from Andrew Charles with Cowen & Company.
Andrew Charles: I know you're committed, of course, to the tenets of the reinvention plan. But in light of the current environment and caution of U.S. and China consumer, can you level set the long-term earnings algorithm introduced November around guidance for 5% same-store sales and 15% plus EPS growth? Does that still apply to 2025 and beyond?
Laxman Narasimhan: Andrew, thank you for your question. Everything we've seen, I know that we had a tough quarter. But everything we see in terms of the opportunities that lie ahead, as you look at the opportunities we have across [indiscernible], the innovation that we [ see ] in terms of the pipeline going forward [indiscernible] beyond. If you look at the productivity opportunities, the store count opportunities [indiscernible], we believe we'll be back [indiscernible]. And we see no change in the long-term outlook that we set earlier in this [ business ].
Operator: And the last question comes from David Tarantino with Baird.
David Tarantino: My question is on the value strategy that you laid out and the need to check traffic or track traffic in a tough environment. But I'm just wondering how you balance that with protecting the long-term health of the brand. Starbucks has always been a very premium brand position and sort of training some of these occasional users to come in on discount might have some detrimental impact. So I'm just wondering how you balance those 2 things and the strategy that you have. |
6,605 | SBUX | 2 | 2,024 | 2024-04-30 17:00:00 | Starbucks Corporation | 34,745 | Laxman Narasimhan: Thank you for your question. [indiscernible] and we have no intention of like going across the board and [indiscernible] what we are doing is we are [indiscernible] the fact that as [indiscernible] levels of [indiscernible] our brand overall right now [ that for what I can ] is still very strong [indiscernible]. So we feel very good about that. And this is more about how we [ move ] and how we [ manage ] customers, particularly those that don't [indiscernible] that is what we intend to do.
Rachel Ruggeri: [indiscernible] transactions [indiscernible] everything, the work [indiscernible] in an integrated way around product [indiscernible] as well as what our customers can get in the app to [indiscernible]
Operator: That was our last question. I'll now turn the call over to Laxman Narasimhan for closing remarks.
Laxman Narasimhan: Thank you for joining us. We had a tough quarter, but we have a clear action plan that the management team and I are [indiscernible] thank you for joining us, and we appreciate the time you're taking this afternoon.
Operator: Thank you. This concludes today's conference. All parties may disconnect. Have a good day. |
6,606 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Good afternoon. My name is Diego and I will be your conference operator today. I would like to welcome everyone to Starbucks’ First Quarter Fiscal Year 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now turn the call over to Tiffany Willis, Vice President of Investor Relations. Ms. Willis, you may now begin your conference. |
6,607 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Tiffany Willis: Thank you, Diego, and good afternoon, everyone, and thank you for joining us today to discuss Starbucks' first quarter fiscal year 2024 results. Today's discussion will be led by Laxman Narasimhan, Chief Executive Officer, and Rachel Ruggeri, Executive Vice President and Chief Financial Officer. And for Q&A, we will be joined by Belinda Wong, Chairwoman and Co-Chief Executive Officer of Starbucks China, and Brady Brewer, Executive Vice President and Chief Marketing Officer. This call will include forward-looking statements, which are subject to various risks and uncertainties that can cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factors discussed in our filings with the SEC, including our latest annual report on Form 10-K and quarterly report on Form 10-Q. Starbucks assumes no obligation to update any of these forward-looking statements or information. GAAP results in the first quarter fiscal year 2024 and the comparative period include several items related to strategic actions, including restructuring and impairment charges, transaction and integration costs, and other items. These items are excluded from our non-GAAP results. All numbers referenced on today's call are on a non-GAAP basis unless otherwise noted or there is no non-GAAP adjustment related to the metric. As part of our non-GAAP results, revenue, operating margin, and EPS growth metrics on today's call are measured in constant currency. Current period results, however, are converted into United States dollars using the average monthly exchange rates from the comparative period rather than the actual exchange rates for the current period, excluding any related hedging activities. For non-GAAP financial measures mentioned in today's call, please refer to the earnings release and our website at investor.starbucks.com to find reconciliations of those non-GAAP measures to their corresponding GAAP |
6,608 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | and our website at investor.starbucks.com to find reconciliations of those non-GAAP measures to their corresponding GAAP measures. This conference call is being webcast and an archive of the webcast will be available on our website through Friday, March 15, 2024. Also, for your calendar planning purposes, please note that our Second Quarter Fiscal Year 2024 Earnings Conference Call has been tentatively scheduled for Tuesday, April 30, 2024. And with that, I'll now turn the call over to Laxman. |
6,609 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Laxman Narasimhan: Thank you, Tiffany, and thank you all for joining us this afternoon. I will start by sharing an overview of our business performance in our first quarter of fiscal 2024. I will then turn it over to Rachel Ruggeri to walk through the detailed segment results. We saw strong momentum and a highly successful holiday in the quarter with record revenue and expanded margins. We saw strong growth in our loyalty programs, sequentially increased in frequency and record spend among our loyal customers. Positive traction from new product innovations, exciting momentum in China with our focus on premium, and progress on the execution Triple Shot strategy. We also saw some unexpected headwinds which impacted the rate of growth. We feel very confident about our robust plans to address these challenges. While we are already seeing traction, there was an impact in the quarter, and it will take some time to normalize. Let me walk you through the details. Our performance in the quarter was fundamentally strong. Our Q1 total company revenue was a record $9.4 billion, up 8% year-over-year. Our global comparable store sales grew 5% year-over-year, supported by a 5% comp growth in North America, driven by 4% ticket growth, and 10% comp growth in China. Our global operating margins expanded by 130 basis points to 15.8% and our overall earnings per share grew 20% to $0.90. This speaks to the continued successful execution of our reinvention plan and the durable business we are building. We are fortunate to have built one of the strongest brands in the world and we continue to benefit from customer loyalty. Throughout the quarter, we saw our most loyal customers around the world coming into our stores more often. Specifically in the US, we set new records with our 90-day active reward members growing 13% year-over-year to a record 34.3 million, with tender reaching an all-time high of 59%, demonstrating increased engagement. Importantly, the frequency of our most loyal customers increased sequentially and spend per |
6,610 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | demonstrating increased engagement. Importantly, the frequency of our most loyal customers increased sequentially and spend per member reached a record in Q1, fueled by our holiday promotion which significantly exceeded our expectations. Our cold and gingerbread platforms drove a record high ticket in the US in the quarter. We also had the highest sales of Starbucks gift cards in our history, making us number two in gift cards sold. In total, we have an incredible $3.6 billion preloaded onto our cards in the US in the quarter. In short, our growing Starbucks Rewards members are visiting our stores more frequently and increasing their spend each time that they come. We also saw great momentum in China. We aim to be the best in the premium market in China. Our brand equity across Starbucks and Starbucks Reserve is second to none. Based on our latest brand tracker, Starbucks continues to be the first choice in away from home coffee, including among the Gen Z consumers. We continue to lead in brand affinity and have the highest awareness, brand familiarity, and purchase-intent scores. We have the most outstanding partners in our stores, with very strong customer connection, and the highest retention rates in our industry. We offer distinctive global and locally relevant product innovation anchored on superior coffee with food attachments and a morning daypart that now has surpassed pre-COVID levels. Our loyal customers, a major part of tender, are coming more often, and our loyalty program is growing. We're doing all of this while offering premium physical and digital experiences delivered across our distinctive store portfolio, across other physical channels and through our digital connection and doing so at a commensurate value. This ambition being best in premium in China is in line with our long-term growth ambitions for China. Let me now talk about the headwinds and our response. We entered the first quarter very strong globally, we had great momentum in August and September and that continued into October, |
6,611 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | entered the first quarter very strong globally, we had great momentum in August and September and that continued into October, which exceeded our expectations across every measure. Beginning in mid-November, while our business continued to grow, the growth rate was impacted by three unexpected factors. First, we saw a negative impact to our business in the Middle East. Second, events in the Middle East also had an impact in the US, driven by misperceptions about our position. Our most loyal customers remained loyal and in fact increased their frequency and spend in the quarter. But we did see a softening of US traffic. Specifically, our occasional US customers who tend to visit in the afternoon came in less frequently. I will speak in a moment as to how we quickly responded with an effective action plan. Finally, we experienced a slower than expected recovery in China, driven by a more cautious consumer. While we had a relatively very strong 11/11 holiday, the overall market weakness led to significantly increased pricing competition. We responded quickly to these headwinds. In the US, we implemented targeted offers aimed at bringing our occasional customers into our loyalty program. As we've seen over time, Starbucks Rewards members develop a routinized long-term relationship with our brand that increases both ticket and transactions. Additionally, we activated new capabilities within our proprietary deep Deep Brew data analytics and AI tool to identify and incentivize specific Rewards members cohorts. Finally, we are leaning further into our brand marketing and factual narrative and social media to engage these audiences where they are. We've already seen the positive impact of these new initiatives with our more occasional customers beginning to rebound in December. However, we continue to see further opportunity to welcome back our very occasional customers. We feel good about the trajectory over the course of the quarter, but it will take time for our plans to be fully realized. In China, we remain very |
6,612 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | trajectory over the course of the quarter, but it will take time for our plans to be fully realized. In China, we remain very confident in the long term. The market is going through a transition as we see an increase in mass market competitors, which we believe will shake out over time, and the market will emerge looking fundamentally different than what we see today. We expect a much larger and tiered market as per capita consumption continues to increase and the market matures. There are three key elements in our China strategy. First, we are offering more coffee forward, locally relevant product innovations and we're increasing engagement in social media channels through influences and partnerships, which are highly effective in China. These actions are increasing awareness and have led to greater customer frequency. Second, we have made significant investments in technology, increasing our omni-channel capability, allowing us to serve more customers through new occasions. These investments have also led to a more digitized store environment, increasing efficiency of our supply chain and stores, while enhancing the partner experience and strengthening our unit economics in both existing and new stores. Finally, we're increasing the percentage of new stores opening in lower tier markets and new county cities, where we see meaningfully stronger new store economics. As you can see, we moved quickly to respond and implement a plan to address these unexpected headwinds. It will take time for these action plans to be fully realized. That said, we remain confident in our Triple Shot strategy and our long-term growth. So let me share some of the progress in the quarter. Our first Triple Shot Reinvention priority is to elevate our brand by operating great stores and driving product innovation. The best lever for elevating our brand is our store experience. We continue to raise the bar on running great stores with a focus on enhancing both our partner and customer experience. One example is the continued rollout of our |
6,613 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | great stores with a focus on enhancing both our partner and customer experience. One example is the continued rollout of our Siren System cold and food stations. We remain on track to have approximately 10% of our stores equipped with a Siren System by the end of this year. We are a coffee company, and we will continue to lead with coffee innovation. We're continuing the installation of our Clover Vertica in nearly 10% of our US company-operated stores in the quarter. We are on track to have on-demand single-cup brewers installed in nearly 60% of our US company-operated stores in fiscal year 2024. This will continue to elevate our coffee offering while also making partners more productive by reducing waste and creating efficiencies in store, allowing them to spend more time doing what they do best, connecting with our customers. Just imagine, a perfectly brewed on-demand cup of coffee at any time throughout the day, even decaf. This quality and the offering are like no other in the industry. We also continue to offer coffee blends which are distinctive and remind people of the romance of coffee. Our Verona blend is anchored in the essence of Verona, Italy. It was our tribute to the city of romance in Italy. In celebration of our five years in Italy, we will introduce a new coffee, Starbucks Milano Roast, inspired by the art and culture of Milan. Milan's miart, an international modern and contemporary art fair, is the perfect backdrop to a launch in our Milan Roastery that will then scale globally. The moment will capture our love of coffee, the passion of our partners, and the dynamism of Milano. Today, we're excited to launch the Oleato platform with Oleato customizations across the US. In the coming weeks, we will also launch Chocolate Covered Strawberry Creme Frappuccino and a Chocolate Hazelnut Cookie Cold Brew in time for Valentine's Day. Starting this week and continuing over the next few months, we will be introducing three new beverage platforms, each of which is squarely aimed at our Gen Z and |
6,614 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | over the next few months, we will be introducing three new beverage platforms, each of which is squarely aimed at our Gen Z and millennial customers across a range of coffee and cold beverages and compelling for the afternoon. These product innovations are examples of how we continuously elevate the brand and welcome customers back with a unique Starbucks experience. We're also offering new and exciting options beyond coffee, including food that appeals to different dayparts, especially the afternoon. In January, we added new menu items, including the Potato, Cheddar & Chive Bakes and the Chicken, Maple Butter & Egg Sandwich. These are products that tide our customers over between lunch and dinner. Importantly, our digital experience makes attaching food to afternoon drink orders easy and convenient. We've seen a very positive customer response to these new items and we are expanding inventory to meet the strong demand. We're also pleased with the pace of our new store openings and strong unit economics. Our most recent age class of company operated new stores in the US is averaging unit volumes of approximately $2 million with ROIs of approximately 50%. And as we continue to open more stores, growing by approximately 4% this year in the US on a base of over 16,000, including licensed stores, we will further invest in purpose-built stores to meet our customers where they need and want us to be. This includes drive-throughs which have grown by over 500 stores since Q1 of last year. Even in the US, we see abundant greenfield opportunity ahead. Our second strategic priority is further strengthening and differentiating our leadership position in digital. We saw our mobile order and pay surpass a record high 30% of all transactions in the quarter. And we reduced downtime of mobile order and pay by half, as we continued to find ways to deliver a better customer experience. We'll continue to make the Starbucks app even better, including adding the ability to use a personal cup in ordering through the app, and the |
6,615 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | to make the Starbucks app even better, including adding the ability to use a personal cup in ordering through the app, and the rollout of more accurate order wait times. We're also laser focused on ensuring our customers can personalize their orders in whatever way they want. One example is helping customers find products based on dietary needs. We saw record results in our US delivery business with growth of nearly 80% year-over-year, aided by our expanded partnership with DoorDash. We see significant growth for continued incremental growth as delivery represents only 2% of our transactions. Our purpose-built stores optimized for delivery and fulfillment help seize this opportunity. Additionally, we are conducting a pilot with Gopuff, targeting a fully incremental opportunity for overnight orders between 5:00 PM and 5:00 AM. In this pilot, Starbucks trained baristas prepare handcrafted Starbucks drinks and food inside Gopuff micro-fulfillment centers, delivering to the customer's door in about 30 minutes. To further expand the reach and impact of mobile ordering and rewards, we now offer Starbucks Connect in over 40% of our more than 6,700 US licensed stores with further expansion planned for this year. We're also pleased to share that Bank of America will be our next Starbucks Rewards partner, delivering even more value to our most loyal customers. This opportunity builds with the great success of our partnership at Delta Airlines that is deep in connection and engagement with our members, and is one of two new Starbucks Rewards partnerships we told you we would roll out this year. Our third strategic priority is becoming truly global. Our international business represents an important growth opportunity for us over the long term. If you look at our business excluding the headwinds, we had a strong quarter, demonstrating the momentum and resiliency across the portfolio. We opened over 420 net new stores in the quarter, a growth of 10% year-over-year, bringing total store count to over 20,600 stores with nearly |
6,616 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | 420 net new stores in the quarter, a growth of 10% year-over-year, bringing total store count to over 20,600 stores with nearly 14,000 of those stores outside of China and the US. In Japan, we reached a milestone of 1,900 stores across the market with much opportunity ahead. Let me address our business in the Middle East. I am deeply distressed by the violence shaking the region. As I have shared, Starbucks condemns violence against the innocent, hate and weaponized speech. We are intensely focused on supporting our partners and the many other stakeholders affected by what is taking place. We have seen a significant impact on traffic and sales in the region, and we are working with our licensees during this time to ensure the safety and well-being of our partners and our customers. I shared earlier in my remarks how we are addressing the near-term situation in China. Overall, our business and brand in China remain strong. Our revenue in the quarter grew 20% in constant currency, underpinned by a 10% increase in comparable store sales growth as the market lapped prior year mobility restrictions. As we strengthen our position in the premium market in China, let me point to a few accomplishments of the quarter. We launched 12 new coffee forward beverages in the quarter, including Intenso, which was incredibly popular with our customers, including Gen Z, fueling the morning daypart, which is now larger than pre-COVID levels. Our digital channels accounted for a record 52% of sales, up 4 percentage points quarter-over-quarter. Our Starbucks Rewards Gold member frequency increased by nearly 10% over the prior quarter with total member engagement setting a record 73% of tender, demonstrating the stability of our most loyal customers. Our new stores continue to deliver attractive returns on both the top line and profitability, with further strength in unit economics in stores opened in new county cities. And our turnover amongst full-time store partners reached a record low in the quarter, coupled with an all-time high |
6,617 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | cities. And our turnover amongst full-time store partners reached a record low in the quarter, coupled with an all-time high partner satisfaction score. Early this month we celebrated our 25th anniversary in China. With nearly 7,000 stores, we have built a durable business. We have built a terrific brand, and we are well on track to hit our 9,000 store target by 2025 and continue to have full confidence in the market opportunity. We continue to see enormous potential in China's premium market, and no one is better positioned to lead in this space. Even as we navigate a dynamic environment, we remain confident in our long-term growth in our international segment. As part of elevating our brand across the international segment, along with a second reserve store in India, we will open two additional Starbucks roasteries that celebrate coffee, art and design in markets outside the US and China. We will announce these locations and opening timings in due course. Turning to our fourth priority, we've focused on unlocking $3 billion in efficiencies, and I'm pleased to say that we're making steady progress. Our Triple Shot Reinvention efforts delivered 130 basis points of margin expansion in the first quarter of the fiscal year. As you've heard me say often, the key to our success is the experience that our partners create for our customers. We're investing in a better experience for our partners to advance our business through a more balanced growth model as we unlock efficiency. In the quarter, we have seen the effectiveness of the reinvention-driven investments we have made in in-store operational efficiencies, such as standards, equipment innovation, and scheduling improvements, leading to a more stable environment for our partners. Turnover has decreased by 5% year-over-year and is now well below pre-COVID levels. Average partner hours increased 10%, leading to a 14 percentage point increase in partner sentiment related to scheduling, specifically preferred hours, which we know is important to partners. We are |
6,618 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | in partner sentiment related to scheduling, specifically preferred hours, which we know is important to partners. We are listening to our partners and investing to make their experience better. Of course, we have more work to do, but we are proud of the progress we have made to date. Outside of our stores, we're working to drive efficiencies across our supply chain and expenses. I am pleased with the progress and we remain on track to unlock [few billion] (ph) dollars in efficiencies over the next three years. Our final priority is reinvigorating our partner culture. In addition to the investments in partner experience, we're focused on partner culture. Our leadership team and Board of Directors have been deeply engaged in putting the partner experience at the heart of the business. An independent assessment found that our strategic investments, greater on the ground support, a dedicated labor relations team, and more bespoke management trading are having a tangible impact on the commitments we've made to our partners. The assessment was also clear that there has been no union busting playbook at Starbucks. I want to be clear in my view on the matter of unionization at Starbucks. We believe in a direct relationship with our partners, and in the 4% of our stores in the US where our partners have chosen to be represented by a union, we are committed to finding a constructive path forward with those unions. I care deeply about our partners, their experiences and safety at Starbucks and their futures. Our partners remain core to the success of our business. And I am proud to be restitching the fabric of the green apron for all partners. Going forward, we plan to continue to focus deeply on reinvigorating our partner culture. It's a priority for me and I'll continue spending time each month working up close, shoulder to shoulder with partners in stores. I did this during my visit to India earlier this month and I will continue doing it to stay grounded in the realities of the business. Good and not so good. I'm also |
6,619 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | this month and I will continue doing it to stay grounded in the realities of the business. Good and not so good. I'm also proud to have earned my Coffee Master black apron along with my executive leadership team. A deep connection to partners and to coffee is a top priority for me and for every leader at Starbucks. As you look ahead to what is brewing for Starbucks in 2024, I have great optimism. We have a strong strategy. Our refreshed mission, values and promises are underpinning everything we do. We have many strengths to build on and a clear plan to navigate this dynamic environment. While it will take time, we are confident we have significant headroom to further grow top line and bottom line in the long term and invest in our partners and the business while delivering strong shareholder returns. Finally, before I turn this over to Rachel, I want to remind everyone that Starbucks is focused on human connection. We stand for belonging. We stand for joy. We stand for humanity. That is what differentiates our brand and our business and has for the last 52 years. We believe this has never been more important in the world. And with that, Rachel. |
6,620 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Rachel Ruggeri: Thank you, Laxman, and good afternoon, everyone. Let me start by saying that I am so proud of the significant margin expansion and double-digit earnings growth we delivered in our first quarter despite the top line headwinds we experienced. Our strong focus on reinvention continued to unlock efficiencies, driving a balanced outcome where both revenue growth and margin expansion drove our earnings growth. As we have shared, we are unlocking multiple paths to support our earnings growth over the long term, creating a more durable business and this quarter proved testament to that durability. Our Q1 consolidated revenue reached a record $9.4 billion, up over 8% from the prior year, even with the confluence of factors adversely impacting our business, as Laxman discussed in detail at the top of our call. The revenue increase was driven by 5% comparable store sales growth, 8% net new company operated store growth, as well as a 6% increase in our global licensed store revenue over the prior year, underscoring the strength of our broader portfolio and our execution. Q1 consolidated operating margin expanded 130 basis points from the prior year to 15.8%, primarily driven by sales leverage and reinvention-related in-store operational efficiencies, partially offset by our continued investments in our partners. Our reinvention has successfully driven resiliency in our business, with our North America margin expanding a notable 280 basis points in the quarter, which I will discuss in further detail in a moment. Q1 EPS was $0.90, up 20% from the prior year. Our strong double-digit EPS growth in the quarter demonstrates multiple paths to drive growth and profitability. I'll now provide segment highlights for Q1. North America delivered another quarter of record revenue in Q1 with $7.1 billion, up 9% from the prior year, driven by a combination of a 5% increase in comparable store sales, inclusive of a 4% and 1% increase in average ticket and transactions respectively, as well as net new company operated growth |
6,621 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | inclusive of a 4% and 1% increase in average ticket and transactions respectively, as well as net new company operated growth of 4% over the prior year. Our US licensed store business also contributed to the segment's growth from increased travel and further rollout of our Starbucks Connect program. Our US company operated business delivered 5% comparable store sales growth in Q1, driven by 4% ticket growing from pricing, mix, and customization. This led us to having our highest average ticket in our 50-plus year history, as our successful holiday innovation and complementary product offerings, including our new Chai Tea Latte and Sugar Plum Cheese Danish, resonated with customers. Comparable transactions for the quarter increased 1% as traffic was pressured to negative single digits in November before it started to rebound in December. In light of the pressure traffic, and as Laxman mentioned earlier, customers showed strong loyalty through our Starbucks Rewards program with record engagement and the highest ever spend per member. North America's operating margin was 21.4% in Q1, expanding 280 basis points from the prior year, driven by 240 basis points from reinvention-related in-store operational efficiencies, as well as sales leverage and pricing, partially offset by continued investment in our partners. This substantial margin expansion in the quarter reflected the meaningful labor staffing and scheduling improvements we made as part of our reinvention. We unlocked significant stability by focusing on staffing and scheduling hours based on partners preferred shifts, which enhanced both our partners experience and subsequent store performance. We saw a store efficiency increase as items per labor hour reached its highest levels in the quarter. Outside of stores, we reaped the benefits of enhanced sourcing and waste reductions in the first quarter, as seen by improvement in the segment's product and distribution costs. When you think about the operational efficiencies that continue to manifest both in and out |
6,622 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | product and distribution costs. When you think about the operational efficiencies that continue to manifest both in and out of stores, we expect to continue delivering progressive margin expansion. Moving to international. The segment delivered $1.8 billion in revenue in the quarter, up 12% from the prior year. The revenue growth was driven by a 12% increase in net new company-operated stores year-over-year, as well as a 7% increase in comparable store sales, driven by 11% transaction growth, partially offset by a 3% decline in average ticket. As Laxman mentioned, the pace of recovery in China was slower than expected. That, coupled with a negative impact to our business in the Middle East, pressured our international segment as a whole. However, we continue to see these headwinds as transitory and remain committed to our long-term growth ambitions in the segment. In Q1, China's revenue grew 20%, driven by 15% new store growth, as well as a 10% increase in comparable store sales growth, including 21% transaction growth, largely related to the market lapping prior year COVID impact. Comparable ticket, however, declined 9% due to mix shift, including lower sales of merchandise and increased promotional environment. The market opened 169 net new stores and entered 28 new county cities in the quarter, serving as a proof point that our commitment to expanding our premium position in the market has not wavered. Total international segment operating margin was 13.1% in Q1, contracting 110 basis points from the prior year. The contraction was primarily driven by investments in partner wages and benefits, business mix shift as a greater portion of the segment's revenue was generated in our company-operated markets versus the prior year and strategic investments, partially offset by sales leverage. Shifting to channel development. The segment's revenue of $448 million in Q1 declined 7% from the prior year, largely in line with our expectations given the sale of Seattle's Best Coffee. Our business continues to resonate |
6,623 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | prior year, largely in line with our expectations given the sale of Seattle's Best Coffee. Our business continues to resonate with customers as Starbucks maintained the number one share position in both US At Home coffee and US Ready to Drink in the first quarter as our holiday offerings such as Peppermint Mocha and Gingerbread were among customer favorites. The segment's operating margin was 46.8% in Q1, down 60 basis points from prior year, driven by product costs in Global Coffee Alliance, partially offset by business makeshift. Although there was contraction in the first quarter, we continue to expect the segment's full-year operating margin to expand to the high 40% to low 50% range and be accretive to our total company margin. Now, moving on to our guidance for fiscal year 2024. We are confident that the business pressures we experienced in the first quarter are transitory. With that, our guidance shared at our reinvention update in November remains unchanged related to our global store growth, operating margin, and EPS. However, given the collective magnitude of headwinds on our first quarter revenue and the time it will take for our action plans to be realized, we are revising our full year outlook for revenue and comp to reflect our Q1 results, as well as account for recent trends, including a softer than planned January, which we expect will impact our Q2 performance. With that, we now expect our full year global revenue growth in the range of 7% to 10%, revised from our previous range of the low end of 10% to 12%. Full year global and US comp growth in the range of 4% to 6%, both revised from the previous range of 5% to 7%. China comp growth of low single digits for the balance of the year, revised from the previous range of 4% to 6% in Q2 through Q4 with higher comp in Q1. Just to be clear, we continue to expect to deliver full year global store growth at approximately 7%, progressive operating margin expansion on a full-year basis, full-year EPS and non-GAP EPS growth in the range of 15% to 20% as |
6,624 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | progressive operating margin expansion on a full-year basis, full-year EPS and non-GAP EPS growth in the range of 15% to 20% as we have multiple paths to such earnings growth as we demonstrated in the first quarter. As an additional insight, here are a few clarification items related to guidance. As a reminder, our guidance does not include any impact from foreign currency translation and assumes constant currency. In terms of quarterly shape, we expect growth rates for our global revenue, comp, operating margin, as well as GAAP and non-GAAP EPS to be the lowest in Q2 and meaningfully below our full fiscal year guidance ranges due to the pressures we discussed in today's call. These metrics are then expected to rebound and stabilize in the second half of our fiscal year. While we continue to expect our effective GAAP and non-GAAP tax rates in the mid-20% range, they are expected to be meaningfully higher than our fiscal year 2023 tax rate of 23.6%, which benefited from certain discrete non-recurring tax items. Finally, our disciplined capital allocation approach continues to deliver significant results. The combination of revenue growth, margin expansion, and improved working capital underpinned by the disciplined capital allocation increased our Q1 cash from operations to a record $2.4 billion. Our strong cash generation, together with our leverage and investment grade rating, creates exceptional shareholder returns while maintaining balance sheet flexibility to fund our critical investments, creating a competitive advantage. In summary, here are key takeaways from my discussion today. First, our Triple Shot Reinvention is continuing to unlock our greatest potential, evidenced by the strong operating margin performance and balanced earnings growth in the first quarter in spite of the pressured environment. Next, our revenue and comp guidance has been revised to reflect our Q1 results and expected near-term and transitory headwinds. But importantly, despite these headwinds, we remain committed to our full-year |
6,625 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | and expected near-term and transitory headwinds. But importantly, despite these headwinds, we remain committed to our full-year fiscal 2024 EPS growth in the range of 15% to 20%. Further, we have robust plans to navigate through the complex and dynamic environment and recognize our plans will take time to materialize, but remain confident in our long-term growth. And finally, our focused and disciplined approach to capital allocation drives our financial fortitude and balance sheet optionality, keeping us in a position of strength. Before I close, I want to thank all the partners across the globe who consistently find ways to create joy and foster connection to and with our customers. You give me the confidence that our best days are yet to come. So, thank you, partners. With that, I'll turn it back to Tiffany. |
6,626 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Tiffany Willis: Thank you, Rachel. Before we open the call to Q&A, we request that your questions today be focused on the quarterly performance that we just discussed, as this call is not to address questions related to recent proxy filing. With that, Diego, let's take the first question.
Operator: Thank you. [Operator Instructions] Your first question comes from Jeffrey Bernstein, Barclays. Please go ahead.
Jeffrey Bernstein: Great. Thank you very much. Just a question on the fiscal ‘24 guidance. I appreciate that you tempered the comp growth for both the US and China. For the US, it looks like it's only a point and China, it's only a few points, but we would define that, I guess, as modestly. And, you mentioned that fiscal 2Q is expected well below the targets before accelerating the rest of the year. So with that as backdrop, I'm just wondering if you could talk a little bit about, I think you mentioned January has been softer than expected, any color you could provide there? And otherwise, your confidence in that new guidance, it does seem like it implies a rather sharp acceleration in the back half of the year. I'm just wondering how you think about the guidance relative to maybe tempering it further and not having that risk if perhaps the recovery doesn't play out as fast as you might be expecting? Thank you. |
6,627 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Rachel Ruggeri: Sure. Yeah. Thank you, Jeffrey. This is Rachel. As it relates to our guidance, when we look at our revised revenue guidance, it's based on the performance we saw in Q1, as well as the near-term and transitory headwinds that we've spoken about. With that, we expect Q2 will be below the full-year guidance ranges, largely due to the fact it’s going to take some time for our plans to materialize, as well as we'll continue to see impacts to our business in the Middle East. But what gives us confidence in that revenue range is the fact that we still have a very strong and growing loyal customer base. We're having increased capability as it relates to our digital programs around the world. And we've also seen that our reinvention has been very successful in helping us to meet increasing demand. Most specifically in this quarter, we saw really strong demand supported in our morning daypart, our busiest daypart in our US business. And we actually exceeded both prior year, the year before, and we're right on line with pre-COVID level. So we're encouraged by that overall just in terms of transactions. And in addition to that, as we talked about in the call, we're confident that we have multiple levers to be able to drive our earnings growth. Revenue growth is one factor, and we believe we've got growth in that guidance range. That will help drive margin expansion through -- flow through. But in addition to that, we have in-store and out-of-store efficiencies that we're seeing great success with. And so that gives us some confidence that we have a balanced path and multiple leverage to be able to drive that earnings growth of 15% to 20% on a full year basis.
Operator: Thank you. Your next question comes from Brian Harbour with Morgan Stanley. |
6,628 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. Your next question comes from Brian Harbour with Morgan Stanley.
Brian Harbour: Yeah, thank you. Good afternoon. Could you talk more about kind of the specific plans to drive sort of the occasional customer? And it sounds like you would expect some pretty solid improvement in US sales as we go through the year. It sounds like what was new was some new product platforms. Could you just elaborate on how quickly you think those will work, what might be coming on the product side that drives your confidence in US sales? |
6,629 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Laxman Narasimhan: Sure, let me start and I'll call on Brady a bit, to provide some more color. As we said earlier, what we saw in the US was a quarter that was actually very strong till about the middle of November. And what you see in the results, very strong performance of the loyal customers, very strong holiday performance, very strong brand equity, and very strong performance on gift card sales. And we mentioned as well that we've got about $3.6 billion loaded on our card. So manifestation of the overall brand being very strong. And so there is, of course, what we do have, the isolated impact with the occasional customers, particularly those that visit in the afternoon. So if you look at some of the actions that we have in place, first, there is actually more demand than we're currently meeting in the US. Second, our loyalty program is already performing exceptionally well as Rachel mentioned. But we have a combination of things we've been doing to address the traffic slowdown, particularly in the afternoon. The first area is innovation. We mentioned a couple of new products coming in time for Valentine's Day, but we're going to have three new beverage platforms coming in the next six months, and you will see how important that is for us over time. The second action is we're opening up our app ecosystem to bring more people into the app because we know that our members developed a routinized long-term relationship with our brand that increases both traffic and transactions. And third, we are implementing targeted offers aimed at some of these very occasional customers to bring them back into the stores. And all that of course is foundational to, we continue to execute in our stores in order to elevate partner pride, bring a great deal of passion back into the business, and ensure that we can meet more of the demand that we know exists. Brady, do you want to give a bit more flavor around some of the activations, particularly on the innovation side? |
6,630 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Brady Brewer: Sure. Thank you, Brian. Thank you, Lax. As Laxman said, there's a calendar of compelling product innovation. Laxman spoke about the new beverage platforms that are coming over the next few months. On food, we're seeing a lot of momentum on this health conscious all day breakfast and all day snacking that I spoke about on the investor day. As we've released new products in that space, we've seen great resonance with customers and will continue to mine that space. Then we look at digital. Laxman referenced the 30% of US transactions coming through MOP. We're seeing high demand for that service even among occasional customers. So increasing the reach of the app, number one. Increasing personalized communication in the app, both to drive tickets for those routinized customers, but also frequency for the less frequent customers is a capability that we continue to build. We talk a lot about our personalization capabilities at Starbucks, but truly that job is never done because as new technologies and capabilities come online, we are grabbing those and integrating them into our system to use that as a business accelerator. And then lastly, I'd say just making Starbucks more accessible, expanding, as you heard from Laxman, the delivery options you have with Starbucks in a very fast growing part of our business. And then looking at ways to capture more Starbucks Rewards members who are currently not members through big partnerships like the one we've just announced with Bank of America. So between compelling products, really accelerating SR member acquisition efforts and then building our brand as Laxman said to address the fact-based narrative in social media and win our customers and win every visit back, that's where we're focused.
Operator: Your next question comes from Peter Saleh with BTIG. |
6,631 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Peter Saleh with BTIG.
Peter Saleh: Great, thanks for taking the question. I did want to ask about the check dynamics going on in China. It looks like down, call it 9%, it's a pretty steep decline. Just talk about the promotional environment that you're seeing there and what exactly you guys are doing to combat that and just more specifically should we expect this check impact to really continue for the balance of the year or how do we think about that going forward? Thank you.
Laxman Narasimhan: We have Belinda online here. So maybe I'll turn this over to Belinda. Do you want to answer that question, please? |
6,632 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Belinda Wong: Okay. Thank you for the question. Let me just address the AT decline first, the average tech decline. First of all, our beverage and food sales were strong and contributed the majority of our comp growth in Q1 and our AT decline, the 9% decline mainly came from two areas. One is slower sales of our higher priced merchandise as our consumers now more cautious in their spending. But the per merchandise category constitutes a relatively small portion of our sales mix. Second, it's the targeted promotional investments that we're making to personalize offers and reward customers' behaviors in order to drive trial vacancy. Now, this enabled us to optimize our sales and margin. And this is powered by China Deep Brew that helps us to design the right offers to the right cohorts of customers at the right time. So that's mainly the reasons for decline. You asked about the promotional environment. Let me just say this. The coffee market is evolving, as Lax said, and going through a transition. It's still early days and it has not yet fully tiered, right? You see mass -- influx of mass market competitors focus on fast store expansion and low price tactics to drive trial. This will shake out over time and yes, we are operating under an increased promotional environment. We are not interested in entering the price war. We are focusing on capturing high quality but profitable, sustainable growth. And it is our aim to be the best and lead in the premium market, as Lax has said, which Starbucks has pioneered in China 25 years ago. We will continue to focus on premium experience that is high quality coffee and human connection. And we have clear strategies to fuel our comp and total growth. As Lax shared the three points, well the three strategies, I'll add a little bit more colors. We're going to dial up our beverage food innovation with robust marketing activations on social media and in-store. We're going to accelerate our digitalization efforts to drive innovations, sales and productivity. We're going to |
6,633 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | and in-store. We're going to accelerate our digitalization efforts to drive innovations, sales and productivity. We're going to continue our new store expansion, infill in existing cities and accelerate new county city entry as Lax has said. We are going to dial up our omnichannel expansion, scale up our membership program and continue to invest in our partners. So we have all these strategies to drive out comp growth and total growth in traffic and ticket. So we are very confident in our ability to deliver our growth in a short and long term. Thank you. |
6,634 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Lauren Silberman with Deutsche Bank.
Lauren Silberman: Thank you very much. I want to ask about the US business. I appreciate all the color. I guess two related questions. One, I understand you're seeing a more significant slowdown with the occasional customer. Have you also seen a slowdown in traffic with rewards customers, or are the challenges really just isolated to occasional, trying to understand some of the breadth of the social media challenges? And then second, you've ramped up the level of promotional activities for rewards. Is this effectively hitting the occasional customer? Just trying to understand how you're thinking about promotional activity ahead. Thank you.
Laxman Narasimhan: Well, let me take this on. First of all, we are seeing no slowdown in our loyal SR customers. In fact, we're seeing an increase in frequency. They're buying more. They're customizing more. That part of the business is extremely strong. We did see, as you rightfully said, a slowdown in the very occasional customers, which we're still working to get back. But the folks in the middle who are occasional, some of the tactics that we used, which of course you're seeing, essentially helped bring them back into the fray in terms of the traffic we've seen it bounce back towards December. So we're focused on ensuring that we do the right thing in terms of welcoming back our very occasional customers with the right offer, with the right innovation, and with the right experience in stores.
Operator: Your next question comes from Brian Bittner with Oppenheimer and Company. |
6,635 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Brian Bittner with Oppenheimer and Company.
Brian Bittner: Thanks for taking the question. Rachel, I wanted to ask about the operating margin expansion in the Americas segment. Obviously, it was very impressive. And it was driven by leverage on your store operating expense line. In fact, when we break it down on a dollar basis, on a same store basis, those operating expenses were actually flattish or even slightly down year-over-year. Can you just unpack what's going on in that line item? How sustainable is this performance on the operating expense line? |
6,636 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Rachel Ruggeri: Sure. As you look at the store operating expense, it's largely driven by the activities we've taken around our reinvention in in-store operational efficiencies. So that's a combination of a number of factors, including we've focused on operational execution, leveraging standards to be able to manage performance across over 9,700 stores and growing. So that's been one driver. In addition to that, we've had continued improvement in our equipment. And the investments we made in equipment a year ago, as well as the investments we're currently making, that's all annualizing and helping to support the favorability that we're seeing in the margin expansion. And then third is, more recently we focused on improving our overall scheduling. So providing more hours for our partners per store. We have a ways to go, but we know that that's a high driver of engagement. All of those efforts together have led to lower turnover and a more stable environment. And it's that stability that really allows us to create a better efficiency in serving our customers. So as an example, I already spoke about our morning daypart of this quarter in the US was the strongest that we've seen. And that's a function of all of those efforts and activities that I just spoke about being realized in supporting our demand. So creating a better experience for our partners leads to the better experience for our customers. Now, some of that was annualization from the efforts that we made last year, but we continue to see quite a bit of opportunity ahead when we think about continuing to focus on scheduling, continual focus on improvements in staffing. We have more work ahead of us there, as well as in-store, or excuse me, out-of-store efficiencies, the way we scrutinize our sourcing, the way we distribute to our stores. We've seen some benefits from that this quarter. That won't show up in store operating expense. That'll be in our product and distribution cause. But between those two lines, that's where we see potential opportunity going |
6,637 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | That'll be in our product and distribution cause. But between those two lines, that's where we see potential opportunity going forward. So it gives us confidence in the progressive margin expansion, but importantly, our ability to continue to meet that 15% to 20% earnings growth. |
6,638 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from David Palmer with Evercore ISI.
David Palmer: Hi. A big picture question. I don't know if this is maybe one for Brady, but by our math, just looking back to 2016 just because you gave some percentages on what was cold and what was hot of your beverages. It looks like your US cold beverage sales have grown by roughly $750,000 per store while hot beverage sales have declined by $150,000 per store. And since pre-COVID, your rewards membership has more than doubled. But traffic is down since that time. And we don't see your customer like you do. So this is a bit of a question. But it looks like you maybe have less of that everyday hot coffee and latte consumer and more of a new type of consumer that comes less frequently and probably has ops for cold beverage. I'm envisioning them being my daughter and three of her friends coming in some afternoon. So it's more of an episodic visit, big orders, cold beverage led. So with this happening, if this is what's happening, how does that inform your strategy for growth going forward? I know you're doing some things to increase capacity on cold beverage and maybe that helps fuel the summer months a little bit more. But I'm just wondering like what are -- do you share that perspective and how does that fuel your strategy? Thank you. |
6,639 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Brady Brewer: Yeah, thank you, David. It's a great question. My perspective is a little different in that we don't see a tradeoff in frequency between cold beverage customers and hot beverage customers. It's really a shift in generational taste preferences where that highly frequent millennial Gen Z customer is drinking cold coffee every day, just as people of different generations were drinking hot coffee to start their day every day. So we've seen a continued increase in our cold beverage in our portfolio, as you noted. But what I found with the cold beverages is there are infinite customizations possible on the cold beverage platform. And what that means is that it's increasingly a beverage you can't get anywhere else. And so it has a staying power to it. So we don't see a trade-off in frequency from hot or cold. Cold is a great business for us, and we don't see a threat there, we see a great opportunity. You mentioned about the capacity that we can put in place with Siren Systems and other aspects of the things we're doing in reinvention, which is really about accelerating our capacity to create and craft cold beverages at pace with our customers, both in drive-through, mobile order, and delivery in particular. So that is a huge opportunity for the company. And on hot beverage, I would say we're not leaving that customer behind. We're continuing to innovate on hot beverages just as we did today with the launch of our Oleato beverages. We're launching Clover Vertica store across our portfolio. We're in 10% of stores now. And that is the best cup of brewed coffee you've ever been able to get at Starbucks rolling out on a proprietary machine. And then lastly, you mentioned, or Lax mentioned, our Milano Roast, which is really our passion for coffee coming to fruition. So whether you're a cold coffee customer or a hot coffee customer, we're increasingly creating a reason for you to visit and we see no trade-off there.
Operator: Your next question comes from Sara Senatore with Bank of America. |
6,640 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Sara Senatore with Bank of America.
Sara Senatore: Thank you very much. I just wanted to ask about unit growth. I know in both the US and China, I know you mentioned new, the most recent vintage of high volumes and strong ROIs in the US, but I was curious if you are seeing anything that might suggest that the acceleration and unit growth may be translating into slower same-store transaction growth? I know this is a very kind of idiosyncratic quarter, but in the past, I think when we have seen faster growth, it has sometimes corresponded with slower same-store transactions and I wanted to see if you had any color on any variation in markets or infill versus greenfield? And then if you could just maybe address that same question in China. Thank you.
Laxman Narasimhan: Rachel, do you want to take on the US? And, Belinda, I'd love you to take on China.
Rachel Ruggeri: Sure. Thanks, Sarah, for the question. In the US, what we see is we continue to see that our unit volumes, as we shared in Laxman’s prepared remarks, are continuing to grow. And importantly, when you look at the growth in North America and in the US businesses this quarter, our revenue grew 9%. So you've got a 5% comp in there. And we've already spoken to, though we were pleased with the performance and the strength we saw, particularly our most loyal customers, we talked about some of the headwinds that related to some of the impact we saw there. But when you look broadly and you look at the combination of comp and new store growth driving to that 9%, it shows you that we still have a lot of, I'd call it, opportunity even in the US in terms of continuing to open more new stores. When we do it through purpose design, we're able to look at the market and determine how do we drive the overall trade area higher with a variety of different types of stores to meet customers where they are. So we see a lot of opportunity there. And with that, I'll turn it over to… |
6,641 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Laxman Narasimhan: Sara, can I just add one thing here? We've gone through a look, MSA by MSA, and what is interesting is, is you start looking at where the population has shifted, and you look at how the US is so different from what it was even five years ago. I think what you see is white space for us. And particularly as you look at purpose-defined stores and our plans to build in the US, we have a lot more headroom in the US. With that, let me call on Belinda to talk a little bit on China, both around how our business has been reset, but also the kind of growth options we see. Belinda, go ahead.
Belinda Wong: Okay, thank you. So despite the shorts-term headwinds, the long-term opportunity in China is clear. I think everyone will agree to that. So I talked extensively at the investor forum about the huge greenfield opportunities to both increase penetration in existing cities and entering new county cities. So as of end Q1, we are only in 857 cities out of nearly 3,000 in China. The opportunities are abundant. And new stores continue to deliver best-in-class store profitability and returns. And when you look at new county city stores that we have entered recently and in the past couple years, it consistently outperformed top-tier cities, new stores, and profitability too. So as Laxman has pointed to, we will accelerate our entry into new county cities. So we are on track to reach 9,000 stores, so many opportunities out there. We will -- we have a very sophisticated system visualized and to help our team to identify the right areas to open to optimize the cannibalization impact and where we should be going. So with our experience, our team, our operating muscle, and track record, I have full confidence in our store expansion plan and we're on target to achieving 13% store growth in FY ‘24. |
6,642 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Laxman Narasimhan: I've been to China three times in the last nine months. And one of the things that's fundamentally impressed me with the business is really how we've used COVID and the time that the business has actually taken to reset the business. If you look at the end-to-end costs from a supply chain perspective, with the digitization of what is happening end-to-end in China, it is frankly incredibly strong. I'd love to have some of that back in the US. If I look at the ability to deliver the value that we have end-to-end in China, coupled with the premium experience with the wonderful stores we design at a very low investment cost because that has also been fine-tuned. What you realize is that as we expand, the kind of economics we're seeing are very strong. And so I think that is foundational to what Belinda talked about. Big headroom in terms of cities to go to. But also what I compliment the team on is the work that has gone in to build a business end to end, that is extremely strong. This doesn't happen overnight. This happens because of 25 years of history and the muscle and the capability that the business has built in China. The team is ready, obviously, as the market [turns] (ph) and we see things come back, you're going to see the kind of economics get even better.
Operator: Your next question comes from Andrew Charles, TD Cowen.
Andrew Charles: Great, thank you. Rachel, how did you arrive at the new low single-digit China same-store sales guidance from the 4% to 6% previously? Perhaps you can help us understand the typical quarter-to-quarter changes in seasonal AWS that you typically see in China and how that factors into the new 2024 guidance? Thanks. |
6,643 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Rachel Ruggeri: Sure, thank you, Andrew. When we looked at the guidance for China, it's largely based around, I wouldn't say the seasonality is maybe as distinct as what we see in the US business with Q2 being so much lower than any of our other quarters and strengthening as we go through Q3, Q4, particularly because we're lapping quite a bit of compares from the prior year. If you recall last year in Q3, we were lapping the COVID impacts from the prior year. So we have a pretty big lap when you look at that comp and that compare in Q3. So it's more around the progression we expect in the business, less about the compare or about seasonality, and more about the progression in the business. And what we're looking to is Chinese New Year as an example is a good indicator of what we expect to see around the consumer environment, and that's factored into our assumptions. So a lot of it depends on mainly the recovery, the time it's going to take as Belinda and team work on the action plans, which are in some ways, I'd say adapted to what we're saying. We've already led in the premium market, but we're adapting some of our strategies as it relates to the awareness of the customer and how we go after the customer through the innovation and new channels of social media. So we expect that that's going to take some time and that's reflected in the guidance range. But I would think about it that way, is more about the recovery and the progression from where we are with the plans today, which we're expecting we'll see a rebound and closer to a stabilization in the back half of the year.
Laxman Narasimhan: I think it's fair to say that the Chinese consumer is very cautious.
Belinda Wong: Yeah.
Laxman Narasimhan: And so the recovery is going to be choppy. But as Rachel has said, we think we factored that in the guidance that we see. The long-term opportunity in China is tremendous.
Operator: Your next question comes from Sharon Zackfia with William Blair. |
6,644 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Sharon Zackfia with William Blair.
Sharon Zackfia: Hi, good afternoon. On the customer that lapsed in the first quarter, was there any particular demographic that you saw more of an impact with? Excuse me. And then on the conversation around the new beverage platforms, I think you said three upcoming new beverage platforms. Can you talk about the potential trade-offs there with speed as you talk about untapped demand?
Laxman Narasimhan: So I think what I heard you say was, were there any demographic, specific demographics that it impacted? And the second question was, on the three beverage platforms, is there something that is a trade-off between speed? Is that correct? I couldn't hear you properly, actually. Maybe you could repeat that question.
Sharon Zackfia: I think my sound is breaking up. When I think about you introducing new beverage platforms and introducing complexity potentially into the system, I naturally worry about throughputs. And you talk about untapped demand and the opportunity to tap into that as part of the buffer into the back half of the year and I'm just thinking about that. With the new beverage platforms and hoping you can talk about if there is a trade-off with speed or if the new beverage platforms have been designed to help facilitate throughput. Brady, do you want to take it off? |
6,645 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Brady Brewer: Sure. So in terms of beverage platforms specifically, I'll start there. We put every product we offer through a very rigorous set of tests and measures to make sure that it's conducive to operations, that it's easier for our partners to deliver in the stores, and make sure that it's a creative to the business. A lot of times what we'll do is we'll bring in a new product and we'll take a lower volume product out just to maintain the total complexity of the system rather than just add, add, add. We have a very disciplined approach about how we do that. And so the three beverage platforms, which we won't reveal yet, have gone through that. And so It's really about how to do these products in a way that's accretive to the business and specifically targeted. And so in these cases, this is about looking at that occasional customer and frequent customer, but particularly appealing for the afternoon where we want to continue to build our business. We've really laser targeted these products for those occasions and so we're excited to bring those to customers. And then with regards to the demographics, Starbucks attracts a very wide range of customers around the world, and particularly in the US, again, a very wide range of customers. So the way that I would characterize it is occasional, and I know we've spoken about the very occasional. That's really what we would say is the audience with whom we saw that impact in November and started rebounding in December. So that's where I would leave it and say we've got plans to bring them back.
Operator: Your next question comes from Andrew Strelzik with BMO Capital Markets. |
6,646 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Andrew Strelzik with BMO Capital Markets.
Andrew Strelzik: Hey, thanks for taking the question. I wanted to just make sure that we understand the bridge from the revised or lowered revenue growth guidance to the maintained EPS growth guidance. Obviously the first quarter operating margin was very strong, particularly in North America. So is something changing there in your expectations for the year? The cost saves coming through faster or greater? Is there a change in how you're thinking about buyback contribution? Just any more texture on that bridge would be helpful. Thanks.
Rachel Ruggeri: Sure. Thank you for the question. As it relates to our guidance and how we're thinking about maintaining the earnings growth range of 15% to 20%. Though our revenue has been revised, I think what's important to think about that is what we're pointing to is that Q2 will be below our full year guidance ranges on all of our metrics. And then we'll expect to see a rebound and a stabilization in the back half of the year. And that rebound and stabilization will come to from the revenue growth that we're guiding to, so the 7% to 10%. And in that revenue growth range, there is an assumption, even though we've got these plans in place and we expect it will take some time to materialize, there is the impact we have from a strong and growing loyal customer base as well as what we've talked to around the strength in digital and some of the success we're seeing in reinvention. So that's factored in there to give us the confidence to be able to expect that we'll see the flow through from the revenue growth in the back half of the year. But in addition to that, what we're expecting is that we'll continue to see the strength in our in-store and out-of-store operational efficiencies. So we had good success this quarter. We'll expect some of that to continue into Q2 and it'll further into Q3 and Q4. That's how we'll be able to drive to the 15% to 20% on a full year basis. |
6,647 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. The last question comes from John Ivankoe with JPMorgan. You may ask your question.
John Ivankoe: Hi, thank you. It's maybe a related one to the previous, but normally operating companies, when they do reduce revenue, it's pretty customary for earnings to come down along with that. Now, you guys have communicated, I think, $3 billion of cost savings on a three-year basis. I think that's $1 billion on a gross basis on a one-year basis. Can you talk about if there were any cost savings that were pulled forward into fiscal ‘24? Were there any meaningful expenses, maybe discretionary expenses in ‘24 that were perhaps pushed out into ‘25 and ‘26. And maybe I'm getting a little bit ahead of myself at this point or getting ahead of you at this point. As we kind of think about you getting more margin on that lower revenue than maybe we would have thought earlier, does it actually lead to a more difficult comparison that you'll have to face ‘25 over ‘24 as there are just some shifts in expenses between the two years? |
6,648 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Rachel Ruggeri: The way I would look at it, John, is as we showed in the first quarter, we were able to demonstrate that margin expansion of 130 basis points at the total company level, given a combination of sales leverage. So we still had strong sales growth, right? That sales leverage, as well as the flow through from that sales leverage and the in-store operational efficiencies that we spoke to. And when we think about the back half of the year, we'll expect to continue to see benefit from the revenue growth and the sales leverage that comes from that. But we'll also see benefit from the in-store and out-of-store operational efficiencies, which we do have ability to increase our focus on some of those areas, which will help to ensure our 15% to 20% earnings growth commitment on a full-year basis. Outside of that, we also have investments as it relates to G&A, as it relates to our reinvention. And we'll continue to make the investments because those investments drive a meaningful impact and they're a driver of our competitive advantage. But we do have an ability to also dial up and dial down some of those investments to help support the commitments we're making. As it relates to the years ahead, I don't think it's probably best to just focus on the year we're in right now. But that's how I would expect the guidance to come together and how I'd think about Q2 relative to the balance of the year. |
6,649 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Laxman Narasimhan: John, if I could just add one more thing. I think we've systematized our approach to how we think about innovation, how we think about productivity, how we think about growth overall, it's a very sort of systematic approach that we have in place with pipelines around how we're looking at different things. So we have visibility clearly in terms of things that we could do, for example, about the store. And they go multiple years. And so even if we did bring something forward, because we can, it does not at all mean that we don't have more that we go after. So I feel very confident about that, that we'll continue to invest in the business. There's no impact from a buyback. I think that was a question asked earlier. None whatsoever. And we're investing in the business, but we also know that we have opportunities for us to make ourselves more efficient. At the same time, get the throughput that we think we need in order to meet the demand that exists out there.
Rachel Ruggeri: Yeah. I do think it's just worth noting is that our buybacks are expected to be nearly 1% of our earnings growth net of interest, so small in the scheme of things.
Operator: Thank you. That was our last question. I will now turn the call over to Laxman Narasimhan for closing remarks. |
6,650 | SBUX | 1 | 2,024 | 2024-01-30 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. That was our last question. I will now turn the call over to Laxman Narasimhan for closing remarks.
Laxman Narasimhan: Thank you so much, Diego. I will close by reiterating our strong momentum from the quarter and our overall confidence in our long-term growth. While we continue to navigate some headwinds, we're encouraged by the strength of our brand, particularly with our loyal customers around the world and the plans that we have in place to address the challenges we have identified. On a broader level, I've come to learn that we truly are a different kind of company here at Starbucks, but we are now operating in a different kind of world. We recognize that no one can solve the many difficult problems in the world alone. Starbucks is, however, and will continue to be the world's third place, providing people with places to come together, to connect, to find common ground, to feel they belong, and to bring a little joy in their everyday. Thank you for joining us this afternoon.
Operator: This concludes Starbucks’ first quarter fiscal year 2024 conference call. You may now disconnect. |
6,651 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Good afternoon. My name is Diego and I will be your conference operator today. I would like to welcome everyone to Starbucks Second Quarter Fiscal Year 2025 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Tiffany Willis, Senior Vice President of Investor Relations. Ms. Willis, you may now begin your conference. |
6,652 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Tiffany Willis: Good afternoon, and thank you for joining us today to discuss Starbucks' second quarter fiscal year 2025 results. Today's discussion will be led by Brian Niccol, Chairman and Chief Executive Officer; and Cathy Smith, Executive Vice President and Chief Financial Officer. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ from these statements. Any such statement should be considered in conjunction with cautionary statements and our earnings release and risk factors discussed in our filings with the SEC, including our latest annual report on Form 10-K and quarterly report on Form 10-Q. Starbucks assumes no obligation to update any of these forward-looking statements or information. GAAP results in the second quarter fiscal year 2025 include restructuring charges that are excluded from our non-GAAP results. Revenue, operating margin, and EPS growth metrics on today's call are all measured in constant currency and represent non-GAAP measures. Please refer to our earnings release and our website at investor.starbucks.com to find reconciliations of these non-GAAP measures to the corresponding GAAP measures. This conference call is being webcast and an archive of the webcast will be available on our website through Friday, June 13th, 2025. And for your calendar planning purposes, please note that our third quarter fiscal year 2025 earnings conference call has been tentatively scheduled for Tuesday, July 29th, 2025. And with that, I'll now turn the call over to Brian. |
6,653 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Thank you for joining today. Seven months ago, we began work on our Back to Starbucks strategy. Since then, we've learned a lot and we've moved quickly amid changing market dynamics to reset our business and our team to focus on the customer and our green apron partners who serve them. Learnings to date tell me a few things. First, we now have the right leaders in place to lead a customer-driven culture and to drive our turnaround. Second, my optimism has turned into confidence that our Back to Starbucks plan is the right strategy to turn the business around and to unlock opportunities ahead. We're relentlessly focused on the customer and we're continuing to invest in a green apron service model that enables throughput and connection with our customers. We're also re-establishing our coffee houses as a third place where customers spend time and build community. Third, we're not just building back our business, we're building back a better business. I know from experience that when you focus relentlessly on the customer, you take care of your people, improve your operations, and carefully manage costs, the financial results will follow. We're already seeing tangible progress and positive signs from the work we are doing to test, learn, and then quickly scale. Our goal is that every transaction is higher quality and more profitable. Current market dynamics have given us even more focus and conviction to get back to Starbucks. We don't know what the state of the consumer will be in the months to come, but I'm confident we're building a globally resilient business rooted in the strength of our brand, focused on the customer, and enabled by world-class partners at the local level that can succeed in any economic environment. Our turnaround is on track and I see more opportunity than I imagined. Turning to performance for the quarter. Total company revenue was $8.8 billion with a global net new store growth of 213 coffeehouses, a global comparable store sales decline of 1%, a global operating margin of |
6,654 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | a global net new store growth of 213 coffeehouses, a global comparable store sales decline of 1%, a global operating margin of 8.2%, and overall earnings per share of $0.41. These results are far below our capability, but I believe they will be temporary because there is so much opportunity in front of us. I also believe there are better measures than EPS right now to track the progress we're making to turn around the business. We have started to make disciplined investments across the four pillars of our Back to Starbucks plan, in partners, coffeehouse, the customer experience, and our marketing and menu. We're also focused on managing costs and improving our financial fundamentals, so that as growth returns, we capture more of every dollar spent in our coffeehouse. We're already starting to see early indicators of recovery in our North America business. Partner engagement is up. Turnover has dropped to under 50%, which is a new recorded low. Transaction declines are slowing across everyday part. Quality transactions are driving more of our sales, and the customer experience continues to improve. And finally, our Canadian business has returned to positive comps with positive transaction growth. Let me walk you through why I'm more confident than ever in our Back to Starbucks plan and the work we're doing. Number one, our success starts and ends with our customers and our green apron partners. Over the past quarter, I've spent a lot of time in our coffeehouses meeting with partners and listening to customers. You can feel the excitement. Our Back to Starbucks plan is the change our partners have been looking for. They're bought in and they're leading a green wave of hospitality. We've put the focus back on our customers and we've centered our work on supporting our green apron partners so they can deliver an exceptional customer experience. It's the right thing to do for our partners, our customers, and the business. During the quarter, we launched an update to Shift Marketplace that lets partners pick up and |
6,655 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | our customers, and the business. During the quarter, we launched an update to Shift Marketplace that lets partners pick up and trade shifts within their district. It's increased the pool of partners to fill last-minute shift changes by 10 times and has resulted in record-high shift completion, with 0.5 million more shifts filled year-over-year. This translates into more moments of connection with our customers, higher transaction capture, and a better experience for our partners. As a result, turnover is the lowest on record and tenure is on the rise, resulting in more capable, proficient partners. And to help our leaders develop and take ownership of the experiences they create in their coffeehouses, we're getting North America store managers together for a leadership conference this June. Number two, we are the community coffeehouse. We've moved quickly over the past several months to make small but impactful improvements to the coffeehouse experience. We're creating moments of connection with handwritten notes on cups, and we're making it more enticing to stay in our cafes with ceramic mugs, and expanded free refill policy and the return of great seats. As a result, we've seen more customers choose to sit and stay in our cafes, and we continue to receive overwhelmingly positive feedback from customers, demonstrating that small details and hospitality drive satisfaction. The third place is our heritage. It's needed more than ever, and we're reclaiming it. That's why we're evolving our coffeehouse design standards to provide customers a welcoming space to connect and build community. We'll begin to bring reworked coffeehouses online soon, and we think they will truly deliver an exceptional experience. The uplifts feel premium, but keep renovation costs down and minimize closure days. They're warm and invite customers in. They create a sense of craft, and they have great seats for different occasions. Expect to see these uplifts begin to open in New York City and Southern California in the months ahead. While we |
6,656 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | occasions. Expect to see these uplifts begin to open in New York City and Southern California in the months ahead. While we still see long-term potential to double our overall US footprint, we have to improve the health of our portfolio. As a first step, we're taking a critical look at our current portfolio to ensure every coffeehouse we operate provides a great customer experience. And we're beginning to work to build a stronger long-term development pipeline that is better mapped to growth markets and delivers improved unit economics. Number three, delivering the customer experience to win the peaks. Using a test and scale approach to win the peaks, we're shifting our focus from beverage production to craft and connection. We're finding through our work that investments in labor, rather than equipment, are more effective at improving throughput and driving transaction growth. Learnings last quarter came from a 700 coffeehouse staffing and deployment pilot. It confirmed that the right staffing, combined with the right deployment, improved speed of service and connection while growing transactions. We also began testing a new order sequencing algorithm. It proved effective in reducing in-cafe and drive-thru service times without impacting the mobile order experience. In test locations, average cafe wait times drop by an average of two minutes, bringing 75% of cafe order wait times under four minutes at peak. Building on feedback from partners and these learnings, we're investing strategically in labor to optimize our operations, bring back a premium experience, and better support our partners throughout the peak and the balance of the day. Beginning in May, we'll scale a new green apron service model to more than 2,000 of our US company-operated locations and to more than a third of our US coffeehouses by the end of this fiscal year. This new model combines and unifies new service standards and expectations, changes to partner plays and deployment, streamlined routines, and our order sequencing algorithm. I'm |
6,657 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | and expectations, changes to partner plays and deployment, streamlined routines, and our order sequencing algorithm. I'm confident, based on our pilot work and spending time with store managers and Green Apron partners across the country, that this new model will create more flexibility within our operation, improve peak throughput, better capture demand, deliver a more premium customer experience, and accelerate transaction growth. As we improve partner deployment and the technology supporting them, we're also rethinking our approach to equipment development and deployment. We've paused the continued rollout of our CapEx-heavy Siren cold and food equipment and have chosen not to move forward with the deployment of cold press, cold brew equipment. We believe this evolved labor-focused approach has more potential to improve throughput and connection while minimizing future capital expenditures on equipment. Looking forward, we're on track to fully roll out Clover Vertica brewers in the US, with equipment already installed in 70% of our company-operated coffeehouses. And this summer, we'll begin to push an update to the Starbucks app that lets customers schedule their mobile order pickup and improves price transparency throughout the order process. Number four, reintroduce the Starbucks Experience to the world. We're reintroducing the Starbucks Experience to the world through a focus on brand and coffee storytelling and an overhauled approach to product innovation. We kicked off Q2 with a new US brand campaign and tied to the launch, Starbucks Monday invited customers into our coffeehouses for a free brewed coffee after the big game. It generated record-breaking customer engagement and drove our second highest Monday gross sales day ever. Customers are also responding to our new ads. Within the quarter, our data shows that the percentage of customers ranking Starbucks as their first choice is the highest it's been in two years. On social media, too, our new fan-focused approach has increased engagement on TikTok |
6,658 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | is the highest it's been in two years. On social media, too, our new fan-focused approach has increased engagement on TikTok by nearly three times quarter-over-quarter. Turning to our menu. We've continued to rationalize and update our product lineup to focus on coffee and craft and to create room for relevant innovation that drives demand. In response to customer feedback, we recently removed sugar from our matcha, lifting matcha sales by nearly 40% versus last year. We launched a new coffee forward Cortado platform, which has quickly become a popular core offering. And we continue to educate customers on the range of premium coffee we serve, building on the strength of our Clover Vertica brewer. In the near term, we're making the most out of our beverage pipeline. This summer, we're bringing back the best-selling Summer-Berry Refreshers with Pearls, launching the new limited time Iced Horchata Oatmilk Shaken Espresso and bringing new innovation to our Frappuccino platform. In the longer term, we're using an agile test-and-learn approach to build a culturally relevant innovation pipeline across beverage and food. To do this, we're developing enduring platforms that reshape the business and create long-term potential for the brand. In the coming months, we'll begin to pilot innovations that are sales-driving, brand-building and can be executed consistently. Work is underway to craft artisanal food, including the exploration of ways to freshly bake, assemble and serve certain items in our cafes at scale. We're using learnings from the launch of freshly baked and prepared items in the UK and other international markets to inform our test and scale approach in the US. Next, we're exploring how to lead in health and wellness with a new platform that resonates across demographics, which we expect to launch later this year, and we're looking at new beverages that create an entry point to our craft coffee and drink experiences. To help reclaim the third place and boost the afternoon daypart, we're also exploring an |
6,659 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | craft coffee and drink experiences. To help reclaim the third place and boost the afternoon daypart, we're also exploring an aperitivo menu that includes sparkling beverages, sippable coffee drinks and snackable bites. Lastly, we're beginning to move towards a more regular cadence of limited time flavor launches inspired by baristas and our biggest fans. It's early days, but we're moving quickly to improve the appeal of our product pipeline and to support real-time, culturally relevant menu innovation. Finally, we remain on track with the rollout of digital menu boards, which are already in more than 25% of our US company-operated coffeehouses. They are a key unlock to market dayparts differently and to introduce innovation that isn't tied to our seasonal product cycles. Turning to International. Starbucks has built a globally beloved brand supported by a business that is executed locally in every country and every community where we operate. In a fast-changing environment, this model underpinned by our Back to Starbucks plan improves our resiliency and has proven effective in both challenging and good times. In the second quarter, eight of our top 10 international markets returned to flat comp or comp growth. In the UK, we posted positive comps and have started gaining market share with great feedback on our fresh baked launch. In the Middle East, our regional business partner returned to positive transaction comps for the quarter. And in Japan, the business posted their 16th consecutive quarter of comp growth and has increased both brewed coffee and espresso comps through a focus on the coffeehouse experience. To support our continued recovery in future growth, we're using learnings from international markets to inform our test and scale approach across our global footprint. And we're building on the success of our US brand campaign to localize and extend our marketing across key international markets. In China, we've also seen indicators of progress following near-term changes to our product offerings, |
6,660 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | international markets. In China, we've also seen indicators of progress following near-term changes to our product offerings, including the introduction of true taste sugar-free beverages and new price points on select products. We've got more work to do in the market, but our brand remains strong. Our business is supported by a supply chain and roasting operation that is almost entirely local, and our team continues to make progress on a market-specific Back to Starbucks plan. As we see signs of progress, I want to be clear that we remain committed to China for the long term. We see great potential for our business there in the years ahead and remain open to how we achieve that growth. Lastly, we continue to extend the reach of our brand beyond the walls of our coffeehouses with our global channel business. During the quarter, we delivered relevant innovation to customers at home and on the move, including a new line of Iced Energy and Frappucino-like beverages in partnership with PepsiCo. In summary, our Q2 results are disappointing, especially as measured by EPS. But behind the scenes, we made a lot of progress and have real momentum with our Back to Starbucks plan. I've led other turnarounds and everything I've seen tells me we're on the right track. I believe we have incredible opportunity in front of us that will create tremendous value for all stakeholders. At this stage in our turnaround, EPS shouldn't be used as a measure of our success. We're testing and learning with speed and where we're seeing real change is in our coffee houses. As we scale this work across our full footprint, combined with the strength of our brand, we know we can return the business to strong profitable growth. If you take away anything from today's call, let it be this. We are putting the customer back at the center of all we do, we're setting our green apron partners up for success with the best job in retail, we've got the right team in place to lead, we're confident we have the right strategy and are making the right |
6,661 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | job in retail, we've got the right team in place to lead, we're confident we have the right strategy and are making the right investments to unlock opportunities ahead, and we see evidence of progress from the work we're testing and scaling, which we believe will lead to improvements in our financial results. Some of the investments we're making now will take some time to create material returns and some elements of our plan will move faster than others. As we continue to build and invest in our Back to Starbucks plan, we'll keep looking for material offsets learning from our customers and partners and adjusting our tactics to return the business to growth. There is important work ahead, and I look forward to bringing you along. With that, I'd like to introduce and welcome Cathy Smith, our new Chief Financial Officer, to share some detail on our results for the quarter. |
6,662 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Cathy Smith: Thank you, Brian, and good afternoon, everyone. I have been a huge Starbucks fan for many years, and I'm super excited to be here. Starbucks has been my third place for countless meetings and interviews and a landing spot when I had time to reflect, somewhere I could go and know I'd find a welcoming barista, delicious beverages and a warm coffeehouse experience. In my short time in this role, it is clear there are substantial opportunities for growth and value creation. Like Brian, I am confident the four pillars of the Back to Starbucks strategy are right. I have seen this pattern before, developed the right focused strategy, test, learn, iterate, focus on the leading indicators, look for signs of progress, work on cost per transaction, then move to scale. The desired financial results will take a while, but I have started to see the leading indicators and early evidence that precede all turnarounds. We'll maintain the discipline to ensure small investment yield expected outcomes before scaling in service of long-term durable growth and strong returns on invested capital. I also know that the turnaround is going to take some time. We are committed to providing transparency along the journey. I'll now cover our Q2 results. Our Q2 consolidated revenue was $8.8 billion, up 3% in constant currency to the prior year. reflecting 7% net new company-operated store growth over the past 12 months, partially offset by a 1% decline in comparable store sales. Our global comparable store sales decline was primarily due to a 2% decline in the US with our US transaction decline improving this quarter to negative 4%. While transactions are not where we expect them to be, we are seeing several indicators that are Back to Starbucks strategy is positioning the business on the right track. In the US, market share, brand sentiment and customer contact regarding wait times are all improving. We saw stabilization in our non-Starbucks Rewards member traffic, indicating our broad-based marketing campaign to reintroduce |
6,663 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | We saw stabilization in our non-Starbucks Rewards member traffic, indicating our broad-based marketing campaign to reintroduce Starbucks to the world is resonating with our customers. Additionally, transaction recovery in our comparable stores was strongest in our morning daypart and we saw improvement quarter-over-quarter as we have invested in staffing and deployment, demonstrating that [the deliver] (ph), the customer experience to win the peaks, pillar of our Back to Starbucks strategy, is effective. Our ticket growth in the US for the quarter was 3%, reflecting annualization of prior year pricing and fewer discount-driven offers in the current year. We are driving more durable growth by moving away from highly discounted offers, building the foundation of a healthier base business to grow from. Outside the US Canada experienced both positive comparable store sales and transaction comp in the quarter. Our Canadian market has benefited from food innovation that has resonated with customers, fueling 12.5% higher food sales. Shifting to China. China's comparable store sales were flat for the quarter with positive transactions and expanding margins, driven by their focus on delivering great product innovation and improving value perception. Additionally, customer and partner engagement scores improved year-over-year. In our International segment, we're seeing faster improvement as evidenced by eight of the top 10 markets with flat or positive comps. Our international cafes are starting their Back to Starbucks plan from a more consistent brand experience. It's early, but it's encouraging to see positive signs. Turning to store growth. We opened 213 net new stores globally in Q2, primarily consisting of company-operated growth in the US and China. While we have solid new store economics, we have room for improvement and are evaluating our global store portfolio and new store pipeline, as Brian mentioned. Our cafes will have authentic coffeehouse vibes with customers in mind. Our core model will have both cafe and |
6,664 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian mentioned. Our cafes will have authentic coffeehouse vibes with customers in mind. Our core model will have both cafe and drive-thru with welcoming environments and efficient workflow behind the bar. We are also committed to reducing our new store build costs to drive greater new store returns. Shifting to margin. Our Q2 consolidated operating margin was 8.2%, contracting 450 basis points from the prior year, primarily driven by deleverage and additional labor in support of our Back to Starbucks strategy. Our strategic and surgical addition of labor into our stores is critical for us to deliver the customer connection and experience our customers expect. While we prioritize delivering on our customer promise, we are optimizing workflow, driving efficiencies with new algorithms, simplifying our menu and improving the layout. Although our labor investments drove margin compression in the quarter, the investment in labor allows us to capture additional demand and transactions, which will accelerate our return to growth. Shifting from margin to G&A. In Q2, G&A declined by 3% versus the prior year, driven by the lapping of certain proxy solicitation and advisory costs and cost savings from the corporate restructuring we completed towards the end of the quarter. Last quarter, we shared our intention to include these restructuring costs in our non-GAAP results. Considering the stage of our turnaround, we may have additional restructuring costs in the near term as we evaluate our store portfolio and operations. However, we still expect that any additional restructuring initiatives will be completed within a finite period of time and therefore, have elected to exclude the corporate restructuring charges from our non-GAAP results. As Brian stated, our EPS performance in the quarter was poor. Q2 EPS was $0.41, down 38% from the prior year, primarily reflecting the impact of expense deleverage and heightened store investments. That said, our considerable progress against our Back to Starbucks strategy might be more |
6,665 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | and heightened store investments. That said, our considerable progress against our Back to Starbucks strategy might be more telling at this stage of our turnaround than EPS. We've made tangible progress on all four of our Back to Starbucks pillars. And while the strategy will take time to be fully implemented and produce financial returns, we are laying the foundation for profitable, durable growth. To conclude my remarks on our Q2 results, we remain committed to our capital allocation strategy and continue to invest in our business for high returns, maintain our strong balance sheet, targeting a BBB+ Baa1 credit rating and return cash to shareholders via dividends. Shifting to broader topics. While I know you would like to have some insight into our financial outlook, I'm still learning the business, and it would be premature for me to provide such insights. Although I expect our third quarter FY '25 top line to follow normal seasonality. I recognize our US business drives our results, and it will take time for our Back to Starbucks strategies to be fully implemented in our over 17,000 stores nationally. I know that our shareholders have many questions top of mind, so I will address two topics in detail, tariffs and coffee prices. Starting with tariffs, although the tariff environment continues to be dynamic, we mobilized a cross-functional team and are actively managing and mitigating risks where possible. As it relates to coffee, I'd like to first remind everyone that we source high-quality arabica coffee from 28 countries with the majority of our supply coming from Latin America. Our coffee team is leveraging our global footprint to further diversify and redirect coffee shipments as appropriate. Excluding coffee, our largest areas of tariff exposure include merchandise currently sourced from China and some imported beverage components. For these impacted areas, we are actively working on strengthening our supply chain, including localizing and moving production as needed. For example, for the upcoming |
6,666 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | working on strengthening our supply chain, including localizing and moving production as needed. For example, for the upcoming holiday season, we have made progress mitigating our tariff exposure by shifting production to alternate sites. Now, shifting to coffee prices. The market continues to be volatile and our coffee team has done a fantastic job opportunistically building our supply and securing favorable pricing. Due to our purchasing and hedging practices, our moving average cost of coffee lags the market. As a reminder, our total cost of green coffee is typically limited to 10% to 15% of our product and distribution costs. And we continue to actively manage and balance coffee inventory with related coffee costs. In closing, while our financial results are far from Starbucks potential, I am confident we have the right strategy and are starting to see early evidence and leading indicators. We are building new muscles to test, iterate and scale quickly, all while focused on customers and listening to partners. I want to thank our partners who are dedicated to bringing our Back to Starbucks strategy to life. Working alongside you, I have confidence that we will deliver the experience customers crave and value creation our shareholders deserve. And with that, Brian and I are happy to take your questions. Thank you. Operator? |
6,667 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: [Operator Instructions] Our first question comes from David Palmer with Evercore ISI. You may proceed.
David Palmer: Thanks. I just want to follow up on some of those points that you made in the opening comments. You mentioned investments in labor and order sequencing perhaps over equipment in terms of solving speed and throughput. And so I'm just thinking this through, it sounds like maybe more OpEx and less CapEx than what you might have thought originally and perhaps this is going to be more of a rapid pace to the improvement that you want to get to, it's going to be more easily deployed. Are there any numbers that we can think about in terms of labor investment, maybe per store CapEx thinking that you would be associated with this, maybe less than before? And then anything else that you can think of like that would be important from a staging perspective because it sounds like a lot of changes are happening. Thank you. |
6,668 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. Hey, David, it's Brian. Yeah, thanks for the question. And look, I think your instincts are right. What we've learned over the last couple of months, specifically behind both the algorithm pilot and the labor pilot is the combination of staffing, deployment and technology gives us the outcomes of a great customer connection experience as well as the right speed and throughput associated with what we want to achieve, both in cafe, mobile order and drive-thru. And so we're not seeing the need for the equipment in order to get to the customer experience that we want to provide, both on the level of speed and connection. And then, look, I think what we're doing as far as taking from pilot to scale, I can kind of share with you kind of the journey we've been on so far, right? I started with three stores on the algorithm, started in five stores with the labor pilot and now we'll be in roughly 1,500 stores, close to 2,000 stores by, I think, May and then hopefully, by the end of this fiscal year, will be over 3,000 stores with the labor program and the algorithm program. And so this just allows us to get to, I think, the service experience that we want to provide across the stores at a pace that we think makes sense so that we train, we staff, meaning we hire, and then we're able to deploy correctly and then put in the technology behind it. The other thing that's nice to see is we're seeing transactions respond with the improved speed of service and the better, I would call it, deployment/staffing to enable the connection and the speed that we want. So, I think that gives you a highlight on it. It's probably too early to say what will be the actual speed and the cost associated with it. But the one thing I would say is, and I think you heard this in Cathy's comments and my comments is, we're going to be also looking to make sure that we are very judicious in the cost that continue to go forward in the business because as we make these investments into the store, we're going to see where we can find |
6,669 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | to go forward in the business because as we make these investments into the store, we're going to see where we can find material offsets in the business. And then, obviously, we're banking on some growth to come with the investment in the labor and the store experience. And I highly believe margin then ultimately responds to and the financial results grow with the growth of the business. |
6,670 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. And your next question comes from Sara Senatore with Bank of America. Please state your question.
Sara Senatore: Thank you. I wanted to, I guess, follow up on your last comment, which is about the margin. Margin was down in North America. It looks like most of that 600 basis points from labor. I know you talked about that as a headwind. I guess trying to understand, it feels like Starbucks has been investing pretty heavily in labor for a few years now. And I'm not sure if this is what we're seeing before you see some of the offsets or if fundamentally the economics of the box maybe looks different than it has historically? I'm just trying to sort of piece together, it's a little slower in terms of earnings recovery than maybe some of the previous turnarounds we've seen from you, Brian. And so I can't tell if it's a macro issue or if there's something else here that again says that the boxes are going to be sort of fundamentally different than they used to be. |
6,671 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. Look, I think what's been going on in the kind of -- if you look back on the history, we've definitely invested in our, I would call it, our employee value proposition or the partner value proposition. But I think along those lines, over the last couple of years, we've actually been removing labor from the stores, I think with the hope that equipment could offset the removal of the labor. And I think what we're finding is that was just -- that wasn't an accurate assumption with what played out. And unfortunately, at the same time, price was being taken up for a myriad of reasons, right? There was an inflationary environment, so on and so forth. So I think where we find ourselves right now is -- what we're discovering is the equipment doesn't solve the customer experience that we need to provide, but rather staffing the stores and deploying with this technology behind it does. And then what we're already starting to see is an impact on that transaction and the number of transactions that are incremental. And I think the combination of coming over top with marketing as well to talk about the experience of the Starbucks coffee company combined with the in-store experience as it relates to technology and staffing, we're already starting to see some nice improvements. And just to kind of give you what I talk about there, it's like our non-Rewards customers, we've seen a nice clip-up in transactions. And obviously, our Rewards customers where we've removed a lot of the discounting, we're seeing a lot of choppiness there, because we frankly, were using our Rewards program more as a coupon program as opposed to a Rewards program. And so you're going to see us evolve that program going forward. But the quality of the transactions that we're building back look at it's not discount based. I would say it's kind of the core of what Starbucks is. It's experience based. It's coffee quality based. It's drink based. So I like where we're headed. I think we're going to build back with better transactions, |
6,672 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | quality based. It's drink based. So I like where we're headed. I think we're going to build back with better transactions, which sets us up for, I think, some great growth going forward. And I think margins will be part of that growth story in the longer term. |
6,673 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. And your next question comes from David Tarantino with Baird. Please state your question.
David Tarantino: Hi, good afternoon. My question is about the portfolio comments you made evaluating the portfolio. I was wondering if you could elaborate specifically on what you're evaluating there in terms of the existing base? And then I guess, Brian, should we think about a slower pace of unit growth in the near term that eventually accelerates later as you do this evaluation? Or are you going to continue to grow as you do this evaluation? |
6,674 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. So, thanks, Dave, for the question. Yes. So to answer the first part of your question, look, we have seen our costs go way up on our new builds as well as our renovations and it's just not the cost structure we think we should have going forward nor do I think it's necessary to have a great build and give the customer experience and the partner experience that we need to provide. So we're working hard on how we reset both renovation costs as well as new build costs. And with that, it's only logical to say, well, why don't we slow down what we're building right now. And then as we get the new design and build nailed down, we will ramp our way back up, because as I said in my comments earlier, we still believe there's tremendous opportunity to double the store count from where we are today. I just want to double it with the right build at the right cost so that we can provide the right customer experience and the right partner experience. And so that's what we're working on right now. Actually, before I even hopped on this call, I had the opportunity to look at something that I think is pretty exciting for how we're going to have much better cost in what we build. But it takes a little bit of time to move that through the development pipeline, so that it shows up in market. But I love where the team is headed on the cost side of this. I also love where the team is headed on the design side of this. And then when you layer that in with, I think, a great third place, the right labor, staffing, deployment and some technology behind it to enable the speed and throughput that we want, I have high confidence that we can double the store count as I've mentioned before.
Operator: Thank you. And your next question comes from Brian Harbour with Morgan Stanley. Please state your question. |
6,675 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. And your next question comes from Brian Harbour with Morgan Stanley. Please state your question.
Brian Harbour: Yeah. Thanks. Good afternoon. Could you comment on just the menu simplification you did. I think the thought before was that, that wouldn't have too much of an impact on transactions and people sort of gravitate to other items. Is that in fact what you saw? And then you did sort of tease some other interesting things that could come over time from an innovation perspective. How do you sort of sequence those things? And how will you think about when is the right time for that? |
6,676 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. Well, look, just on the transaction front, we still believe we're making the right decisions by simplifying because it frees us up to do what I believe is more like platform innovation, more compelling and relevant innovation, frankly, versus hanging on to what I would say, just slow movers that -- I'm sure there's somebody that wishes we didn't remove it, but they were slow movers, and we got to open space up so that we can have the big movers. To your point on transactions, one of the things that gives me a lot of optimism is just if you think about from Q1 to Q2, the percent of stores that had positive transaction comp went up by like 80%. We went from, call it, 13.5% of our stores with transaction comps that were positive to now almost 25% of our system with positive transaction comps. So I know we're making progress just by seeing how we are improving our transaction comps as it relates to our existing store base. And the nice thing is that obviously translates into what percent of stores are delivering sales comp, right? And now we're closing in on 42% of the system with positive sales comp. And the thing that's really exciting, too, is the morning, we're almost right around 50% of our stores with a positive sales comp. So, Again, we're making great progress, both across the system with the Back to Starbucks programs just on getting back to being focused on the customer, simplifying the operation for our partner and then being very crystal clear on what are the things that we need to be spending our time on. And that is all around providing a great coffee house experience. And I think we're starting to see it in the results. And then obviously, as I mentioned earlier in the pilot. So the innovation that you talk about, you guys are going to chuckle about this a little bit, but we're using the stage gate process, right, to make sure that what we bring in truly does provide meaningful innovation, whether it's food, whether it's drinks or whether it's an afternoon targeted program. I think |
6,677 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | provide meaningful innovation, whether it's food, whether it's drinks or whether it's an afternoon targeted program. I think it's just really smart of us to know how does it impact the business and how does it ultimately perform with the customer and how is it able to be executed consistently with our partners. So I'm really excited about the pipeline that we're building. To be frank, the pipeline was a little thin, and we're building it back. And I think -- at the same token, the team is doing a nice job of taking advantage of what news we do have to make it as big and as impactful as possible without getting in the way of what we want to accomplish in the store with the Back to Starbucks program. I think you'll see that even coming up in the summer months as we start to roll out some new news. |
6,678 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Your next question comes from Andrew Charles with TD Cowen. Please state your question.
Andrew Charles: Great. Thank you. Brian, you talked about building a globally resilient business. And with investor concerns surrounding a recessionary macro and Starbucks' underperformance in past periods of economic curation, what levers does the brand have as disposal to protect US traffic if the macro would deteriorate further? Maybe said differently, what parts of the Back to Starbucks playbook, can you accelerate if the macro becomes more challenging in the US?
Brian Niccol: Yeah. Thanks for the question. And look, here's what I would tell you is, the one thing that we've heard consistently over and over again, is getting back to this idea of the third place and the connection and doing it in a way where we're on time with the mobile order and accurate. We're less than 4 minutes in the cafe, less than 4 minutes in the drive-thru. And then with a great seat is a real point of difference. And it is one of those things that people would say, hey, look, this is a simple everyday luxury that I can still continue to participate in kind of regardless of what some of the economic challenges are around them is what some of the feedback we're getting. Now if it's a major step backwards in a macro environment, of course, we will be impacted. But my experience has been the best way to go after these things is with your best offense. And our best offense is to make a great third place, with a great drink with a great barista, providing that connection. And in the innovation pipeline, we've got some news that I think would cut through in any environment. So some of those things you can go a little bit faster on because it doesn't require additional equipment or anything, but we'll recognize what's happening with the customer, and we'll adjust accordingly.
Operator: Thank you. And our next question comes from Christine Cho with Goldman Sachs. Please state your question. |
6,679 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. And our next question comes from Christine Cho with Goldman Sachs. Please state your question.
Christine Cho: Thank you so much. I think, Brian, you mentioned the under 15 minutes goal on the mobile order delivery in the last call, and I think you've started to test the mobile order sequencing algo as well in a few of your stores. Any early thoughts here on how you saw the opportunity? And can you walk us through how the partner and customer experience would change with that? Thank you so much. |
6,680 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. So yeah, so the -- that is a pilot that we've gone from three stores to now we're in over 400 stores. And what I'm happy to report on is, really what we're trying to do is figure out how we could continue to be on time with mobile orders while providing better speed of service and customer connection for the drive-thru, the in-cafe and then obviously, the handoff as it relates to the mobile order. And the pilot has been proving just that. We've, I think, pulled out over 2 minutes in the in-store time, and we've definitely seen the drive-thru exceed the 4-minute goal, which is great. So we're averaging less than 4 minutes in the drive-thru and we pulled out about 2.5 minutes in the cafe and we've got about 75% of the stores that are in the pilot now achieving what I would call the 4, 4, 12 metrics without having anybody be dissatisfied with the time of their mobile order experience. So all really good stuff happening for the customer. As it relates to the partner, the good news is a lot of this just happens behind the scenes for the partner. Because what happens is, behind the scenes, the technology is figuring out how to route which order to the store and to the certain station. So that when they pull out the ticket, it has already done the work so that they're pulling the ticket is the right drink for them to make so that they will be successful hitting those speed times and it enables the partner to have the time to have the connection with our customers as well. And like one of the things that really is fun to see in these stores is it's just a lot calmer. People move with purpose but it's a lot calmer, there's the opportunity to provide great connection, and that's really what we want the technology to do behind the scenes is just be there behind the scenes so that our partners are set up for success to connect and do their craft with our customers on every transaction.
Operator: And your next question comes from Jeffrey Bernstein with Barclays. Please state your question. |
6,681 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: And your next question comes from Jeffrey Bernstein with Barclays. Please state your question.
Jeffrey Bernstein: Great. Thank you very much. I wanted to say hello to Cathy and throw a question your way. You mentioned ROIC and returning to strength, this was not normally a metric highlighted on Starbucks calls. Perhaps it got more attention in your prior roles. I was wondering if you can share metrics in your first month, how you think about the ROIC framework at Starbucks and maybe how it might come into play as you make decisions going forward. Thank you.
Cathy Smith: Thank you, and good afternoon. I look forward to meeting you soon. Yeah, so I -- for a very, very long time, believe -- at the end of the day, our shareholders want really two things, give me durable, sustainable growth and give me a good return on invested capital for the risk I'm willing to take for that growth. And so it's very, very simple to me. And so if we focus on those two metrics, I think we'll get to good outcomes for all of us and for our shareholders. That said, to your point, I think we've got a little bit of work, as Brian shared with the portfolio. While they still give us great IRRs by most standards, not by our standards. And so, we've historically done better, and I think we can do better, and we will. So we'll think about that. All the while, though, we're going to make sure we invest in the Back to Starbucks strategy, and then we'll find our offsets. I love deploying a few tools like zero-based budgeting, which will come into our vernacular this next year, which will help us get after some of those maybe stranded costs. So all of that, though, in service of durable growth and a good return on invested capital.
Operator: Thank you. And your next question comes from Jon Tower with Citi. Please state your question. |
6,682 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. And your next question comes from Jon Tower with Citi. Please state your question.
Jon Tower: Sorry about that. I got to figure out how to use the mute button. Thanks for taking the question. Just maybe following up to the labor pilot comment that you spoke about earlier. I think you said 1,500 stores and 3,000 stores by the end of fiscal '25. Do you see that being deployed across the whole US store base over time? Or is it more a select number of stores? And then maybe on top of that, do you see any sort of incentive changing for store-level labor, maybe at the GM level or at the hourly level? Or do you feel pretty good about where that sits today? |
6,683 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yes. So, look, I do -- well, first, thanks for the question. I do see us rolling this across all of our US company stores. It will be in different forms, right, because we have some stores that are cafe and very urban. We have some stores that are drive-thru, mobile, cafe that are more suburban. So what it ultimately looks like as far as being deployed in the store will be contingent upon the business that they run. And I'll just give you an example. I was just in Chicago last week. And they have the labor pilot in their stores. And the one store is a downtown Chicago store, doing a lot of transactions, big mobile business, nice cafe business. And not surprising, we added a lot of labor against the mobile order side of the business. And for perspective, this store is doing like 250 transactions in 30 minutes. And so the woman that runs it is Alicia and fabulous leader, the place is just running like super smooth, no form of chaos. The customers that want to have an in-cafe experience have great in-cafe experience. Customers that want to just grab and go, having a great drab and go experience. And in that place, she increased a lot of the labor towards the peak and then also some of the shoulder hours and primarily in the mobile ordering space. And then the algorithm is going to be behind the scenes, help us manage how those orders flow. Versus like a suburban store, one of the things we saw with putting in this additional labor is we committed a person to just be stationed at the drive-thru. And in this case, the women's name was Jessica, that was the store manager of this store. She's done a fabulous job of taking the labor that we're generating as a result of the peak pickup into our weekend business. And so I just give this as examples of it's going to be -- we're going to need to move both the labor and the deployment to match what the business actually flow looks like. And what's great to see is in both of those scenarios, which are two very different stores, you're seeing transaction growth, |
6,684 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | And what's great to see is in both of those scenarios, which are two very different stores, you're seeing transaction growth, you're seeing a team that's highly engaged, highly energized. I think moving with simplicity, moving with connection and then also just moving to our customer, which is really exciting. And so the plan is we will be moving this green apron service model across all our stores in the US, and it will be a rollout that's very focused. And we'll make sure that our managers and our district managers and the whole leadership is dialed into what we are after with this green apron service model. And the early signs are very promising. |
6,685 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. Your next question comes from John Ivankoe with JPMorgan. Please state your question.
John Ivankoe: Hi, thank you. The question is on the drive-thru. And really in the context that the Siren station, particularly around the ice machine and food warming cabinets, at least from my understanding, were really geared at least partially to significantly improving speed of service at the drive-thru especially where you had a very high blended mix or you had a high food mix. So really, I'm going to go two parts with this question is, do you think those components of siren might make sense in the future? Or are you just suspending them for now? And the second part of the question, and you've alluded to afternoon a couple of times, does it make sense for Starbucks to actually split its menu to some extent of products that are available in the morning and other products that maybe are a little bit more time-intensive or customized that would only be available in the afternoon? Thank you. |
6,686 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. So to answer your first question, obviously, there are some stores, to your point, that would warrant putting in the siren system when they've got a very high mix of drive-thru and a very high level of transactions. So it's not that we're not going to ever use the siren system, it's just not something that we need to be rolling out across all 10,000 stores. So it's going to be very targeted and it's going to be on a very, I would say, used basis as it relates to the store has a need. And then in that case, we will implement it. But for the bulk of our stores, the majority of our stores, it's just not the necessary solution. We have plenty of capacity if we deploy, use the technology and execute with excellence the way I know we can. To your other question about how you think about the menu, look, that's kind of what I'm alluding to is when we do things like an aperitivo menu, right, that would be available in the afternoon from like, say, 2 to 5, we definitely want to reinforce the artisanal, the craft aspect that we provide for when people want to have that little snack or that little pick me up drink in the afternoon. And it gives us some flexibility to do some different things in the afternoon that maybe we wouldn't be able to do in the morning. So digital menu boards will help enable that the way we can market it and then frankly, just being clear in how we market the actual menu and what the experience is, we'll help with that. So yeah, we're going to -- we want to take advantage of what our capabilities are and the fact that we're open from 5:00, 6:00 in the morning until 7:00, 8:00, 9:00 at night. And we got to be smart about delivering on beverages and food for the occasions that move throughout the day.
Operator: And your next question comes from Chris O'Cull with Stifel. Please state your question. |
6,687 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: And your next question comes from Chris O'Cull with Stifel. Please state your question.
Chris O’Cull: Thanks. Brian, on the last call, you mentioned several near-term changes that could be implemented in China to stabilize the business. They appear to be working, but can you describe some of those changes and whether you believe they have stabilized the transaction declines?
Brian Niccol: Yeah. Thanks for the question on China. Molly and the team have done a really nice job of getting after some key things that we need to do to be more competitive in the market. And they've started to implement, I think, some very relevant marketing. They've also brought forward some very relevant product innovation, both in flavors and now most recently in this sugar and flavor separation program and then also the dumping program that they have. So they've already started the process of figuring out products at certain prices, combined with, I think, very relevant innovation and some additional marketing that's connecting in a very culturally relevant way. And the good news is Molly and the team are just getting started. So a lot of their ideas still are yet to roll out. But the things that they've rolled out most recently have definitely made a very nice impact. The flat comp with 4 points of transaction growth is really nice to see. And I think the team is going to build on the momentum that we're starting to create in the China market.
Operator: Thank you. And your next question comes from Danilo Gargiulo with Bernstein. Please state your question. |
6,688 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: Thank you. And your next question comes from Danilo Gargiulo with Bernstein. Please state your question.
Danilo Gargiulo: Great. Thank you. Brian, this question is on pricing. And earlier, you were mentioning that you had the intention of not increasing prices in 2025. And arguably, with general inflation rising given the tariffs, you might have a golden opportunity to be pricing below competitors and perhaps strengthen the value positioning of Starbucks. At the same time, the coffee prices are increasing. So are you planning to maintain prices in '26 as well? Or will you be prioritizing margin protection? And also, can you help us quantify the impact of rising coffee prices on margin? Thank you. |
6,689 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. So I think as I've stated before, our intention is to not move on pricing for the balance of this fiscal year. And we've also done some other things, I think, to enhance the value proposition like not charging for alt-dairy. You're going to be seeing us on the pricing front also roll out in the app here in the next couple of months, easier ways for people to navigate and get pricing transparency into their transaction, which I think is also going to help clarify things for our customers. And then look, as it relates to 2026, we're going to be working on a lot of things to figure out how we can improve margin. And I think it'd be premature to say we got to use price as the only way to protect margin. I think we're going to be looking at ways to grow the business and also take really a hard look through the zero-based budgeting approach to understand where else there might be some offsets. Frankly, price would be the last lever I'd like to pull. But we'll assess as we get closer to 2026 and then do what we believe is the right thing for both the customer and the business and the brand. And I think your last question was in regard to coffee prices as it relates to the business. The good news for us is it's actually a small piece of the total cost of sales proposition. The team does a great job of buying coffee. And I think you've seen historically how they've done a really nice job on that, and they're currently doing a really nice job on that as well. So, Cathy, I don't know if you want to add any more details on it? |
6,690 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Cathy Smith: No, just that it's typically 10% to 15% of our product and distribution costs. So as Brian said, it's small. And maybe the only other thing to layer on as our team has historically, for a very long time, had a great sourcing, hedging and warehousing program that then will mute the prices both on the upside when prices are rising and when they're coming back down. So -- but all of that said, I think the bigger picture is where Brian went, which is a smaller piece of our total product and distribution costs.
Operator: Thank you. Your next question comes from Peter Saleh with BTIG. Please state your question.
Peter Saleh: Great. Thanks for taking the question. Brian, since the fall of '24, Starbucks has embarked on a pretty meaningful change investment behind advertising, a lot of linear TV behind sporting events, some radio. Can you just talk a little bit about the return on that investment that you're that you're seeing, how you're measuring that? And should we continue to expect that this will be the cadence going forward that you'll continue to invest behind linear TV and radio and maybe even increase that going forward? Thank you. |
6,691 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Yeah. Thanks. Yes, look, we're feeling really good about how the marketing is taking hold. One of the brand trackers that we do, we just got back that brand first choice is the highest Starbucks has been since 2023. The other thing that also I'm really delighted to see is the progress that we're making with our non-Rewards customers from a transaction standpoint. We were at a really big deficit in kind of that fall when I first got here. And literally, every quarter, it has improved from a transaction basis, and even as we enter the third quarter, I'm continuing to see further improvement. And the other thing that's really nice to see is as we've removed a lot of the discounting, we've seen higher-quality transactions show up. So it's showing up in ticket a little bit to the tune of like 1 point roughly. But what I'm most excited about is when you talk to customers, they're giving us feedback that I'm really getting a better experience from Starbucks. And it's interesting. It's just little things like the barista asking me, do I want to stay or is this to go? Writing the little note on the cup, having that connection at hand off, having the condiment far back. So I think bringing these things to life and advertising and then having it be reinforced when you're in store, is one of those cycles that just build on it. And look, I think trust and the team are doing a great job. And I would say it's beyond just the linear TV. It's the social, it's the digital, it's all the different aspects of how we communicate with customers. And I think we're going to continue to just get better from here as it relates to the marketing side of the business.
Operator: Thank you. And that was our last question. I will now turn the call over to Brian Niccol for closing remarks. |
6,692 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: All right. Well, thank you for your time and all the questions. Obviously, I'd be remiss if I don't first just mention the hard fact in front of us, which is our Q2 2025 financial results were disappointing. And -- but I think the thing I want you to know is behind the scenes, we really are showing a lot of signs of progress and I think as I've said before, our turnaround is going to take a little bit of time, and we've got much more work to do as we build back a better business. I can't emphasize enough. It's not just about building back the business, it's about building back a better business. But I'm more confident, frankly, than ever about the opportunities ahead of us. And frankly, I think there's more opportunity than I even imagined when I first came into the job. So -- I've learned a lot over the last seven months. We've got a great team that is in place that is committed to winning with customers and doing it in a way where we set our partners up for success. I think I've said this before, as I've led turnarounds like this before. And I really do have a lot of confidence as we continue to scale the work underway and we manage costs smartly, our Starbucks transformation that we're going to lead, I think it's going to be both impactful and enduring. And our aim is just that we want to build a Starbucks with a clear mission and purpose. We need to be loved for its coffee, it's warm and welcoming coffee houses, our talented Green Apron partners and the community that we build, and we're focused, I can't emphasize enough, we're focused on moving quickly, but we're also focused on executing with excellence so that we can deliver on all these commitments. So look, in doing so, I'm confident we're going to stabilize the business. I think we're starting to show that right now in our results. And then we're going to build resilience so that we frankly create economic opportunity for both our partners. And then, obviously, we want to provide an exceptional experience for our customers and then we |
6,693 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | for both our partners. And then, obviously, we want to provide an exceptional experience for our customers and then we want to clearly generate terrific long-term returns for our shareholders. So lastly, I just want to say thank you to our partners for supporting the changes that we're making. And for the feedback that they continue to provide. I can't emphasize enough how much they are the leading edge of our comeback. And I hope that all of our partners are really proud of the work that we're doing, and they're proud to continue to wear the green apron. So with that, have a great afternoon and I'm sure we'll be in touch. Take care. |
6,694 | SBUX | 2 | 2,025 | 2025-04-29 17:00:00 | Starbucks Corporation | 34,745 | Operator: This concludes Starbucks' second quarter fiscal year 2025 conference call. You may now disconnect. |
6,695 | SBUX | 1 | 2,025 | 2025-01-28 17:00:00 | Starbucks Corporation | 34,745 | Operator: Good afternoon. My name is Diego, and I will be your conference operator today. I would like to welcome everyone to Starbucks First Quarter Fiscal Year 2025 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Tiffany Willis, Senior Vice President of Investor Relations. Ms. Willis, you may now begin your conference.
Tiffany Willis: Thank you, Diego, and good afternoon, everyone, and thank you for joining us today to discuss Starbucks' first quarter fiscal year 2025 results. Today's discussion will be led by Brian Niccol, Chairman and Chief Executive Officer; and Rachel Ruggeri, Executive Vice President and Chief Financial Officer. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ from these statements. Any such statement should be considered in conjunction with cautionary statements in our earnings release and risk factors discussed in our filings with the SEC, including our latest annual report on Form 10-K and quarterly report on Form 10-Q. Starbucks assumes no obligation to update any of these forward-looking statements or information. Revenue, operating margin and EPS growth metrics on today's call are measured in constant currency and represent non-GAAP measures. Please refer to the earnings release and our website at investor.starbucks.com to find reconciliations of these non-GAAP measures to the corresponding GAAP measures. This conference call is being webcast, and an archive of the webcast will be available on our website through Friday, March 14, 2025. Also, for your calendar planning purposes, please note that our second quarter fiscal year 2025 earnings conference call has been tentatively scheduled for Tuesday, April 29, 2025. And with that, I'll now turn the call over to Brian. |
6,696 | SBUX | 1 | 2,025 | 2025-01-28 17:00:00 | Starbucks Corporation | 34,745 | Brian Niccol: Good afternoon, and thank you for joining today. Over the past four months, we've been focused on getting Back to Starbucks and those things that have always set us apart, a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas. We believe it's the fundamental change in strategy we need to solve our underlying issues, restore confidence in our brand and return the business to sustainable long-term growth. While we're only one quarter into our turnaround, we're moving quickly to act on the "Back to Starbucks" efforts we outlined on our last call. And to date, we've seen a positive response. As Rachel will outline in greater detail, our financial performance met our expectations for the quarter, with a total company revenue of $9.4 billion, a global comparable store sales decline of 4%, a global operating margin of 11.9%, and overall earnings per share of $0.69. To be clear, these results have room for improvement, but I'm confident the disciplined investments we're making in labor, marketing, technology, and stores this fiscal year will help stabilize the business and position Starbucks for future growth. We're also working to change the role, structure and size of our support teams to improve efficiency and accountability. This will ensure we deliver on our commitments and our work to get Back to Starbucks. Let me share with you some of the progress we've made through the quarter and what we're focusing on next. Our path "Back to Starbucks" in the US is driven by four core initiatives: reintroduce Starbucks to the world, deliver the customer experience to win the morning, reestablish Starbucks as the community coffeehouse, and ensure Starbucks is the unrivaled best job in retail, recognizing our success starts and ends with our green apron partners. During the quarter, we moved quickly to refocus the business, our mission and our marketing to align with our core identity as the premier purveyor of the finest coffee in the world. We |
6,697 | SBUX | 1 | 2,025 | 2025-01-28 17:00:00 | Starbucks Corporation | 34,745 | our mission and our marketing to align with our core identity as the premier purveyor of the finest coffee in the world. We started by reducing the frequency of discount-driven offers, resulting in 40% fewer discounted transactions year-over-year. We also removed the extra charge for non-dairy milk, customizations and identified several other steps we can take to make our pricing architecture more transparent for customers. And just this week, we launched a new Coffee Forward US marketing campaign, reintroducing the brand to a broader customer audience. Our work to reintroduce our brand is just beginning, but our core business is already strengthening, demonstrating that when we talk about our business, customers respond. Through the quarter, we saw a shift in our sales mix towards coffee and Espresso-based beverages, which over-delivered and compensated for lower-than-expected performance across our holiday promotions. We've been focused on simplifying our menu to position partners for success, improve consistency, drive customer satisfaction, and enhance our economics. As part of this work, we made some late simplifications to our holiday product lineup and believe we have more opportunity ahead as we follow a disciplined stage gate process to innovate and bring to market fewer, better beverage and food offerings that reflect our premium positioning. In the coming months, you'll see us begin to optimize our menu offerings, resulting in roughly 30% reduction in both beverages and food SKUs by the end of fiscal year 2025. As we do, we'll work to lead this market with breakthrough beverage and food innovation. We'll do this by being responsive to customer trends and their changing preferences. We'll rely on our highly-engaged green apron partners for inspiration like we did with our Lavender lineup last year and we'll be more responsive and tuned in to cultural moments like we did with the Dubai matcha. We also saw continued improvement in comp trends driven by "Back to Starbucks" efforts launched during Q1. |
6,698 | SBUX | 1 | 2,025 | 2025-01-28 17:00:00 | Starbucks Corporation | 34,745 | the Dubai matcha. We also saw continued improvement in comp trends driven by "Back to Starbucks" efforts launched during Q1. Non-Starbucks Rewards customer traffic grew quarter-over-quarter. Starbucks Rewards membership and spend grew both quarter-over-quarter and year-over-year. And price parity for non-dairy milk customizations brought back lapsed Starbucks Rewards members. Our US category share among QSRs also recovered in Q1 following two quarters of decline. These things tell us our actions are resonating with customers. Progress like this shows me that the Starbucks brand is still resilient and strong and that we have significant future potential. More importantly, it shows that we can sell more of our core beverages simply by demonstrating our premium value. A key part of the premium value we provide is quickly and consistently delivering a high-quality handcrafted beverage to customers. The handoff from our barista to the customer is our brand moment of truth, and we've been working hard to get that moment right. Through the quarter, we've continued to test and learn as we position the business to achieve our four-minute throughput goal with a moment of connection. It's become clear through our pilot work that order sequencing creates more of a bottleneck than capacity. In short, investments in staffing and deployment, processes and algorithm technology demonstrate the greatest opportunity to deliver a four-minute wait time in most of our cafes. As a result, we've started to segment stores by transaction volume and are now targeting installation of siren equipment only in our highest-quartile stores where it is needed to meet our throughput expectations. We've also invested additional coverage hours across more than 3,000 US company-operated stores through precision scheduling, introduced new brewed coffee and tea routines and simplified beverage builds. And soon, we'll launch a pilot across 700 stores, looking at staffing levels to improve our green apron partners' ability to serve the world's finest |
6,699 | SBUX | 1 | 2,025 | 2025-01-28 17:00:00 | Starbucks Corporation | 34,745 | a pilot across 700 stores, looking at staffing levels to improve our green apron partners' ability to serve the world's finest coffee with a moment of connection. We'll use learnings from this to inform the future investments we need to make in store coverage hours to deliver both an exceptional partner and customer experience and further differentiate our brand. Looking forward, we're beginning to pilot a new in-store prioritization algorithm and are exploring other technology investments to improve order sequencing and our efficiency behind the counter. We're also progressing efforts that build on the strength and popularity of the Starbucks app. This includes development of a capacity-based time slot model that allows customers to schedule mobile orders and a midyear update that will simplify customization options, improve upfront pricing, and provide real-time price changes as customers customize beverages. Lastly, we're planning to fully deploy digital menu boards in cafes across our US company-owned stores over the next 18 months to make our offerings more easily understood and to better show customization add-ons. We also made strides to reestablish Starbucks as the community coffeehouse. To make it easier for our customers to enjoy a cup of coffee their way, condiment bars will be back in all our US company-owned stores by the end of the week. We reintroduced ceramic mugs and handwritten notes on cups to better connect with customers and elevate the cafe experience for those who choose to stay and work. We rolled out new cafe service standards and expanded free refills on hot and ice brewed coffee and tea to non-Starbucks Rewards customers at participating stores. We announced a new coffeehouse code of conduct to prioritize our spaces for customers and we continue to target a full rollout of Clover Vertica brewers by the end of fiscal year 2025. We're taking a hard look at our store portfolio as well. In the US alone, we still see the potential to double our store count while improving the overall health |
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