SBUX - Earnings call transcript Q1 2020

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Operator

Good afternoon. My name is Hector, and I will be your conference operator today. I would like to welcome everyone to Starbucks Coffee Company's Second Quarter Fiscal Year 2020 Conference Call. . All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator Instructions]

begin turn I Ms. to now the Durga now Doraisamy, conference. Doraisamy, may Relations. over Investor call will of Vice you your President

Durga Doraisamy

our Operating led we and Grismer, thank Chief CFO. and Roz and results. joining to year Good afternoon, will Johnson, President, by Americas; second will President Brewer, you Coffee fiscal be everyone, quarter discussion Pat Q&A, and be Kevin Group us joined And for Culver, Channel Officer today for discuss by President, Group Today's Development CEO; XXXX and Global Tea. and John International,

from Form conjunction Form This considered statements which that these are such cautionary discussions annual conference our statements and statements, filings actual uncertainties and forward-looking our could risks our will call and subject the release cause XX-K to report quarterly materially results in earnings last statements. with in should including include on Any be SEC, various our XX-Q. with differ on risk factor in report to

COVID-XX in of estimate spread were prior the available information the some we statements based actual at assumes previous of were comparing These on the obligation reasonable, which of virus, Starbucks cases, of were to created to to to time impact the forecasts all of and addition, on forecast. update a variety information. some results no forward-looking In but not these our accurate. assumptions, or be or we by believe which prove any may

These website the referenced investor.starbucks.com impairment costs in measures to and items the results. in measures. from strategic corresponding fiscal with including to call financial certain and items charges, reconciliation at restructuring GAAP our our excluded and results non-GAAP refer include non-GAAP transaction find several integration Please today's are to of related GAAP XXXX other items. actions,

XXXX. being will our through webcast XX, is be an archive conference website This Friday, webcast, on available May call and of the

planning for purposes, earnings calendar third your scheduled fiscal for year that call July our Tuesday, quarter XXXX. please Finally, tentatively note conference XX, been XXXX has

the will Kevin. turn now I call to over

Kevin Johnson

welcome. extend responders, are and for those Around economic compassion this life, to times. all Starbucks, want our afternoon both of Good impacted world, and by of people, empathy and On and deepest isolation of governments during health behalf navigating I all feelings and anxiety pandemic. loss businesses the of uncertainty extraordinary fears frontline and

It our all how responding. our impacted three business Pat update in has with are weeks was COVID-XX just shared how spirit when we and ago, second of stakeholders, transparency, the I continued intra-quarter and on

strengthens continued with impacts from we insights global business recovery our even emerge pandemic are that new temporary Today, China in more that will this make these our capabilities belief stronger and and will relevant. that and

responsible in focus and supporting our we principles this prioritizing serving bringing positive January well, our to our customers, started the to officials developed effort. showing role spread us the partners principles of constructive work response our government to playing they as well-being pandemic serve to and communities. and in way up in since health The three and simple are mitigate of virus and and health recovery decision-making drive a are the The a

our of drove on momentum to States. the the our business United April history the quarter in we one shared seasons positive X, the continued second stakeholders holiday company In update that that strongest into in our of well

crisis. agenda at that will emerge of obviously is impacts brand performance by our from propel disrupted future Starbucks remains when positioned and this Growth confident we Scale that the COVID-XX, growth and intact Our are we was well but the current

strong exceptional quarter on in of navigating performance and up was in notable China. over be to how U.S. driven to time. impact then some offer shaping some QX expect share QX simultaneously Channel COVID-XX were by Development, will business we even we while I the an recover the perspective highlights from for and our Starbucks,

the of started impact significantly end pandemic the near both quarter, the to outside the However in materially U.S. of our China business

consolidated a in result, primarily closures, was X% store QX in to by revenue XX% temporary prior globally, in year, partially billion, compared reflecting $X Development. by traffic, offset decline a contraction and operations sales driven a due As store modified comparable store to strength slower Channel

impacted XX% comparable in the with revenue in international year-over-year closed store zones China place. China, many most that are pandemic and In business travel Starbucks open, QX, reduced and almost and by enclosed of stores China in protocols $XXX entertainment are our still XXX% with sales hours in seating, where stores respectively. for where located and are declined of certain Today, our effect. hubs in million restrictions other primarily remain cinemas and safety along venues limited tourist

February, Since we store comparable office in China commercial, in sales and started meaningful reopening improvements have locations. stores late we seen residential in

continuing rise. to We mix are sales in-store the seeing also of

were of sales approximately XX%, from China in a minus For low store improvement down comparable strong the April, in weekly XX% month of marking mid-February.

the during Importantly, most seven XX were and suspended quarter, QX even of development activities net another opened locations thus added new new in though locations we April. for far store in China

many XXXX. to XXX originally planned deferred We year are this XXX expecting fiscal in to stores net fiscal least new at XXXX as for new as open with stores

and capability speaks a enormous store and development our team amazing our to represents of spirit the rapid This new in reacceleration of China.

progress, optimistic on coffee our market ability we the we remain potential recovery is China. the premium about in of and to Given plan working capitalize our believe growth long-term this

a recovery year. path We believe, fiscal end the our any business this of barring disruptions, substantial is that new by China in to on

planet choices aspiration features GOOD the distribution while Beyond Asian packaging materials. customers. alternatives a Starbucks our we plant-based be positive, packaging. just served national Oatly, relevant in with new China from to Meat's marketing is this plant-based menu Starbucks plant-based products This items and of step milk With made in menu introduced which to proteins week, program introducing offer campaign Starbucks the one alternative. in China larger for launched campaign, first Also in plant-based in GOOD last Just is

Over and premium China, delivering partners and investing admired the unique in experience we've in customers. our years past to established our a trusted XX by an brand

to in play is in Coffee market. roasting growth in will outside continue the Park we as XXXX for state-of-the-art customers for key the we Innovation be component China network see as We Shanghai game that in a to China our Starbucks opening coffee serve opportunity we specialty The future. and the will invest worldwide of coffee testament in a long

Starbucks' is premium and differentiated the China strong is as in customer brand as ever. highly experience

Starbucks pave one the proud China significant of two has a lead We way continues that continue growth growth Starbucks. of potential China our in to as how thoughtfully long-term for market to I invest markets. am

the the four to strongest quarters of for revenue U.S. growth Starbucks, Prior other the in was accelerating comparable on to in driven one growth X%. momentum X%, off strongest market Now over U.S. Coming level of history in continued the U.S. of store by build transaction years, the holiday lead to growth comparable well QX. Starbucks, the into growth sales to mid-March including of

in to Additionally two-year tracking strongest comps growth, over three years. were XX% the

customer occasional a clear from strong that dayparts Rewards our on experience, and growth is the both beverage and powerful relationships members With Starbucks all customer it very innovation digital customers, combination. our contributions is and focus across

we contraction mid-March X%, stores X% delivery to of COVID-XX. weeks and remained down our to U.S. a decided performance that was In ending and of over final emergency three was for drive-through driven quarter company-operated interrupted in Our that close swiftly comp. by sales national declared service limit a decelerated, when XX% to open. And QX those traffic mitigate comp the

as been protocols, adopt in Based are our while we on still safety prepared for the needs. we anyone mitigate-and-contain gained positioned to as the meeting navigating experience have customers' this in particularly our well stores COVID-XX as U.S., operational China, phase well

being Starbucks second the to directly note, at whom delivery. of In and on-the-go, stores increased mobile XX% majority over highly for the customer include communicate XX% during orders before crisis million members, the loyal our the routinized drive-through from customer highly XX% the our or can and Starbucks occasions ago. our of quarter we U.S., app these using were Of the U.S. XX.X up of drive-through to order the year almost XX-day company-operated by placed with digitally active a Rewards or with in base, pickup engaged

started, Flat are Cold And beverages, making and pandemic with an quarter, for average the seen result throughout for growth Nitro response Coconutmilk through local have resonating their alt runs Almondmilk Overall, customers and the lead Latte a milk we increased White to for Brew frontline this are and ticket as Starbucks teams. Honey our customers. homes, Since of refreshment crisis group businesses well ordering essential continue new beverage. also

to new innovation breakfast Our food, date. wraps, expectations in our surpassed notably have

we operations to new we are Similar adapt. experience call and a of China, transitioning phase monitor into in our

service the up every operations. leveraging U.S. leverage stores enable curbside delivery, parking entryway from We us is across community delivery that allow variety home pickup, are to in that now and at thoughtfully digital monitor of scale us contactless reopen where situation options the service, and tools available and COVID-XX to a

new of ways of adjusting a our enabling far. using have digital customer principles reach, health strength our in service our partners, community the and The We range are safety with our with us customers to simple by a reopen three to guided options, is standards way, expectations. a combined innovative of new thus thoughtful the stores, public community communities, that finding to serve and focus response prioritizing exceeding on

necessary down May reopened have Our dial is monitoring schedules. enhanced to XX% and or stores, input the protocols or beginning the of early provides store. company-operated specific for a reopen in safety turn June decisions community, with specific depending in of all capability and the early stores enable beginning This to Starbucks on up U.S. the we recovery we as the a us that situation modified expect by approximately

continue store We who are locations responsibly U.S. grocery our protocols across country. across operate the our stores also in sharing to particularly the safety licensees with their

the our ongoing that rapidly community on is reopening to U.S. this. is stores in process inflection U.S. recovery a the phase This by begins for the point summary drive and business community requires and monitoring adapt My monitor-and-adapt recovery.

digital to our operating to contactless leverage and to assets curbside like positioned customers. new service well pickup are and expand formats We

this has the and we had to our prior Starbucks COVID-XX. serve connection momentum Starbucks, place been in formats will us to regain third with improvements the about store and through on convenience. our focus to innovation expect community connect digital customer And the we with continued customers strengthen communities And experience, enable digital enabling and beverage convenience. our At always innovative us competitive to even differentiates capabilities greater and and safely advantage and

for care of serving free million us X their cups have which shown who tirelessly of this. responders, am proud. partners Starbucks others the that all proud fact coffee served communities, of how The have the frontline worked over through also to up I very in makes while all U.S. they to

developed by and and the as U.S., around the values playbook for Starbucks in With are China the working refined international to our the that current Leveraging and in closely Experience license to committed our prepare commitment our to was partners recovery this too Starbucks license guided safely XX environment and with supporting the challenge. navigate we mission partners we markets, and delivering responsibly. in world navigate are they

business. to stores. Selling they our strategic And the when Starbucks unable ability segment of retail our been environment. they in extends Development products Channel current even the finally a multiple our brand through are, customers few are has Channel channels Development comments amplifies visit clearly our where on evident value to meet and The

X% and we QX products down and our Through convenience in of at market wide Growth to Nestle impact, In a activity, the Tingyi, this mass of Global the important to stores, grocery revenue related Scale Starbucks the range element by including at aisle an grew Global outside our includes stores of retail. favorable which online. be Alliance This Coffee in transition-related a agenda. boosting coffee the partners Coffee specialty primarily Pepsi of segment's ready-to-drink Alliance offer XX% merchants, share with continues and our

It our since ago. The markets the channel is now extremely time, Global world. clear we around working Coffee is XX Alliance expanded to And have well. XX nearly months brand that Starbucks just was that established with Nestle strategy the

hand Starbucks quarter walk and balance-of-year you perspective, to Before key resilient. over of I point. Pat through the I to want details to is the one reinforce

challenge and For have every XX well. founding, us years since as overcoming challenge to our over this we presented are overcome

Our China to a on business is recovery. path

our results the phase strong and is the posting adapting stores, momentum. reality and new as Our amplifier. And and entering business business to acting of is restoring U.S. Development reopening a rebuilding Channel brand very

more in this agenda remain navigates confident we to approach. our to works there's do Scale must COVID-XX at and create Growth provides to Our agile We for and understand focus a the and discipline vaccine. be much the successfully us challenge. We navigate world as that

going clear very path a forward. have We

future believe ever experience even Starbucks optimistic about and determined more this and from focused than are stronger, the will We we emerge more before.

goes But in the are emotionally principled a true decisions Together, humanity. the to we certainty real we the our period. together It to connected And partners. are will to to and can key mission this why credit making Partners values. Starbucks all are Starbucks. After economic to all of heartbeat resilience. with is partners through do provide challenging them our we are support them grounded we

deeper crisis. an it financial over our our overview of Pat? results, outlook, dive weather on turn readiness I'll FY QX a into an Now, our Pat and to for to this financial XXXX update

Pat Grismer

to appreciation for global their continue of demonstrate dedication Kevin communities in and now. everyone. right you, community of Starbucks and the Starbucks good who hardships start I facing spite their Kevin's Thank like to echoing the partners all our to by afternoon

disruption our business has pandemic materially results. Unsurprisingly, to financial the COVID-XX attributable impacted

impacts on performance is our our conditions. by normalized well outlined, with impacts insight provide second into as how the future temporary the Our so be for may highlight perspective belief investors by quarters' to as as recovery that these affected as in quarter these financial Kevin will continued results are evidenced I China

segment estimated In in to to impacts actual the specific forecasts prevailing and each comparing the reported market. based on our These other in we segment onset in business results internal have most specific these late the forecasts all and developed January were started impacts each material to revenue COVID-XX-related first impacts cases recent operating markets quarter. and QX These operating China trends profitability market. and materialized in later to prior in of by

produced temporary hours, channels, $XXX Starbucks sales to quarter, X% approximately be restricted shortened impact year. store severely second due operating revenue the down COVID-XX of We the prior $X reduced from For estimate consolidated billion, to million traffic. and closures, customer the

$X.XX QX only earlier $X.XX, year. I non-GAAP we prior but the in month I approximately an revenue outline impact that on COVID-XX from We to not X-K, response noted including down also shared to incurred this which impact we earlier the will incremental flow-through As costs XX% later. estimate the that in the EPS be was profit pandemic

then I some of share highlights and liquidity. will consolidated perspective performance operating on balance first and of some results margin results year segment provide QX and for we'll

flat at the past sales sales. decline segment year effectively in incremental X% $X.X from of Revenue in billion comparable was for store to net our growth as offset over Americas by QX was new relative prior store X% the a XX months

QX decline approximately due I to resulting impact that estimate three was first We weeks Through attributable few of quarter the the quarter. ultimately building than the the million. a the sharp to on But America's in X% a mentioned growth the final in this quarter, weeks store X% COVID-XX earlier be COVID-XX $XXX revenue comparable the sales by momentum for XX past decline strong of more the quarters. offset to from delivered U.S. decline

non-GAAP February, meaningfully operating month sales prior leverage strong the margin the year supply efficiencies. improved of versus chain continued reflecting Americas' and Through

the to response rapid investments due that the operating However, year. the QX mid-March, to in outbreak margin sales significant XX.X% the in XX.X%, in landed from COVID-XX materialize at and down decline prior in Americas started U.S. to non-GAAP

retail in approximately QX incremental non-GAAP consisting well as our inventory on safety as estimate catastrophe Americas programs support store sales the notably We write-offs, through as well and partners, lost COVID-XX benefits as in and that flow million income store enhanced supplies. was operating wages $XXX to pay impact of of investments

January of impacted and for Japan. markets including business majority with the March International, starting to in resulting extending in from to other China segment on QX COVID-XX the disruption late Moving

prior International's to QX driven million. sales, attributable revenue by $XXX XX% XX primarily For the $XXX store growth the XX% or by quarter, store $X.X by approximately decrease decline a versus declined million revenue COVID-XX the International's estimate to partially We comparable net new past XX% to year billion, over months. be offset in

to what estimate in approximately higher-than-normal a down was non-GAAP income the in resulting Further commission costs. operating COVID-XX the XX.X% as components outlined prior contributing customers consumption, to to non-GAAP transactions decline of million was and in operating $XXX QX impact margin similar higher International X.X% that year. margin International's with from delivery QX for the the I Americas. mix shifted to was sales packaging off-premise We

orders On to Global transition-related of Channel QX X% Development. sales Coffee to to customer on the of 'XX, single-serve XX% higher normalizing Global prior transfer for the favorable activities revenue Development's When Alliance of foodservice benefit inventory Coffee certain year. the the basis. as product prior Channel items, Revenue go-forward QX was include fiscal $XXX year. Transition-related million the Alliance an well as impact under over XX% in related Nestle in a Nestle increase items fulfill grew prepared as a to over

operating margin was basis just prior for Development's basis XXX XX Channel Normalizing basis XXX activities operating the point I of the points points The mentioned, margin segment's impact transition non-GAAP over XX.X%, of year. QX. improvement the an in expanded

consolidated Finally, basis $XXX I be to QX cited in inclusive impact the X.X% non-GAAP contracted income at of level, points XXX International. operating non-GAAP million, and We the Americas estimate to for year-over-year. amounts the approximately operating of margin the COVID-XX

of the manage term investments business, flow-through investments than and the that effects pandemic. I of of the long to to reflecting the our strengthen competitive flow-through believe our our lost revenue our million that significant observe support term. from and as which in will fuel impact position these the short we partners on our typically to We we've for made this emerge relation the recovery consolidated we that materially the brand equates mentioned XX% is $XXX approximately rate revenue In earlier, variable XX% higher in

outlook our fiscal on moving XXXX. to Now for

ability our business, updated for is predicated year nature of provide the within global response on the the remainder our to phase the of guidance COVID-XX of Given of markets. our each current

China, our Kevin phase, ability to is estimate second balance year of recovery in market largest the As discussed, results. our enhances which

However, four impacted of COVID-XX round this guidance at time. ability are largest response, enterprise-level and provide the phases our Japan out Canada, limits markets which earlier in U.S., our which to

we for and updated to selected while outlooks metrics. formal financial fiscal suspend a XXXX, are guidance businesses for As result, continuing providing

China. with start I'll

mentioned, customer to of the improvements relative in improve half With store date the including having XX% XX% year, to in towards today by year. XX% fiscal XX% and the the for XX% to as comparable will traffic progress reported Kevin to roughly flat second we seen for decline sales open end of and in fiscal relative declining as of a believe stores yielding have QX, continue QX to of the of the China's to China's trending XX% in QX decline our continued full comparable we XXXX sales prior

resumed new activities we While in original COVID-XX, fiscal China net in in to end of This we year given store at new stores temporarily development see the are target. opportunity our quarter the this towards to and on China us to position of continue track will 'XX paused and QX we XXX or in open openings the growth capture XX% well fiscal over beyond. least

be COVID-XX in estimate of approximately any $X.XX China $XXX effects of fiscal to XXXX between and store $X.XX with new revenue new million by sales store by disruptions. declines comparable development to EPS deferrals, impact million the estimated an barring Combining we $XXX and negatively impacted in

be with of XX% hours. operated many expect Moving stores them to temporarily of our early week, XX% we operated stores in But modified shorter by of operations to and licensed expect U.S. stores XX% next company are approximately operating reopening our open We the company and the begin initially June. approximately of closed. to currently U.S. Today

is our also already safety best-in-class entryway curbside And channels throughput are through service to drive along new and as are a we which with MOP in modifications increase Kevin available. solution, handoff delivery Additionally, locations in underway existing stores in where incorporates protocols. parking mentioned, exploring

our are a the and business U.S. the deliver momentum innovation continued We that will experiencing to in of onset to coupled focused digital experience beverage actions upward help we taking capabilities COVID-XX. believe to contactless we’re the prior expanded with customer restore

for comparable that levels. minus are April, in sales is XX% stores operated date To at of XX% approximately prior averaging growth year open or company U.S. indexing

balance-of-year rate have of given well in U.S., not into as earnings COVID-XX as materially is QX. significantly and the recovery we a be the we premature lost flow-through quarter QX the COVID-XX a on late the provide the the impacts entered yet U.S., higher sales or to expect greater U.S., at QX However, it extend estimate of of to But in revenue onset in this do compared U.S. impacts as phase to in financial to negative time.

they the expect the store of So in are while period were move less severe the U.S. the we extending China through monitor with fiscal longer as from model XXXX. to a the than in comparable the recovery of owing initial a into for prevalence U.S., impacts to impacts phase persist time phase our the in perspective drive-through adapt do we and

businesses move that these We in our in very business impacts international in brand will as we pattern similar U.S. fully the time. easing expect into in these event license to that impacts quarter as the over will fourth believe our and a the are with as of third recover on our substantial the quarter in and pronounced COVID-XX the our some businesses impacts expected follow experience well continue temporary is China Japan, Canada phase. In based today, recovery any resilient these as

flow-through enterprise level, QX compared COVID-XX of disruption impact greater QX Canada to in to materially due QX we the U.S., the to duration absolute of Japan particular the QX. longer be business in in expect and to At compared

the lower said, the than ease of QX flow-through of stores sales half QX to QX appropriate in take operated reopen steps further the we restore That company they in profitability we as to slightly in of expect the to as on and lost back in rate year. be

store markets. to year perspective performance U.S. balance update how we interim financial seeing Consistent in updates our execute results our that other our the with the what as shapes on into quarter, and in provide as and of approach trends and we this we increased transparent are two visibility reopening business have taken we plan will have the

provide in expect and possible opened We in better June stores Japan. of the performance we've closures of our evaluated in temporary to after understand next the the update we U.S. duration

taking and From a stores ourselves recovery. when we comparable do fully view operated the position stores are crisis actions renovation. are sales our is perspective, Recovery subsides market with growth the store positive those all company to and undergoing open reopening of our not existing define when delivers in the exception of

a the more Finally, year is to being X% Coffee XXXX prior to and QX. on less the reported X% growth basis, with lap Development that expected between items certain and pronounced the impact in we pronounced in XXXX QX Alliance relative line fiscal in in fiscal decline revenue far the benefited Channel to segment's Global transition top as related

balance disruption modestly XXXX. COVID-XX of improve ready-to-drink the the Global margin during prior fiscal is from adversely operating to relative Additionally, segment's resulting is Alliance expected the and XXXX business year. the in The our impact Coffee to fiscal expected to foodservice under

but The preserve dealing implications only to are while near-term key In But our in of cash balance flow manage growth, strengthen sheet our the not to with company the material. them of future. operating with to of for very enables long-term investing the short-term essence, relationships realities. those relationships, business for with we us constituents are scale results these business strength our combined

of thinking we are provide about several examples this. me Let how

the continuation lines success. and pay the to who of on are our salary business, working to communicated and our through and our the critical front both through of long-term for Experience those premium are Starbucks end through partners instrumental First, May in we as investing wage

are licensees, who are growth. development our financial international partners flexible we extending terms QX, by Second, more long-term in in our driving and in investing

predictable fourth, payments, that products quarterly in And Third, of support strategic an proprietary our accelerated a declaration capital weather ongoing can sustain uncertain through supply certain crisis they of investment by shareholders with honoring the we our supporting dividend upcoming suppliers product are our and so we our are return environment. helping this innovation.

X. dividend May to on next shareholders of payable is Our May on record XX

expenses X-K disclosed As near-term repurchases, by accessing creating in in business the our recent QX, Due partners more primarily expenditures most to needs, approximately million to deferral to room of and we expect of capital lower refurbishments, than we to bridge original in additional COVID-XX. are broadly and deferring total which the fiscal in openings $XXX cash some capital $X.X investment our to share expect certain XXXX reducing billion the and suspending for store for we capital plan store to or additional peak expenditures. discretionary addition our new onset now prior

and to that very credit committed impacts of remain to impacts of we will rent-adjusted BBB+ much the of period Importantly, a COVID-XX That our for leverage said, rating us time, temporary. while we leverage cap times three EBITDA. cap cause exceed these view be to

part our latter to is XXXX. times EBITDA the short, leverage of unchanged. fiscal rent-adjusted three return In in leverage to expect our near We policy

we of that these and material reopen temporary. reinforce belief performance impacts But China to on making are our in the very in approach financial particular. the progress the the in weigh U.S. are and stores, we are taking summarize, are QX will To COVID-XX headwinds our deliberate

that are confident resume their We our brand customers daily routines. resilient that are and our is to eager

by We long-term the by financial that brand. make our inspired have serving navigate are to as communities people investments in when And a strength are at our serve partners, Starbucks connection term. customers looking personal the the the we the time defines courageous for we who the for challenges short

questions take are joined Operator? Roz and the and Brewer Kevin John your you. by Durga Thank outlined that, happy with to And Culver top at as I of call. our

Operator

line Palmer comes David proceed of question Evercore [Operator with your the question. ISI. Instructions] with from Your first Please

David Palmer

the In to slower that of areas the what about here, rebuild your being evening. but those percentages you good I'm want are are sales? only – and would locations, Thanks that path you about walk-in this China but anticipate store think today commuting what that be you to the terms analogy how they base Thanks we thinking these distancing U.S., also not could even think or Perhaps in that do reopen? downtown in closed use your in would areas travel. about talk your is highway do those relatedly, very limit depend locations will drive-throughs recovery. And against social much. on numbers much when stores to you capacity and as mall helpful walk-in Any as

Kevin Johnson

why bit you on share of a Thanks David. the Roz, I let little U.S.? don't perspective

Roz Brewer

And Thank for you Kevin. David that question. thank you,

about me Let April. off talking first start

about So XX% to-date did stores XX% had averaging we prior those sales mentioned, Pat of company-operated by indexing in in And locations drive-through as have down growth at levels. comparable open. about April, U.S. right we or

So reopened as as modeling look at we drive-through county, few helped partner saw decision stores, those create curves government sources analysis, a looking sentiment us that frequency to we we local guidance, stores tool really customer customer and the at as the things infection in a we by well sentiment. from that did created the

week, modifications starting And those modifications. open we when So next will stores. be with going we're drive-through to open

We will amplify delivery.

We channels of will entryway concept, the then have a open, Pay handoff. Order and & the Mobile the addition new

open those there order. And that roughly will XX seating. in have will cafe will stores be We and only stores, be XX no

in monitor and and our making areas reopen are our a customers we we and safe the then And certain will shelter-in for begin that sure provide stores. happens cafe as to we So is lifted what environment partners. for regions

also we'll summer, the to access in later see stores. curbside You'll add our

and partners doing entryway against new labor applying David So to opening learning stores our the what also we're and then accordingly our we're model amplify and what and drive-through. these is managing

app through ahead also make sure described. use our the they pick I be and that up drive-through in and helping channels either order that store or other those We'll customers

Kevin Johnson

stores occasions to point said. XX% our U.S. other in were what Thanks David of the in Roz. just one take-away. to-go customer I'll that just Roz for shared add reinforce Pre-COVID, we

we mobile the so volume And actually by experience customers cafe with can seating in-store pickup, and contactless significant ordering without having augmenting opened. of the service area

And so an that's I point. think important

And in be fleet the I But -- Areas will that of near slower eight anticipate stores where the it's are well. will office mall U.S. office be think going store fewer quite not I China we are that also the And think little Roz they slower. stores office less than that back in -- yet, a X% if will work it -- mall workers captured to I slower. think parks than then be stores similar total

Operator

your comes Ivankoe JPMorgan. John with question. Please question next with proceed from Your

John Ivankoe

very of I to-go I of are I third in -- does couple help experience. Hi. to-go on cafe China. itself the that I than of U.S. mean, piece me think the China but occasions of to the would the number China, and in the percentage really a that the Thank now are to XX% times you wanted within terms of said be clarify that much. follow-up as differentiate place lower occasions expect experience that in Starbucks much with the you've

and at And hope thank can a China near you well. that you comps flat somewhere triangulate in I without of the basically the within So that reduction to transactions everyone with the actually that thought are can quarter, to-go kind the market you of you physical is guess percentage end full of social how of might specifically? do get fourth distancing that

John Culver

-- appreciate okay. is this John, John. Thank you, that. I Yes.

Just China. cafes. our drinks and Traditionally seen the XX% real enjoy in be quick business stay-in their of we've on

hit rest peak then delivery. experience was it As with we and the all in up orders. those orders the of your of picking stores the & a digital walking Mobile through Pay. digital nearly XX% COVID contactless in of up hit, set being Order were orders And transactions And

stores place. that them roughly see stores today that we the social What have distancing in have we seating with we is have XX% of in open in those

cafes into back come people we there seeing the albeit are sit we pre-COVID. that levels to so and not saw And the

there is place to-go lining, there is if new I it doing percentage a think a we're habit people is in get seeing And that. trend orders you to China, orders that China taking used take and to What a is we to-go and forming of in silver that continue. expect where seeing are higher more

sales of occur. we're the this to so and will optimistic a in the year. anticipate levels the that shift were the And back we will China, path by that on overall will as recovery to recovery we full we'll not see fiscal We to full back maybe get continue high XX% pre-COVID where end but come of

Kevin Johnson

John. Thanks,

situation about global consumer have as When Let lockdown it look on one What In it are – observation. is for we several - to a after something for the home in been weeks. it's COVID-XX, add just that behavior convenient. for look is in other at little basis me relates U.S. sheltering sentiment people at experiences a what was six safe over weeks they three been looks – a consumer and weeks. familiar that China, safe,

world. the that is around And consistent

protocols standard provide every we've and built safe a ensure be stores we've at follow exceed exceed the to to we our in customer every And operating can is we done safe can – Starbucks experience. every so health and what

that's a when that Starbucks experience place familiar for weeks get is them. getting nice be out something Experience in at for it's and several you've just sheltering uplifting it's Clearly, Starbucks to familiar had to to rewarding. And

back these And and that around having to so ability our people three and that periods attributes have world, where convenient something convenient customers come home. at works familiar this stores. sheltering But following safe, is those been the

see I We've the to in come single out of think seen something seeing in they but when lockdown in a that And more that of phase. market we're the it's going sort we're world even in way around amplified the U.S. that every China.

Operator

line Blair. of comes next with Sharon William proceed Zackfia question the Please Your question. from your with

Sharon Zackfia

as on quarter. also gone communicating Could the you've we've an on have protocols, the you're talk know, safety you seeing to be have month. you gave It'd second trends more this kind about any start digital afternoon. the of know Rewards for as good Hi, your reopen April? what ramped helpful to of as can with through initiatives I us on you you kind update give And in-room you how gone engagement through of then dine-in? update

Kevin Johnson

don't digital follow-up why the and on respond, digital. maybe Roz, to it you of can relates have as then safety China I kind And protocols? and John U.S.

So first why ahead you Roz? go don't

Roz Brewer

Sure.

off which customers in to last have as actually exiting the increased the our Rewards year, We've were customers when XX% year started quarter of mentioned members we ago. saw XX as So we those grown Kevin in the entering and a call, million U.S., – with routinized us. we up are really over our highly

progress majority, the been of the they're still through COVID Rewards they Starbucks seeing roughly members, experience our is we're going of coming we of less frequent business, frequently. this we've remain roughly our as XX% our customers. things are about them One the stores And that just to quarter. XX% even through And as our Rewards Starbucks

over also There's across the there. daytime, we've the and loss been a more be really not – looks expected frequency dayparts. to much all disrupted. bit like in that's change but same It's what So little that seen morning because about have think a pronounced to routines

routines by But far encouraged we've are a to The resilient get and back position. can believe customers We in will we U.S. remain we us. so different people they look but we accordingly. bit in a little these mandates So seen that local like feel highly come as the from what relaxed, will work home even monitor may – adapt

John Culver

And just China. real quick on Sharon

in and We adoption transactions What do weekly the we've really digital the of seeing in improvements continues that really China our the able key engagement sequential experience. connection to accelerate. and COVID membership to element a leverage strategy in overall our We're during maintain been see to is continue being members. Rewards to active Starbucks of digital our stores

and order people the XX% interact more us or in in mix shared continue the And was scripts, as adopt to one app QX. digital of digital and more shared with digitally. now is So I

a And Pay seeing peak We on. Mobile split Order XX% of in between & early making making of and about had up delivery that a really XX%. you're early good XX% February about up XX%

opportunity will the in now couple flywheel our just ability and accelerate very companies tech leverage days with pace partner of digital to accelerate Capital, with And the we retail in Sequoia think our partnership start-ups local we're key as with further a and look So encouraged of to we digital. ago the announced innovation which we China.

Roz Brewer

that part a marketing And have part we second She piece the that of a like in have and our marketing question. beverage spring And about asked you about actually, question. schedule reopen to we Sharon's think you of Days addition do address delayed next second lineup plan we Hour. Sharon U.S. if also of our around as the business. I'd Double-Star the to the introduction we week. shutdown had the Happy

those see than a you'll reignited past. So lot in energy more with

ahead. most app existing and spend just of will work We our accelerate encouraging people use app for enabling condense plans around to the and them the order our -- year this and within our

But stores, been than New markets some volumes terms we normal we've significantly And seeing believe able accelerate some York a delivery. we're to handful will delivery-only where higher with like delivery, of have as like that But in of in then in We overall. of post-COVID COVID the in us for Thank York. channels accelerate go you. for and early delivery recovery period. we one New it through we delivery places it's is still the will

Operator

with question proceed Please next Morgan from Your John comes question. Stanley. Glass with your

John Glass

My U.S. of Thanks is think pace question how very recovery. much. the the about on, you

in to we're the pandemic, In addition, a recession. obviously

You do China? -- post lineup in the believe really you customers no about purchasing maybe as your once differently? And to of behaviors price-sensitive pace of you product a how Have consumption. incenting Or now China once calculus? thought seen think come they not you're different? situation? like in because differently Or China? their consumers different? pandemic Are that Are the is you So normal consumer stores there about if price sensitivities you resume back are using are they benchmark more are reopened or open in have

Kevin Johnson

is Yes. Kevin. John, this

frequency of Let customer built relationships. us the momentum for the remains combination powerful the experience, on And me in visits. of to that we customer three continue and just customer had and beverage business a to by innovation comment. engage focusing Pre-COVID, experience things: drive gets to tremendous that digital world start now around COVID these the the through to store optimizing everyone on-ramp kind is familiar coming concepts the recognize is convenient we customers the initial around what of that's that really engagement. that experience and sharing -- But safe

those in individual a in of XX% open, in prior we're roughly more Roz just lot revenue XX from to were drive-throughs, we've days even know highlighted, the -- delivering we now that But going of without I had as certainly, XX the stores. year the open number drive-throughs U.S. the think cafe Now

And of and we the the so customers. an connection brand just of the with of have that's power indication strength that

begin week when think that path I articulated, experiences Roz Now open with I think we of to set the stores next engaging. of and over going this more that we're has

to And talked we've got goes. now, rapidly grew think how to leverage just we're and to market about thoughtful Roz million with beverage that have clearer XX% in and communicate I take we be to view to that going And customer evangelize that that a and days from -- customers. a that's step great going by I formula. release. the just digital each think to going And that. We're We've XX lineup U.S., got responsible going relationships we're the of we to XX.X our going we're that's much with

Operator

next Your proceed the Please Senatore with question with Bernstein. Sara comes of your question. from line

Sara Senatore

thank Hi, you.

sort about on some Just concepts menu of drivers, a sort at more an We've strong I more does I the when it sustainable was apologize innovation heard know ticket COVID don't U.S., of I how other is from other follow-up impact happening surprised growth there the offset higher the that but was. there's guess, talked were I this or if the because on that about Or -- you traffic pandemic? I from drivers? group ordering. are checks think to

about how what of sort been the there stores look open have much And represented of trying the figure Just that might doubling you happening? open remained the Or you out of doubling stores? from just to like. is sales and Thanks. as number transfer in volume? the will those stores sales the think sales do we that's some reopen system-wide kind of are Should any stores of sense that open transfer U.S., stores have closed in as volumes you

Kevin Johnson

questions? you Roz, why take don't those

Roz Brewer

Sara you, the for questions. Sure. Thank

XX% plan in the than various so First with of the formats. a and stores X, then we'll reopening we'll start have week with that all little let anticipation greater June -- next me start the just

Sara in extremely seeing traffic, in beverage our when coffee cold Nitro, and selling of quarter we about in great ticket Brew were exit terms quarter I the trend most well. Cold about first pickup think and of I think predominantly where into the both innovation, fourth all

of early the played continued XX to we through where comp It year. the point saw well the quarter our holiday just lineup into the March, the first of -- it and beverage weeks X%

of first innovation. all starts beverage our it with So

thing second is experience. the in-store The

relieve the And of for really the the lot they actually the amount they in work a were Creating in with most so, our to real of a change their moments a and we was customers some engaging partner ways. of us. of had meaningful done stores were significant tactics customers key doing our best with

partners seen they they levels just Our how was customer are levels we and work sentiment concerning partners recognize were and from customer great volunteering in in COVID. stores. placements over social customers engagement to the has partner our at We've as well. to media engagement from due to to engagement great. partner what We customers our record carry been response to We stores doing to our saw come grateful were when work very record numbers at at slow stores actually energetic. The addition down began saw that

COVID the engagements on where digital been I that and drive to just things were quite coming the got And innovation, around in-store we've take then while So beverage is the created the experience. and we now working it that would the that we we've to it's X a Sara work to into and as back the exactly for those continue comp situation.

Kevin Johnson

somebody getting someone the responder for frontline -- and buying or that. responders. typically say, add increase a beverage frontline was through drive-through and a for making was their saw family Starbucks in I lot going of orders. ticket mean, run let's Yes. a run it it's making food entire drive-throughs family I'll -- a just and group buying We

family drive-through transaction fact to that And time if driven it's and by the up group. you're down So to just ticket. drove And really or the was drive-through take going entire entire it the drove through load the that to you're for up buy only. go going

Operator

R.W. Please the with question. from Your line comes Baird. of proceed with Tarantino your David question next

David Tarantino

think wondering is commitment the guess, other CFO wondering the And there's for cash to but to you safety what this CapEx? up just you in everyone Pat suspend that might discretionary to mentioned the growth that frame margin you afternoon. about I feel could at dividend I Thanks. maintaining is spending the have well. if then us? about with question up hope my then your that plans what capital just current Good burn was maybe to would crisis, the doing throughout ramping I quarter. level potential relative question. your And respect as back of no thirdly, talk is you point I it, and comfortable of

Pat Grismer

start-off able current with of confident company saying the I'll maintain we as the crisis. our to are scale David. sheet, the that, strength you, will given that, by Thank our combined be of we manage balance liquidity appropriate we

and in consider over our and the those dividends. $XXX you of approximately in are before and has place, million per company-operated open are and with U.S. that drive-through but protection closed when And at Now, our largely to partner rate are XX% delivery stores Canada, week today cash burn channels, after peaked. that restricted store payroll it's temporarily CapEx,

in of and reduce burn and in rate large month pay the recapturing month company-operated this further we Canada go normalize as we reopening begin as the partner of in May, June the sales. expect to practices numbers benefit our stores U.S. of We from and down to store

of $X.XX share flexibility in spending. pay balances, already and deferring used bonds repurchase steps billion to the reducing March, have proceeds and temporarily to our program, certain suspending includes taken capital down commercial financial our We that with outstanding paper discretionary expenditures issuing enhance

and operating our the the cash well comfortable in capacity, cash wages us so of available and with position we're benefits, from if May. includes And facilities end manage our that additional and we've perspective. borrowing to currently We're extended liquidity existing And which we conditions current amount of to through interim partner that investments a prepared with credit it. includes the need overall and flow

profitability traffic stores near-term our their is and and clearly the focus crisis patterns said, as optimizing That more and on we underlying trends. from our reopening about emerge learn customer

dividend. you Now our asked about

is of measure our uncertain maintain to in able that an commitment my certain of remarks, that, things some in we're to said the one to investment proud return shareholders of environment. I we're provide As prepared

our today So to our dividend. is to intention pay continue quarterly

this deferring this example year. that least had to year. originally deferral As to for new includes this to XXX certain CapEx, That to into openings at stores China, CapEx planned that taken That year. the of we've down already those next store year, includes We've where for new were we trim XXX. taken steps guided

taken next capital today, including optimistic year that that, would that shape So it's into normalize too of the would to capital other next based we with into of we But there year. what programs to third we programs, given deferral of the associated at into we've quarter in we to spending store stage would CapEx. on any see normalize the opportunity the and will as trim our our is say, around out simply But expectation this sales expect to much quarter early next recovery some recover so of XXXX. our start refurbishments. expect capital would some come guidance that growth fiscal year, to specific going our CapEx give I say the curve of fourth But which spending including I we're that underpin

Operator

line the your proceed with question Your next comes from Jeffrey question. Please of Bernstein with Barclays.

Jeffrey Bernstein

least Thank you question very April some us it's half. tough I second half at given for second the much. terms outlook for the you to but offer global know, have you a Great. of Pat color. in guidance,

estimate U.S. comp we recovery. path down China to down the And believe XX%. I So XX%; obviously can

In fact, path. you were very specific on the China

in what of of points terms comfortable said, of current type how to know, these trying I earnings – aren't provide sure the from know reasonable sensitivity points the all couple framework in do those you we annual I quarters? Or based big a what kind imply would for operating form the in on in more about give or China margin? over outliers of comp margin of and Just sensitivity can that you're you're with year any So segments if to down there a about operating it of from XXXX comp of terms modeling. is don't two rest of U.S. trends? Thank the comp the range think basis don't margins next any talking or or make of you. of XXXX to benefit

Pat Grismer

practices, operations interim to And large is large do juncture. improvement or there towards quarter. and performance needs our cash recovery. Well, comp to current I that obviously from Yeah. so plans, would margin improving Jeff. stores growth to goal highly partner peak store based of this that store at on near-term starting including are expect And to value closures is normalizing cash-positive our by levels we incremental by in about and their incremental somewhat priority say partner talking May. current the and And numbers this we margin reopening distorted improve will Thank practices irrelevant profitability store store full going our reopening and top pay of on our pay you, store return is of

quarter impact and expect It remarks, U.S. Now, much of in were business. as longer intensify think impact, the part of in about talk we you do the large given significant the the absolute because to in second than to more lower the investments I said sales it, about they in the be third let's and my increased will when quarter. prepared duration

outbreak. significant expecting the our for reduced third and the purposes quarter month weeks May COVID-XX in had of reopen our In but we second April between two quarter impact, as stores impacted three the normalize of weeks practices. and we're and XX June in In we and all pay most intents the months by of

to continued we we a including margin to compared sales adverse but sense other Japan largely impacts improvements impact Now in in to and again due the perspective expect for intensify International, the an quarter. QX. from EMEA China expect And extended in of that duration in it's third that's slightly markets both and different do

community be than time just revenue outside to impacts when explicit in substantial investment QX, do to this impacts moving results visibility will the to are say we of more absolute guidance operating and moderate income have many many to continue to at able of we unknowns we in And but updates On better too balance QX and in expect to to other too more providing to China be quarter. these much provide our the there pieces compared the QX fourth terms on them. practice will that

Operator

Your next question. with Please question line proceed the comes of Dennis with UBS. Geiger your from

Dennis Geiger

question. Thanks Great. the for

competitive bit China of talk in could both coming and smaller about how wondering with the or of the a the the U.S. in the more Starbucks the independents you this and environment certainly larger Just if brand China. and case the positioned in situation chains depending is even chains on out

customer potentially? Just Thank that also trends for you. demand longer-term and unit what development might your site and for selection traffic mean

Kevin Johnson

experience, the occasions a of the we coffee last digital customer navigated in-store a generated in of this an clearly I weeks Kevin. would is very the this U.S. retail. the on until commenting virus first March points And in at clearly specialty relationships Dennis believe with comp start was posting strong putting an of that combination by in think had way we've and -- growing the I the were just the the pre-COVID. I was if And beverage to position customer think Yeah. in I that where share competitively. put innovation momentum up position X% us -- indication anything four continues two of we the transaction growth us

yet -- following this said determined. the economic to there's be implications That are

reaction the very -- I the lot from and United just days States. we to think, the competitive be optimistic now of XX in our about reopening see have get smarter we'll a after we to we're position

that we've strongest competitive we're in position. in the in, in very And the history that U.S. China also health help China, comes partnership and we've lot and say health responsibly had to customers, to the contain engagement our taken partners have both Similarly our and every think as prioritizing governments as -- in and up the virus and thoughtfully strong well with of principled the community mitigate we we're that and virus responsible well-being I and decided the positive showing the in going we've in and fact and contain way the and part competitive that of the a COVID, the spread every company. the of. action a are of focus through we're been way had position officials that we navigate COVID a in the into discipline of I'd we

that this customers. very strengthening, the so and brand stay our That do we I the rise. our competitive we have think And the focused for our right I on with said to We've partners from the strong. We've things do strengthening got to that position customers. -- keep things is got think we emerge if our And and that, we matter. connection

Operator

with of question the proceed from line question. Goldman your with Please Katherine comes Fogertey next Sachs. Your

Katherine Fogertey

look or improvement that we them And of rest U.S. restaurant, are the the If week-on-week hasn't it overall discussed with business. guidance you. April, a business the for the sequential Thank improvement. numbers you've in in most kind showing big of March then comp in of might Great. been your really and week-on-week there at suggest that

see do you initiatives drill can starting a you on bit to comps curbside trends, with or before when like these see to you new you. store I'm So Thank reopenings consumers? wondering reaccelerate? here need improvements Or little the are down weekly

Kevin Johnson

to customer we'll why about terms Pat, the in and she's the off watching comp behavior? talk sort hand of on trends you to don't Roz of then take that the numbers

Pat Grismer

Katherine. Certainly. Thank you,

third the when we've time, of this U.S. for fairly initiated minus XX. week stores the March range it's the on we comps period widespread include in defined of based closures how the to been So, impact of the seen minus comps XX steady closures of which since in of we've

X a minus within really we've our would slight of have May some reopen large we that to begin reopened end so range. in that improvement As But the weeks improvement that starting we're stores we in anticipate XX seeing that range, stores, of week until we that drive-through more of seen is closer number. recent the to not of numbers it material

Kevin Johnson

stores More customers and ways for Yes. engage. more to

reopen you week? stores about drive-through now of as don't ways next we're the so a talk little incremental engaging beyond Roz, that these why just we bit sort And

Roz Brewer

Yes.

So, Katherine thanks for question. the

all, so So a to XX%. allude first did Pat to XX% that of range,

So, as we're we're been the are of that stores and and it It those doing or local so. really you jurisdictions drill week depends where has last down And the those sheltering-in better there's lifted. probably seeing some migrate. that seeing over on

So, actually tell. in instances, to it's too some early

time. Also we any remember marketing turned in really off have that this

spring so we our on our Hour, not customers to introduced Happy relationships. are our Double-Star not a nor us our presentations have in Days. We've basis addition And used our And digital to birthday customers. to through to them beverage acknowledged done introducing speaking we've one-to-one

abnormal we're how in to So, I an we would our say that terms position operating communicate in customers. of

of our members. We'll out We'll begins have coming lot e-mail things we're early media. all media. TV. the doing contacts earned gate, one Now, to have next of have paid That social of digital a new new week. owned each with also marketing. We're We'll creating

important in we that that thing the the we million are is that you're can So let XX do open. that we reach those most to them next know -- will week. And

And it's hours are not and we're in different to different us if in actually surprising some regions. we've open aware areas had not people or

terms in have but and of about summer our beverage where we're soon it's will pretty tell ahead the to work line. the us reintroducing So, that positive be, too pickup of we

by that. So, encouraged we're

I'll also our going on mention delivery extensive work have too, partner. we with

in space so the And marketing see you'll well. some delivery as

models acceleration XX and more that opened, of talk the days. and to we'll we them these broadly So, know over new we're going the about next pretty loudly

Katherine Fogertey

you. Thank

Operator

Your from with line with question the proceed Please comes Brian of next Bittner question. your Oppenheimer.

Brian Bittner

think question. And to Thanks China, just do based like in What about XX% In general? the a roughly versus in are XX% their it same your is lag China the driving you coffee thus third same-store market? sales Is this the of far. your on in knowledge recovery peer this quarter. quarter afternoon your comps the expecting Yum down you're Thanks. down XX% said for

expect you in levels employment As your you U.S.? in in on on recovery? general expect in lag similar similar lag just the given And reopen levels recovery we dependency high-frequency and your should a your Thanks. like the do dependency just a habitual

Kevin Johnson

let I'll China. on John you comment

John Culver

hubs in us the open then areas downtown is neighborhood. And the on travel our of recovery international of tourist getting highest of channels those to in entertainment rest now areas in urban the in the the obviously, stores the aren't volume and some right being subsided and the biggest the airports that Yes. China our the areas impact open. those as tourism has are stores and some Brian

we comps stores and one. also to market once continuing back those we're path a that the leverage reopened is continue will accelerate particular see to good beyond seeing. continue role going continue So, where play two we're can already feel gain transactions get MOP number The we see a to that. we to that our get we what Number we in MOD digital in to bigger to momentum news and and

getting And hit stores on where we accelerate. then year we this to end by new number going we're XXX three, as to stores. of excited opening start about to continue and new stores obviously, reopened we're the path a well going the are are and And

we've What seen They're seven of performing in new well. opened April thus far month we've the stores.

which Shenzhen order well down store delivery in We're concept. to mobile concept. to Beijing. accelerate and continue We mobile are as opening a order have going as in now Starbucks is Now We it pickup that also

the I they into mornings into well. people continue behaviors think routinized back foresee which recover and as get go as will and back into later back which offices week start to we help session schools once And go this into that week more next will

Operator

the of question. Your with Cowen. from next question Please line comes proceed Charles Andrew with your

Andrew Charles

was looking chain, to to very protein an around and I degree on I staying you're shortages to challenges Great. insulated that supply a coffee are much you all particularly and lesser Thanks guys update pork. starting somewhat are and safe. mean hope get for from surface. transparency I

little Can for the into coffee the is in America, breakfast with of U.S. amount lesser of to degree pork a you talk given stages the But coffee bit securing a about supply that COVID-XX earlier imported to the relative you sandwiches? have Latin visibility and it's

Kevin Johnson

don't piece manage then coffee, the And the don't John, food rest why of green maybe you take as you coffee Roz green the about as you a talk John coffee little that? sources? coffee But supply the green chain, take you bit well why network of on sourcing. since roasting sourcing

John Culver

good and that feel coffee this we're how America, we're we've harvest positions able something they're the in were the positioned very Andrew to and every we of terms is each on monitoring in with secure Yes, we coffee that the that What obviously supply green Latin through inventories green is seen in We our day. adequate marketplace. need. and

we regard. now to this year any Colombia. in into that moving disruption America And see crops don't South good Brazil markets We're have and those continuing anticipate we're into and supply

states up having good feel So, to we about get here to green as it coffee. transportation And set then the do so. the the we

Roz Brewer

running. our open you a thank things couple been capacity. on Andrew -- of able keep roasting our and John. Andrew We've to roasting facilities

We followed mandates local have for closure.

coffee As to a down you go can down had a procedures sure But we built imagine environment. network different into a We make few to take did do safe Amsterdam areas time. for we a the of of system. cleaning shut in we period have units and

and facilities us. our It in has distancing for impacted adjusted production not We've capacity. social that's roasting for very our been effective

roasting shape. Even are right feel pretty we confident now. we our are So, in capacity stores before opening good in

proteins. lot food happening of activity in of there's In a sourcing, terms

intentionally been as talk little wanting bit the sandwich We category will Our that suppliers that business contact there we close area. that we as a and a breakfast it's got our of are in all to breakfast I regain feel is secure. about reopen. confident in we've inventory with

the for So Thanks right our good question. feel position. pretty we about now,

Operator

Your next question DiFrisco your Matt comes with Please question. Guggenheim. from proceed with

Matt DiFrisco

Thank also the that's to a of those stores there potentially But lot XX% your employment bit correct an a than with at new you. not presume on as U.S. normal that that being probably leases or assumption? you respect up were during with looks to little or XX% some that open of and May have to and is of the rents back. Obviously, are are Is leverage if suggest sort renegotiating some given sort is expect peers they these period closed. recovery reasons you're might situation that a not locked hamstrung indexing those with a leases permanently those pre-COVID XX% as far that the as locations down. the the that's I bit that you've for of so or level where you an there some into going and that these being number stores is those the little renegotiating landlords? since somewhat where closed question entrance X, or stores my of higher COVID hamstrung, Pat, would of be closed would

Kevin Johnson

Kevin. is this Matt,

I'll Let hand part then the it me of Pat. just comment to question on your over

cafe that XX% the safest thought stores partners' case. and for as We drive-throughs opened that as during for rather nation our was than sheltering open not suggested out You'd only ensure we the of the the hampered well that our partner reason. to location home any social shelter-at-home and us at when have has went closed of for were way to distancing a period That's customers. that some both the where we we did safety the we was decided into safety. that We decided just

those question. others we to more Starbucks I'll perhaps over whereas than made and of stores, customers, close Pat closing So stores. decision the and decisions rest And to fine. for prioritize in aggressive health then, others all comments why our the which the that's that's and were what partners well-being But is on your the drove certainly hand different of we

Pat Grismer

question. for Matt thanks the Kevin. you, And Thank

things couple I'll of on. comment So a

first currently is we optimize applying that, our our stores The are will reopen performance. to closed, be store as we normal discipline that

a is world-class top as the focused have We driving team on line on line operations the sales. that as bottom

to sales to once the stores, profitability. visibility appropriate for curves be their so have And we taking will recovery better those steps we optimize

fact with on we Specifically if reinforces rent, developer the you believe to to say date we're have of our respect proud of remained as rent choice what of our that I'd current will. all like which to position that we is quite a payments,

ongoing landlords various what lease be markets in in the are concessions environment. with We regarding commercially may current reasonable having conversations our

premature it those yet really that not something we've arrangements indicate and that to we look relief what may like, but are So pursuing. confirmed it's is

Kevin Johnson

rates fair think going that believe that's think I to the And -- fair post-COVID occupancy go down a just lease are assumption. is do And I it to situation. given

Operator

Your comes Chris question. with proceed Stifel. O'Cull from with your next Please question

Chris O'Cull

the in more Could maybe describe the because differences wondering it to other in sales to U.S. of easier in I'm compared primary differences China? behavior. to just is in one approach just reopening will reopening the or if country afternoon. either the of than be maybe the you recover Thanks. taking because so consumer country the Good approach to

Kevin Johnson

Yes.

just I'll the and in for little of path then differences of Roz a can then Let close sort to briefly U.S. me bit to off share by hand and the some comment of China. John

was For make were me, the were certain was opened. and city-by-city I parks would coordinated comment on government I China, it decisions in a and even they think office centrally actually by central made when things basis

centrally. of was weeks. here a we're was opening but in in it going time period Keep over three in orchestrated China, the shutdown the the I about and And period so the whereas of been in was or six weeks sheltering-at-home the it's think see to almost mind U.S. city-by-city longer community-by-community period stores than of U.S., of about

to be in going as at the that the And format sort particular store. happening we're be I rate. is stores we U.S., in to going reopen across going on each so to faster a we the -- reopen dependent think use store of to in that now is But the nation going anticipate what's are

protocols we deciding a what's the to geography-by-geography safety difference next that plans bit we'll share don't the So more the you why of there'll XX a in the unfolding the -- principles them U.S. terms you the the appropriate decisions. of in in think -- terms use of open operating about the way lot protocol, a these little be I I bit days? But Roz, the but there's in faster, priorities think of see stores over the make a decide format. we little similarities we'll

Roz Brewer

Sure.

for that you thank question. Chris, So

highlight habit China one and market it a a sit-down U.S. and of is U.S. the market. different the things So I'll grab-and-go China Culver alluded earlier a between to and John is is the

to us more than drive-through. number for stores U.S. XX% a good access So are percentage have of our the in to

going a is alone create that difference. So to

we I difference it's second is will this really The have and think that obvious say decentralized I decision-making.

and local And make not customer. municipalities openings the so the on decision and closings mobility can and a and shelter-ins of

those and through we'll month So able as you early back described to May Pat learn patterns the to of be come in June.

But to partner doing and one safety. of it's the is things us primary we're

and And for was pick then we're the every we in go And actually modes helpful very partner if pre-check. the in take It will so a temperature a download work order available be app of thermometers new a then to and ahead. partner learned where we which something pick through our providing safety of is That's will up these for reopen as why instituted from series last validate to the And their that we safe that we all and ready environment, enforcing. China. really we're We're have questions. stores, week also and up stores. us. they're partners enforcing like reopening We're things

we then more. are China -- plan that's officials this that at government and they what in we health and And safe be then and from local we'll we open to just expanded and so saying. And and work learn looked learn we were until how position

calls open. stores. -- we it So really go adapt. we're to going as Kevin that falling to have as encouraged stores line We're going XX% open learn there monitor we'll of the and and I'm into our

thing are I'll also. other they wanting that, is from tell to you partners -- really The our connection start

And they and and training stores actually new and them themselves through to having next healthy. celebration around they're for keep how also excited how safe customers safe then healthy so cleaning of and reenter week the next and as about stores to protocols take we're them week a the and the keep homecoming rejoining somewhat

pretty strong next a got week. plan we've So kicks reopening early that off

Kevin Johnson

Thanks, China? on word Roz. John last And

John Culver

Chris, China. Yes. just on real quick

what ability both the they're about understand and reopening the the with were. them provincial to central has working difference leverage been the reopening able their the relationships being our that officials and big our those closely thinking the relationships to then with think how in I build for taking government we've to able really government, us and and on staging been on cities the into government based plans

connected we also our together would safety well and the we officials were how stores work as local going very We put operate health And into them forward. very well. the in protocols our with stores to closely

environment a we brand customers So obviously really making created sure that to on our that safe and and continue we with partners. our trust our the that build has with

to as points begun what and a gotten the has we've our off And customer the increased very stores. excited were similar actually get to so we've matter of And opened reopened, to partners levels. U.S. into over fact, our XX% up, seen since stores eight we've back first of scores pre-COVID experience by as

market. resilience our partners the strength amplifying level and the of in more brand engagement level of customers engagement really the importantly, is Starbucks of the of the and our So our

they've done recognize that So what very and done for they've proud want to navigate situation. the work just China team this complex of the to

Operator

and last the now will Ladies I turn today. Kevin our Mr. was question gentlemen, Johnson. over that call to

Kevin Johnson

you I today and are safe you. us your hope I families want for to joining and all and Thank healthy. thank you

are. We our and we continue to values pleased true navigate mission through with situation this staying where to and I'm unprecedented

large prepared The clear stores next week recovery. a to number a path throughout demonstrated of U.S. to May. of month is and has the reopen China

demonstrated this I and approach business continue of has recovery to Our confident in our monitor-and-adapt channels resilience optimistic this phase. Starbucks about to in ability through our all drive and am

of principled of through We strengthened the term. us both That our strong. our well the the Starbucks. have in the Starbucks power is we all for serve will partners and brand very long confidence trust have And customers understand actions and our

proud how of stakeholders, Starbucks to as we to this I'm and disciplined Thank part transparent with we very partners focused, navigate all world shown in have you. up and continue continue every of the will be situation.

Operator

quarter fiscal Company's Coffee This XXXX call. year second Starbucks concludes conference

now may You disconnect.

Starbucks (SBUX) 28 Apr 202020 Q1 Earnings call transcript