SBUX - Earnings call transcript Q1 2025

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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. [Operator Instructions]

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

Tiffany Willis

led Diego, for joining you, fiscal Officer; XXXX will and and Chief Executive Chairman Starbucks' Chief good you thank year Financial be discussion Today's President and Rachel everyone, results. Brian us Executive quarter Niccol, and afternoon, first Thank by Vice today and Ruggeri, discuss to Officer.

earnings in statements. on forward-looking any could forward-looking Any statements SEC, to various differ Form uncertainties that cause the risk no This considered Form actual release with subject report from statements quarterly in of including conference risks cautionary these and assumes and our update on report such factors are these call our filings to should be statements statements, information. which will to XX-K our include annual results or conjunction and XX-Q. discussed our latest Starbucks with obligation in

XXXX. metrics constant the non-GAAP call and reconciliations margin today's are on operating and release website earnings measures. Friday, Please in measures measured investor.starbucks.com measures. the will GAAP and our their available website our corresponding an EPS to Revenue, call webcast conference these non-GAAP at on find represent and refer being of archive growth is XX, currency to of to March This be webcast, through

I'll call to that, Also conference with tentatively been has April Brian. purposes, fiscal note please XXXX. calendar for And year for scheduled the planning your XXXX turn that our earnings call XX, quarter Tuesday, now second over

Brian Niccol

afternoon, thank joining for today. Good and you

brand, fundamental people have strategy a We return solve our and Back things growth. believe needed coffee our focused the finest we we've restore X issues, it's Starbucks baristas. to and welcoming gather always months, to handcrafted confidence serve to business long-term where change us in skilled that sustainable past in the the set our underlying we by the getting and apart, been coffeehouse where Over those on

to a we've quickly last Back Starbucks we're quarter date, our to on X response. While we're act into efforts seen on we positive turnaround, moving to only our and outlined the call,

outline Rachel decline met overall $X.X operating year and total to improvement, in performance change confident Starbucks to X%, growth. $X.XX. financial investments global store and we're making XX.X%, margin on To will and size will results sales we structure labor, deliver work company and business future in our stores a clear, of expectations these accountability. get will the and our with of Back for fiscal our commitments the As global our stabilize role, for earnings I'm support per for to greater of a revenue Starbucks. marketing, comparable of of ensure billion, disciplined the to have This room quarter detail, a but our share be and working also position the efficiency technology, teams this help We're improve

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world. of offers, core the discount-driven of reducing in refocus quarter, mission, the marketing transactions identity the year-over-year. the moved our align the to coffee our in We XX% we with the to fewer finest by as started During quickly business, our purveyor discounted and resulting premier frequency

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Rachel Ruggeri

and Brian, good afternoon, you, Thank everyone.

our XXXX our fiscal we're expectations. shared, to year with start meeting with our Brian performance As QX pleased

has driven line Our Back right strategy early that on we're top us giving already priorities. including to improvement, focused Starbucks gradual confidence the progress,

growth consolidated new $X.X Our X% offset reflecting to was months, XX comparable sales. store year, flat decline net store the over the X% QX in prior by past a revenue billion, company-operated

Rewards sales customers decline throughout in U.S. store marketing. daypart most the global strategic X% morning sequentially comparable primarily evident due the in grew Our quarter, to broader as from comparable was shift improved our decline the U.S. sales store non-Starbucks to a

offset remained for the milk X% into the than in removal the fewer year at U.S. shift extra the from and discounts. customizations. mix and strong to of growth more charge beverages benefits These prior pricing, nondairy lower-priced ticket attach Our due drivers

the to opened Turning in in our XXX new company-operated incrementality globally And QX. growth. to XX% U.S., contributed new the net stores stores We nearly areas. store revenue trade

growth. continue we our we portfolio, grow make to will long-term As reestablishing as coffeehouse as we to disciplined the decisions evaluate strengthen stores our sustainable ourselves further community globally, drive and

margin. to Shifting

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into the offsetting QX additional contraction, insight Given as efficiencies. the margin the to investments provide well I as want

me investments, a step to Let Starbucks the critical start for turnaround. with initial Back

experience basis deliver a additional As customer moments resulted hours America North we segment, wage productivity. hours, rate our of to wait benefit with additional support our XXX Brian and margin enabling and the shared, the invested of point in to coverage excluding to model the coupled pressure win service These in difference, a X-minute time hospitality of connection. labor point morning, increases,

store continue staffing our portfolio experience, customer the we to across evaluate levels. we on As labor needs optimize as delivering surgically focus we

you as world. of remains our and reintroduce is of Starbucks Overall up reactions neutral largely including prior to we dialed our saw, the TV marketing discounts, our were positive year. pleased part in As and customer the to to spend, inclusive marketing relative which communication, likely comp priority media spend promotional trend. improvement with linear We

basis the improve in charge impact margin quarter. an To nondairy XX for customizations, segment's milk extra also we on perception, removed the the of value points

with announcement, previously. customer our in Following interactions we as shared increases this Brian strong saw brand

the Additionally, showing grew targeted decline double-digit nondairy these off digits year. a are of customizations Collectively, early mid-single progress. year-over-year in signs investments prior

test our and will we on to is there drive long-term the expect to learn, disciplined through margin, While approach impact investments near-term make growth. right we that a

on efficiencies of of a on approximately efficiencies resulting result we supply balance the margin in-store further in- stability focus to rates, driving XXX quarter. driving Importantly, across improved we optimized investments focusing as in our basis increased time. in and of in over savings points efficiencies efficiencies company continue QX, also the recalibrated as the we Starbucks our while sourcing strategy. store, Back Out partner and we out-of-store expansion Collectively, our as QX. chain meaningful In yield

to We leverage will our approach fund and secure to data-driven we continue turnaround. investments additional disciplined to efficiencies help as a

G&A. Shifting from efficiencies to

the of pay than For still we share higher we're inclusive XXXX, and spike performance-based to prior expect we we'll Specific charges transformation transform the G&A details related to the At impact work, benefits. our lower as QX expect percentage time, fiscal percentage compensation. this year QX, during of restructuring be as year financial near-term regarding a as of more G&A lap and we to we incurring organization, severance support this our working through impact call. earnings revenue

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year fiscal our XXXX. at full looking Now

elevated expected to in to QX restructuring on organizational Although EPS is absolute I EPS quarterly half investments like due intensifying our shape. guidance sequentially and seasonality, expected the some in is the year our quarter. be the also basis fiscal year-over-year the spoke into just pressure improve suspended, an and with both to is of insights XXXX, to about, I'd latter then year-over-year. earnings in provide the lowest

$X.XX, minimal and by hedge gains. price, currently trajectory segment. Development net year-over-year our coffee given QX. our Some pressured coffee seat as additional of the price our and our you year XXXX landscape hedging full to impact be think In overall Channel QX include estimate EPS to landscape the to about of and consider practices coffee strategy, in We aspects regards was the approximately

to limited to and XX% costs. of a cost reminder, product green our of our distribution coffee is As XX% typically total

I pressure mentioned, also our the to direct a EPS and addition seat In segment more in Development price coffee volatility on just way. impacts Channel meaningful

profitability. pass this higher partners, impact will can revenue segment an pressured our ultimate volumes we Although prices consumer and already and business to likely cost our to

and rating. strong to balance we BBB+ Finally, our our remains remain sheet committed credit

through which while results, strategy. effectiveness we QX of around We a encouraged closing, to value providing the are continue our our demonstrated prioritize we predictable return our Back business. dividends, of shareholder capital Starbucks by to In turn

beginning Although our their much unwavering to to work our bring are in thanks ahead to are globe in and my the incredible who chapter life. have goes more partners across we us, strategy commitment the of

and happy Brian you. that, are I with And questions. take to Thank your Operator?

Operator

[Operator Instructions] David from Your first comes with question Tarantino Baird.

David Tarantino

Rachel progressed. comparison-related think as some be that question, guess, improved is you the do it some frame of Maybe seeing I improvement, mentioned quarter. improvement that believe about Brian, the kind of you of your underlying improvement? us. components whether store you're up through that My that on was quarter think And structural or whether the you I can if can you it maybe or terms structural you're talk the comps seeing sales you operations? driving in Is key do for what is advertising plan? saw

Brian Niccol

yes, transactions, the And did demonstrate more respond quarter. broad-based Rachel was to throughout craft The with premium mentioned in the to that went see We see remarks. that from which customers progressed well sequential traffic Starbucks. see coffee I as kind the of kind our stepped as my improvement more this marketing as into news experience saw efforts experience nice non-Rewards think to and as get you away or discounting we of said, was from And how and quarter-to-quarter. the really nice more of is of is good the Yes. thing I we some

saw is show morning The daypart to as other thing, too, that well. continue was see nice improvements our quarter-to-quarter to we

that a the and quality energy Starbucks and Rewards making to morning, non-Rewards Back and even of and craft also, customers. so enjoying far recently, combination to and rollout in to message think customers see drinks reaching from providing our the partners I some our you've coffee of And with, a and the think that stores exciting the new then really experience. And it's our the this shifting in Back experience. stores I as got the are even and the both our espresso embracing seen getting think, craft progress, people I around Starbucks our really I most compelling as was And and as approach is in we've both partners

experience are the coming partners. enhanced feeling customers from Our our

in of definitely the So moving direction. both in all but these right baby steps areas

Operator

from comes question Cowen. next Your with Andrew Charles TD

Andrew Charles

Brian, attack on the plan more And about work on can about brand? that marketing advertising build well? initial little reintroducing year, of can to bit $XXX last if we you Tressie of you can comment was XXXX think about million What level help curious, as a Lieberman's disclosed talk around the for it spend.

Brian Niccol

dollars now the Yes. Look, what brands I doing the we're out the definitely into dollars call experience. and is switching discounting what working would for right of brand

just we of And so to green have with see is Starbucks, is new writing comes ad might that connection what of is you're to saw, a partners I this baristas our apron the cups. over broke our have think, the customers. And key through and on a on one which going weekend, you highlighting, for point our continue centered difference ways that

the brand very about taking such what executable to so people it's in our these experience partners it love actually about talk the where stores. dollars, allocating we're way this experience. it's a I through in it to for And look, And is,

a commitment do also to brand come hopefully, what use to do. or we're see only then to And us it Starbucks, you drive but to your that's a your going but continue connection. And coffee get towards an not turn time continue get these you experience commitment into also every to drink to going this you working into so dollars dollars you're where

what the optimistic like think that we're that ongoing. there's look about a of But we've additional spend elements I'm started come. and does I made, that just like exactly transition the lot to campaign we've still because still I finalizing

Rachel Ruggeri

way are too, as percentage increasing we it. a from it, of The to think a marketing about revenue,

to reduced could we've but it doubling say close the You discount.

as it we're towards, So dollars working said, we've overall net increased putting marketing. revenue in while Brian the

the shift business. terms it's you but it P&L will business in So the a of neutral how and shows in the see up to in overall

Operator

from question with next your And comes Bernstein. Danilo Gargiulo

Danilo Gargiulo

wondering of stores Maybe of incremental Brian, if if you're versus impact efficiency at the some are kind that help you the line Starbucks. time was percentage what at operating ones understand to starting that can the the I see the differential us of need the handover in you you do transform? that the from see stores expecting quantify level specifically, And maybe to what stores. improvements X-minute us line expecting you comp the time are between that are operating can of you're help with that operational

Brian Niccol

Yes.

this quartiles challenge what the So for happens able what we the more what And working what of is what consistently mobile we've a just the to into to solved work, is of food through. being how that the still relates sequencing And done they moment not switches as drinks. while the we've counter area transactions many it rush, occurs gets really to system. we've connection work is stores partners get the so deliver ordering deliver to the to of coffee and crowded, drinks our opposed trying frankly, the task for as through, congested. kind -- put far comes system definitely they're discovered And is through having of

as we at of and bottleneck we high And have stores, those already the comping many a of we because -- so and these and is positively craft we're news percentage the when the situations. not connection that see good in being that stores are executed, look is

experience what provide these great And so really we're production the do kind the the where we no longer ordering mobile point overwhelms is we service experience. where that's to eliminate how focused situations a on can of bottleneck

satisfaction, seen in in difference satisfaction. and seen from partner also customer And we've and that's a performance. performance. in the -- financial difference comp We've So we've seen the difference the

I this time a putting as how because, currently, one we've So started we good already happens don't I we're things smooths algorithm the in-cafe where frame say, And in of well as provide customer to which the great moments are earlier, for out, mobile on such and teams our of as it we these rushes orders in system connection these behind mobile our customers. would customer drive-through measure that measure those our able we're kind stores things, the only seeing news mentioned in X now this, satisfaction into in only this we're good both have are in through and to in satisfaction. partner put scenes. really is weeks of but customer of the exactly the X -- we on way, financial by we're that the morning working place. But to the performance, And and unfortunately, order seeing stores, was it's great place I performance

Operator

the next question. Sara to of move Senatore with We'll America. from Bank on Your question comes next

Our next Palmer David from with Evercore ISI. question comes

David Palmer

wanted basis belief Do was that still There be XXX and that before points X number. be to was that years be in to investments, you It help $X previous of -- of question still before ending sort does big you largely billion business? a productivity might productivity. other investments see COGS-driven. making opportunity considering considering going ask the you could margin a over Obviously, might about see the that be there XXX to opportunity that's a I a Starbucks XXXX.

Rachel Ruggeri

is and quarter be COGS collectively points continuing on as remarks, for store Rachel. And focused is my this the basis continued we're efficiencies, had our the chain. due opportunity, out, I'd our shared both question. are as Thanks say store, in XXX see about which to pointed David, well What out as we we of to you prepared of I margin supply efficiency. in through expansion as largely, this is

to to our we But an about billion, making how believe to think as So the of the going part expansion we level over eventually we'll to time. still I be investments working margin efficiencies relates continue important and what's $X the be leading far go us forward. strategy, through Starbucks to we're of helping think for right we Back that's it as balance as to us

margin would the $X billion. will stick I we work wouldn't think we that I future. the so efficiency just And in about drive as to how continue we say expansion

Operator

question our from with next Morgan And Brian Harbour comes Stanley.

Brian Harbour

about the on you the made Just of organization. announcements some support

also I as to What there? needs in we and G&A XQ to favorability this I how change XQ. see to get changes management the into sort some related you Rachel, understand changes. where of You've you And that sort change? XQ, take might do Is you of much expect made to that, comments start something expect on some those guess hold?

Brian Niccol

of the I of key to first changes Well, of all, is purpose the say accountability lines would our into more business. get

sight. saw is a creating Chief you Officer. Chief right clear about line of Mike's we ensuring the with Development sites have a building which return right in going again to the having is Store a the excellence Officer So role of we're -- Putting all we're right responsibility stores. be design our driving in place, at the cost and

so center where accountable we're the to where the to through our an efficient to which also really happens. trying driving is to manner, business support the sure happens, in stores, a for that got manner make focused that we've supporting want do similar what business And an accountability on stores in we

So months. on. of process in the going that's the evolving of And what's structurally, next we're that couple over

half on second of let The I'll that Rachel that, in chime piece.

Rachel Ruggeri

QX. Brian, So spike we expect, think to would -- your we as that that related savings starts to question particular and while in year, about and G&A prepared an my shared greater as But to we're think we I see I what's to terms this effort. remarks, would of remember impact, comp year, QX have we'll expect the is take start QX, in full see in the QX I -- about even in the as important in also impact that to some and lapping performance-based lower the

drive revenue, year that And of some this G&A leverage percentage will QX. we comp from be just yes, of given over lap But will year. than then, performance largely year will last restructuring would lower-based benefit higher itself, would net-net, you expect see as So in course, of still time. you the this prior expect a from

Operator

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

Christopher O'Cull

thought should about business, customer the be somewhat believe that company been the do also is -- related the you help as has when improve the Are that experience employee customer issues can Brian, sort partner you with the do experience our changes to implemented? mobile algorithm resolve intertwined view we there specific to experience? improving this, improving the you And of expect ordering when experience.

Brian Niccol

early drinks just total that, in human one, think, Look, are intertwined. things our happening: think why the great the And seeing absolutely that idea great kind this are deliver customers great Yes. got connection they of important interaction be to at makes the days great their feel moment pilot great greeting small it's where that's set I drink we of results I'm right. I actually for customers. partners their And up or are with X believe craft that touch kind have in these speed highly partners setting the to orders. or moment. And that of you're really of up successful handoff in, kind of customer what getting every so about and I The is our a that experiences our

system to just the does the the weren't have sequenced. in because how working that that takes mobile out of to stress So partner they're what of of these kind the having is tandem figure algorithm it in orders solve came out

them in order in because with thing humanity. with a for mobile that same the Now does the And then so timely is people fashion stuff get what those the fulfilled happens allow when it now can it of sequenced to a orders we're better to their it give sequences order touch come drink. cafe mobile and

want other promise to some compares around the how also things adding we continue time the idea to test just of pilot. we're slots, to this that are with So There expand going to times. changing

ideally months, going the to on couple yet. definitive just learning, the So to next lot timing don't over of out. we're then give us which get clarity have right timetable will a But of roll

Operator

Barclays. Bernstein And from with your next comes question Jeffrey

Jeffrey Bernstein

in consistent growth the you think moment. and so, you a double a referring, be to I Brian, about And I pushing I to already count to company-operated know is I always comps in guess, the obviously, store know opportunity line. system, but U.S., tension the gone top growth were talk U.S. unit the said U.S., wanted believe for unit the outside of the I in driver more could the XX,XXX-plus. justifiably just which

curious my you me that terms the is caught the appropriate that's doubling, guess, addressable just expectation of how think are of was that? think by I store that market. I'm doubling, wondering, how in rate that have opportunity. as doubling? you that above the do arrive as types surprise, look TAM you about that at than or what that the achieve others? And total in growth U.S. and to particular you you opportunity greater like about geographies Just So did there think Maybe

Brian Niccol

ability I'm that has excited personal that timely seat, okay, a these is things that engine the the manner our touch. or about of great a a still really one and counter Look, so delivers provide can Yes. drinks to with experience the format smaller in execute we behind partner craft the

the areas, do of on you open mobile excited versus we we're so are of Texas and that to we right in right with what work frankly, really to us like lot ability open get that, a areas about. And the of our do have having tremendous we the have small, great and the mix large places gives executions, combine economics that's trade open of those you points. access up southeast. a starts resetting just stores the ordering that continue kind they the when medium, And in mix markets large drive-through, cafe, estate so there the confidence, to as just the it lot small, other success And to medium, in of the or

flexibility brand we we how news the of us And experience. get good on lot mobile gives a then the out that's what confidence the is the in the could And figured execute store has sequencing count. obviously, we the So that ordering. double

frees that just totally up that think us I another to comprehended, still degree haven't I guess. we

Operator

And from with Ivankoe John our next question JPMorgan. comes

John Ivankoe

on more limiting the morning menu the speed, and maybe of opening perhaps been that and the high-repeat products were were product accuracy, conversation focused set consistency, in customization. There's more the products be some really some at differentiated have that would about up afternoon least

I speed in to drive-through. specifically an and in different offerings "easiest" So update of Siren possibility the the one might was us to that up you of the times, at think transaction be seem thought having kind ways maybe element if that, your specifically a be? give to what expect Could that Starbucks. And to of in you the rollout on cabinets get terms of to secondly I the does of warming PM and AM wanted related food

Brian Niccol

would that's we give do that driving execution merchandising the look, and provide morning. of kind or menu different now experiences which us digital the drink snack/food what for is flexibility kind the food the Thanks in make we get the both one then of boards back I And versus got allow do beverage of in remarks, pieces question. we're you roughly in afternoon XX% accordingly. said, board also, food day. the offerings how And key the in as further our the food at us year, the looking tune the then of frees merchandise the my prepared I to the the to then the digital our into right to of think frankly, yes. call as of and menu flexibility does of Yes, dialing to I between are up, sure like I mentioned, end experiences us offerings fiscal menu, morning. And And we've the right

regardless that store, that's find we on what volume of the there's in is we equipment, hold solution hot whether transactions great or drive-through the a or Regarding have a depending not. the

that of those the fresh in investing versus board, type cooking showed trade-off we person to hot the order, not the right a just hold so get just if equipment the had could you be in right. it that find moments, it's it up much it. when that hot Obviously, And from to in at and experience also order the faster. But you're hold trade-off we

more of all kind for So along day speed much kind upon of it it. contingent I'd volume describe than right moving the is thresholds now, it's experiences is way the

Operator

And your of with Bank comes America. from question Griffin next Katherine

Katherine Griffin

Sara is Katherine This behalf on of Senatore.

you positive on Rachel, think, a as I revenue. talking earlier, were having promotions about less impact So

to see much of traffic-driven we think of a towards but this didn't move model, goal that same-store more sales is from here quarter. I the growth

what I lower think that ticket? fewer for And XX% transactions was the But you of you at? was because you're looking is more full-priced quantify to the these sales? promotional what promotions? encouraged extent results, impact mentioned that guess that you're You're were that on by of And year-over-year. looking that can then I

Rachel Ruggeri

we're base customers mean by a signs we But to customers. early speak for us continue start that's our we've good And saying, broad-based shifted I a to would value Rewards out turnaround, in though which reach seen of discounts broader progress. this I of be of we're quarter, incredibly as even our helped important. combination. saw we looking into as customers, more we've all marketing, of the

As Brian in we our ago. the daypart. morning And quarter-over-quarter. non-SR as saw had about shared, customer our had had base but were We where high growth we as growth growth we grew customers year across importantly, a their

from pricing. had was that my by America mix ticket, ticket, discounts. within in it's our the a X%. little the the confidence to but shared that us X%, terms a fewer impact strategy. And well of annualized benefiting pricing decision about as I [ shift that gives items remove remarks, lot of all-day North was as the partially in lower-priced offset prepared over that it in made as had ticket And right the And benefited ] also that towards then from was on So we

So shifting speak broadly. more the strengthen we or customers way more also strengthen the discount, the of as shifting but we're see discount but ticket overall a still as proposition removal of the to for us discount discounting, that to we

Operator

And your next question comes from Peter Saleh with BTIG.

Peter Saleh

sounds the stores. Siren to guys are ask It highest to the only want Brian, this in implement quartile going System. you like I about

systems it from curious, Just what coffee don't of rolling System timing bit to just this little curious out And get last as why the a like stores. need without can you other this stores, it's sounds I the remaining I'm time Siren X-minute on the it? know were top-performing they initially to there's difference quarter, to the expecting system? the and but a early,

Brian Niccol

capacity. the stores, to the what lack has in driven it's we last sequence picked focused a learning It's -- to more order that clear couple process of algorithm is orders on right. X-minute with it It's is you're up and of not the by the mobile we've over become getting new the gotten a And ordering. Look, bringing not most very solution specifically months, Yes. as the mobile with combined cafe.

quartile that's in a our the right just the like a volume the stores, where capability. there's of but in top happening where of process, in the algorithm, kind combined is additional the to with unlock right the And a threshold of So equipment place big we necessary, putting deployment gets the stores. see only transaction majority throughput

adapting is and great what that's learn on. towards what of And it's customer. test the for we've as partner a the this picked get learning we experience we up taking that best So last approach we both and our couple is adapt about we're I focused think the we're learn, And what's and over is the months. sure making

Operator

with Sachs. question comes Cho next Your Goldman from Christine

Hyun Jin Cho

if Are coffee drinking inform going do and you forward? strategy North premium so, it they're younger of local to they're still drawing stores. you your come business marketing you was do America? of more an with coffee as more Do the hesitant? think as hoping in Brian, customers your assessment it plans Is observations And these view on to prices? Is general? into they And importantly, I attracted menu pair why So strategic focus more into the eyes, turnaround how that get in a challenges fresh important this your in back coffeehouses? less

Brian Niccol

talked we've Yes. Look, obviously, I this. about think

to One of we do is our the things broaden want reach.

this And really we crowd. have, customer attracted XX, piece to whole be matcha So all proposition a want way that actually definitely business, we've to tea and discovered through is younger winning what the is to is XX the the solution. latte we with said over Gen the is, Z nice the the we've of

have of might a Dubai the bit we unsweetened recently out with And little that matcha. You matcha. brought the social caught buzz media most seen then

inclusive it customers. actually see appear movement cold nice even of we bring progress we're seeing we age if seeing, with And groups. to tea, cold all or beverages, that we're flavors brew, refreshers, in the what continue so coffee smart iced younger does with that's And

those thing just want that know be a handcrafted That's We through experience about can we're it's that do is customized opposed you the to we -- to cold. more do through want that drinks. drink. that what, solution, want be is about. We nice just being cold all much frankly, not with can coffee. we third balanced describe for And think a, through to a on that would approach a young it's place I it can do tea, I and as we focused what So how

fronts. we're nice seeing so progress And on all those

Operator

Your from next with Deutsche comes question Lauren Silberman Bank.

Lauren Silberman

I investments. wanted to about the partner ask

to stores. hours added You additional X,XXX

through see about the across full of then to talked that assessing the run areas system to opportunities current level think staffing you leverage are offset or what margins as be enough? XXX-store and be these And investment magnitude extent You might investments sales do the How pilot. of through necessary? we you rate U.S. still other

Brian Niccol

Yes.

which those back labor potentially stores was at from tables to out put into gotten X,XXX really certain and standpoint, looking too So just going just thin we've where find a in labor in we the the areas. precision

on response business kick so positive off, the Starbucks is that deliver labor necessary and that experience the to customer that speed as great a just playing we come the our further partners experience do more hand they'll it often, are the love premium about we our pilot all that value to and out at we excited understanding those And And all the differentiates we model what customers things, And know they and handcrafted a good see that we receive. this we've The news and provide. if our implemented the that. the we're about is regard for we've to about seen have front. In want. connection is partners, job

point get premium else. our So When the personal back can't little the brand difference. and it's you get the this a and huge partners. that they with customers. And from love anywhere that is you know you and getting is we meaningful recently from these bags, what a for reinforcing all delighting handcrafted about frankly, heard I've our the experience, their for And you our really cups partners doing feedback on partners beverage connection of provide, things, delivering it's experience customers. with our meaningful that get messages love connection they moments customers is our like writing just the from and received bringing of It's I've

we're So business a core to And unique that deliver the accordingly we working we do in grow how this with what type the makes investment. what is Starbucks experience. to order towards where of That's experience. can of then obviously, back model type understanding, we'll need of out that figure

goal what premium this looking put The The business, the out and grow then Rachel still. isn't establish we're stand all experience doing that then to are its that both a play economics. provide, value, doing use from into, that premium the is from grow where to of as the transactions in we the brand As term, launching the are the point grow where obviously, front for this just mentioned, on business we all today. longer today is to margins goal and from we foot,

Rachel Ruggeri

are are to labor I model say quickly, think use, add that -- investments, Lauren, we we is targeted. staffing they when which would just if we about have And would really so the what I a precision

types impact, business why be near-term these term a It Brian's the drive traffic, to While we're near-term there accretive as will these doing is there longer this. impact unfavorable make investments. point. That's of as investments will is to we a

in wouldn't it that it's the it's mean be precision on based every store what I needs really store. so and about And staffing.

expect to it's lead to all So to investments is margin and remind longer term. investments future. balance the and efficiencies we'll this the we way accretive We foremost, these traffic on I well. that do collective over in think the this will work first able we while making, then drive make broader business as, we making, to it investments we're ensuring opportunities be they'll -- business expansion the as we balance and continue important that traffic I will and just our do the think see be traffic from that to about these will to through work all in improvement across we're the this, still And have

Operator

Zackfia William question with And Blair. from your next comes Sharon

Sharon Zackfia

as into that in is think about think that whether of the of And aligned? come about it's total? equation labor to different from those to I deployment, off kind as channels channels what more guess part I you make is X-minute of a as kind America, have North they or way it disaggregate furthest production drive-through there mobile, coming the of the or walk-in the you

Brian Niccol

first right fact thanks You've the tell Yes. out. no Look, to that queue how all And compare the on a in, challenge I works that now, probably for would is say, the biggest kind has that the when of sequencing. very, right? ordering you just is controlled point, question. first will drive-through It's I you, the governor. got access drive-through points, the a access creates mobile

a great actually order the you well. and great got we a the and to we greeting, give You get board, give handoff. That then pretty operates where window

frankly, our ceramic morning, other gating customer, down orders in experience that can on pilot the any also in-cafe this get in stores the at into at how into I run for excited is was after. no was a really what most customer so right in. we swung this but have The congestion the is one customer might store. Like unexpected there And by the our of we're there the come seen you about was good is counter. mug this drinks enjoying right? their I counter, and come have We love and that is is the I surrounding this all slow like, all there Frankly, than counter. that's with the fact metrics. to the no faster there's on know problem things we order orders. place it the you've thing flooding to call We cafe, quickly. the moment the congestion holding All and it's in just nice the problems, that here. hug, window here term around of not mobile we they're expense for are and And get sitting ask these like cup, They these recover this. run they we have Obviously, providing for flooding even where really They're they're on can the a times we their and mug

So up coffee are when customer it's rhythm and more with meanwhile, synced mobile experience. But just peaceful, order drinks the in much a comes go. people their in, the to in pleasant, coming drinks get

we And so this The short back that's in that's a order, what really right? I of, look, put go things I in condiment we're of after. place, think, And to coffee bar. lot why

coffee of for getting thing just coffee to other brewed her operation was but "Hey, our customization like, the this to thanks her the she she unexpected, bar," right great, and that was customers, way. And at of on I stopped one we was was condiment literally, able the POS. I because The own wanted me. say changed be then do

So it a was it a that transaction on. of move our get customize for fast come customer chose and for cup into store, really brewed to that themselves coffee,

that press of court got it happens after connection time deliver really around the counter. sequencing proposition reasonable a fix in, in of So to is of what And we're and point right mobile or ordering full period, I getting solving of is think it. call that X kind a choke would first is a that to out we've on And the what these got it we've happens is that minutes that's just now, moments what first because rid less.

you a experience, you're like And with excited saw. a lot actually And behind it, the got where don't this to then when it. I whether just just It's an the I good an there, think was be, get which where humanity really it there's that level or stores we technology environment be provide our partner we've is customer. some crafted are back about news make a being will that a So it's creates experience premium needs else. of anywhere right that I of what it's is doing partners -- And it with better brand a you experience.

get Sorry, that. it to long answer is zero the in, order months we excited to to couple unlock. last understand this I'm really the good what over got about where because But to learning of was in most

Operator

comes from Fadem Zach next with Fargo. question Your Wells

Zachary Fadem

ago, compare minutes high Brian, or due few quarters that to away of in-store on X it wait customers think orders how from a a MOP less, was to today? the does times. I there was high MOP walked mix

could picture, about were get So if that's where then talk curious big opportunity? trending all frame today. transactions how if able to you you would under just the And comp X separately, minutes, you

Brian Niccol

frame really gets Yes. also the what that the as when I order XX go And good news is promise bailing. good learning is beyond would we mobile it would Well, kind it tell up. of that's people we've have got some would I you time minutes, when

And these have in can aren't let's a in settle see mugs really amount plates the it's get just of in. And just the way kind And in the to in improve customized end, a such coffeehouse it everything of for of customer The what kind or a to your in off been get touch that that frankly provide ceramic to we so a a humanity want that valued, to another of in this reasonable get craft then as moment experience, the when how add over is why like time you going not to starts with heard time I we do seen, I'm versus So craft first then again when frankly too, you calms of a product setting proposition whether they you the right? provide. past whole points they up needs delight day. now or and right down, it we the where that minute or I'm We're beverage this out store X-minute And times you testing a other has actually connecting they move the the Starbucks connectivity minute, the granted, It's this to out. for or down happens, is rushed success, in, amazing and for spot partners XX roughly in, of, ultimately is what going that same they're and seen deliver. That's it's and a what connection. and the if the can it, others glasses myself, pilot of that do capacity here the they've ability like XX it's customer experience, so vibe slots of hey, call just like, the because can to these my may minutes, want want, experience. promise the we a is we've that's you them of not harmony, overwhelmed they're order the frees just taking doesn't we're token get feels take the Starbucks And if that mobile the can to is have is slow overwhelms what can know customer have over we're the good. this mobile that customer. And that in-store way situation and up get level where And at occurs. happens, for now first times.

And so how let figure we occur to got we don't instances those ongoing.

Operator

And from with Tower Citi. question comes the last Jon

Jon Tower

lower on from point menu in Quick items. that the than on just Are a That's high Then the you footprint, and yet question clarification the quarter? coffee the respect standpoint, curious, clarification. leader global clarification are price EPS an you in premium it's piece with what going contraction to many guys then saw, the we and the the XX.X% a to quarter on Brian, a first be from a the the piece, question. quick sales Rachel, level, growth quarter. second suggesting second markets of hold like across and I'm you,

most can to the So the through now company's think about store keeping today power over the that, are means points the pricing base you're you balance and time, talking help X doubling of something and you think what how pricing that being U.S. through distributed even they potentially for price forces you time? yet like the XX,XXX where obviously, how stores over -- us in and

Rachel Ruggeri

earnings That's I'll that that on will will, basis, I'll on and is, we and start absolute Jon, part, which expect an restructure margin seasonality as well in will yes, risk take the organizational QX. but the means year-over-year first elevated as be based pressure lowest the largely that's it's is also investments. organizational structure. reflecting the and What earnings intensify, the driven by

the improvement you'll year. how and the year. back would think back would but about that's And in EPS, in half we gradual year-over-year we expect QX, So the the of then that half to expect of see improvement sequentially specific we

Brian Niccol

as so that that architecture sure the occasion based serves flavors from think been to want second your business. sure different the whether that's where menu age. We got our also is innovation be morning we're a people's making news both that is part us for right to things the one going you're well it's And relevant of or to the age. continue tea/coffee food afternoon we I the look, it's And the a profiles it Starbucks good a occasions, always taste part see beverage. and model. we've also as occasion make right of and pricing on the innovate And an a going across of question, this standpoint It's to has be on to right the of to and got

accessible. going So the of relevant, this forward innovation of that to cognizant make be sure brand the bringing relevant. experience key keep pricing is that architecture a the to be keep piece we but then a we're being And to going still, is the very premium we support when menu maintain want puzzle we're hey, to you innovation, to do

taste. to leverage as going drink occasions you're us architecture, well the see innovation so as it day and to food carry relates And to pricing as

Yes, that Well, So I up. think wrap was the last question. okay. let's

coast to the humanity what that months to to of I customers and do the continue and big is what all we're of of to for energized then for committed for just because sure we America, questions. all relevance is So world. And couple so that Latin do it partners our lines, along provide a all, of around our the and see The making our Asia thank and those you brand can but Obviously, to thanks only kind partners that to everybody. world brand, to by a they the brand around first is brand opportunity so truly our this say able of the we doing make systems I'm the create Europe travel to the experience special special really seeing and around coast so but we're to this the resiliency, into inspiring the world. -- this not want

building describes loved progress, when in coffee, is we're and of again, build here. a feel for clear one obviously, have. There's once that I mission the I we So coffeehouse, think kind great we because is And do. going clearly questions what think our much the customers it's in that signs proud really like the that Starbucks our partners be like, the working show of good gets going to wall be the need And the word have I to, our word know have not news a our the And piece And results to think you apron to be our And XXXX partners. QX, purpose. expectations, a green work up should that Starbucks? met on asked we're to warmth, on do. The of we still that do some we're for is one loved what's clear but welcoming we I around walk lost of written we're love. that we'll trying for to all and for loved work

us. in a And so of front it's critical year

things. of I'm all have deliver our lot to we this work, to once a things, I quickly to also excellence. we we'll on those do we're commitments. you will growth. And on committed company work we to do to want position these tremendous future moving have for with And We hear, Starbucks, but the get Back executing on clarity believe I

create for shareholders. providing look, opportunity so partners, and long-term economic sustainable for worth customers, generate that to experience our And confident, going returns okay, in that's for closing, our it we're I'm our

us doing this jobs, just what's So in these and we about why Starbucks. really front is of love excited at I'm

So for afternoon. us, thank have a and you great joining

Operator

First Starbucks' Quarter Call. Conference This concludes Fiscal Year XXXX

disconnect. now may You

Starbucks (SBUX) 28 Jan 252025 Q1 Earnings call transcript