Q4 2024 Starbucks Corp Earnings Call
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Good afternoon. My name is Diego and I will be your conference operator today.
Please refer to the earnings release on our website at Investor that Starbucks Dot com to find reconciliations of those non-GAAP measures to their corresponding GAAP measures.
This conference call is being webcast and an archive of the webcast will be available on our website through Friday December 13th 2024.
Also for your calendar planning purposes. Please note that our first quarter fiscal year 2025 earnings conference call has been tentatively scheduled.
For Tuesday January 28, 2025.
With that I now have the privilege of turning it over to Brian.
Thank you Tiffany and good afternoon, and thank you for joining today.
Starbucks is one of the world's great companies and most iconic brands. It really is a privilege to take on this role and I'm excited to be here and optimistic about the future.
Since joining Starbucks last month I've spent my time digging into the business listening to partners and connecting with customers.
These experiences in my learnings have helped me form a clear understanding of where we are and what we need to do differently moving forward.
Everything I have seen and heard tells me we have significant strengths to build on the brand is strong and enduring we have deep coffee expertise and we have a fantastic team of Green apron partners I look forward to sharing more about my plan to get back to Starbucks with you shortly but first I'd like to turn it over to Rachel for a more detailed overview of our final Q4.
And full fiscal year 2024 financial results Rachel.
Thank you, Brian and welcome to your first Starbucks earnings call and good afternoon, everyone.
Rachel: As you saw in our press release last week, our traffic challenges persisted in Q4, resulting in pressures throughout our P&L from our topline to our bottom line.
But the second half of fiscal year, 'twenty 'twenty four inline with expectations.
We expect G&A to further decrease relative to revenue over time, leading to sustained margin expansion.
Rachel: Q4, EPS was <unk> 80 down 24% from the prior year.
The decline was primarily driven by a combination of traffic challenges and heightened investments, partially offset by our pricing and efficiency efforts.
Rachel: Moving to full fiscal year 2024.
Consolidated net revenues increased 1% to $36 2 billion in fiscal year 2024, driven by 7% net new company operated store growth offset by a 2% decline in comparable store sales.
Full year consolidated operating margin was 15% contracting 110 basis points from prior year, primarily driven by investments in store partner wages and benefits deleverage and increased promotional activity.
The contraction was partially offset by pricing and in store operational efficiencies.
Our in store and out of store efficiency efforts collectively delivered roughly 250 basis points of margin improvement for the full year, which is nearly 1 billion of cost reductions throughout our P&L as aligned with our original plan.
Full year, EPS was $3.31 declining, 6%, including a 1% unfavorable impact from higher effective tax rate.
Shifting to our outlook.
As noted in our press release last week, given the company's CEO transition coupled with the current state of the business. Our guidance is suspended for full fiscal year 2025.
This allows ample opportunity assess the business and solidify key strategies as we refocus our efforts on the turnaround.
Particularly during our morning peak and shoulder hours, we're moving quickly to test and learn.
We're also making a commitment to grow from within by identifying internal hires for 90% of our retail leadership roles and to rally our team behind our back to Starbucks plan and helps support strong leadership in every store, we're planning to host a store manager conference in 2025.
Second, we're making it easier for customers to enjoy brewed coffee their way, we plan to bring back condiment coffee bars, and all of our cafes by early 2025. It is a great customer experience and will help with speed of service. We also plan to complete the rollout of our Clover vertical Brewers in all our company operated locations by the end of fiscal year two.
25, providing customers more on demand choice and high quality brewed coffee.
And we're evolving store routines to hand deliver brewed coffee to customers faster upon order.
Third to improve throughput quality and consistency, we will cut down our overly complex menu to align with our core identity as a coffee company.
We will still offer customers great choice, but we'll be focused on fewer better offerings consistently crafted.
Fourth we will continue to scale our investment in siren equipment in siren craft processes to improve the in store experience for our partners and customers. This work is a critical enabler in helping to achieve our four minute wait time aspiration.
And finally, we will bring order to mobile order and pay so it doesn't overwhelm our cafes today more than 30% of transactions are driven by mobile orders at peak. It can drive an influx of orders that can be difficult to sequence and quickly deliver to our customers. When it works well, it's great, but sometimes it can be a challenge for both customers and partners. So we're.
Working to improve sequencing with a new algorithm that enables on time mobile order handoffs and supports our four minute throughput with quality.
Rachel: <unk> drinks, the latte or the flat whites the cappuccinos a lot days.
You know these are things that literally they they shined when they answered the question now as regard to I also asked them. What do you think there's some things we could be doing better.
You know and right out of the gate one of the things. They said that would help the whole process is if we could get brewed coffee not to be going down the line and ending up down at the counter and so that's why you heard me in my prepared remarks, you talk about how we're going to bring back to coffee economy bar.
Because both our customers are asking for it and our voices are saying it would help them deliver the speed of service that they want to provide.
Rachel: So that's one big piece of feedback I got the second piece of feedback right. There with the brewed coffee as you know take a hard look at the staffing both during peak and shoulder hours to ensure that we're setting the teams up for success.
All day long and so we've looked at it I'm happy to say, we're already implementing some changes in a couple of thousand stores and we are going to be piloting.
Rachel: Some new approaches on how we set up the labor model, so that our breaches have time.
To give not only great craft drinks, but also that hospitality that human touch of handing off the drink.
Two our customer at the counter and then also making sure that we're on time with the mobile order business.
The other thing that they shared with me and some of the stores.
Stores is they wanted their cafe dining room back you know they like.
Rachel: Leading the coffeehouse I think there's a moment of pride of saying you know this is my place they know our customers by name they have their regulars they won't have a great seat for them. They won't have a great environment for them to enjoy you know whether it's a moment for themselves for whether it's sharing a moment with others and so I.
Couldn't agree more frankly with a lot of their feedback.
Let's go in and by the way the menu simplification spoken beverage and food.
We're not just looking at beverage or just food.
And then on the customization guardrails.
Right now if you go through the App, you'll notice that we offer up all kinds of customization or it's the same customization page almost for everything that you order.
Rachel: So two things happened one it's complicated for the customer to get through it and then two we kind of incentivize people to customize drinks that probably aren't the best way to execute the drink.
Not to mention it creates additional complexity for our partners to execute the drink. So we have some cleanup to do is the way I would describe it and then I also think we have some pricing architecture tied to guardrails to ensure that we ended up with no.
Rachel: No surprises for frankly anybody on what was the price of what they just built and then also that we can execute consistently every time.
Rachel: So that's what we're after on on those fronts.
Rachel: And what was your other question.
Is it just product innovation.
Your view whats kind of the right pace.
Speaker Change: Yeah, you know look it's really interesting.
The I'm still getting up to speed on the innovation process at Starbucks and what I'm happy to discover is they have a stage gate process. It hasnt been followed recently.
Rachel: And we're gonna start using the process again.
So innovation has been I think a core piece of the Starbucks proposition and it's going to continue to be but.
But we are definitely not going to be moving at the speed you probably saw over the last two years.
And part of that is we're just going to take a much more disciplined approach using the stage gate process. So that what we roll out we have a better understanding of how it is going to perform the supply chain can support it.
Rachel: <unk> can execute it and you know.
Rachel: We'll make sure we.
Rachel: We're smart about how we then marketed so people are aware of it. So it's kind of the basics of how I would call it like stage gate innovation.
Rachel: But what I was happy to discover is there is a process already at Starbucks. It just wasn't being used and now we're gonna reinstated.
Speaker Change: Thank you.
And your next question comes from John Ivan Cope with J P. Morgan. Please state your question.
Hi, Thank you very much you know Brian you just mentioned food I think for the first time in this call and you know food is nearly 25% of Starbucks sales you know food from what I recall as you know in 40% of transactions. So it is actually a pretty meaningful part of the Starbucks business and you know.
Rachel: There has been some discussion of kind of improving the baked goods, improving the sandwiches and printing the lobby yeah things around food warming cabinets that could be a significant enhancer to speed, especially if people were to order several different things.
How would you prioritize you know food is that something that you think is a big long term growth opportunity for Starbucks or you know is the answer or you know do fewer things better and really focus on beverage first.
Yeah. Thanks for the question John the AR.
Speaker Change: To answer your question look food is I think a key piece of the puzzle and I think you're right. We have the opportunity to do fewer better food executions.
So you know, obviously I want to make sure that everybody understands the quality the craft the commitment we have to coffee, but I think we can also have the same commitment to quality and craftsmanship and our food.
To match the experience you get with our beverages. So we're doing work on that already.
And I do think we're gonna be much better at food, if we do fewer things.
On the food front, and a better quality fashion. So that's part of the process and.
Speaker Change: I think you'll you'll see some of those changes evolving over the coming months.
Thank you.
And your next.
She comes from David Tarantino with Baird. Please state your question.
David Tarantino: Hi, good afternoon.
David Tarantino: I wanted to ask about the store redesign work that you're doing.
David Tarantino: Just curious if you could elaborate on what are some of the elements are seeking and that in and what do you envision the benefits of the new design being and then maybe secondly.
Once you know you finalize that design do envision a big remodel cycle.
The next several years or however, you want to frame it.
David Tarantino: Thanks.
Speaker Change: Yeah. Thanks, David.
So yeah. So look what we want to do is figure out how we can reduce the costs on our renovation program and then as part of that also.
David Tarantino: Create the experience where you've got a great coffeehouse.
David Tarantino: Chair or seed or buy okay.
Then at the same time I want to separate and we believe we need to separate the counter experience, meaning the in store experience from the mobile order pickup experience.
But regardless, whether you walk in to just.
Pick up your coffee Ingo I want you to feel like you've walked into a special place and you know look ideally I was just saying this to our design team I know we've got it right when people are questioning whether or not they want to order mobily because maybe if I have a few minutes I'd rather stay in the cafe and get that cafe experience from a barista words handheld.
David Tarantino: So I I have.
Strong belief that we can make the cafe experience frankly, really terrific and something special really welcoming warm space, where you want to spend some time.
David Tarantino: And I think Theres touches right I mentioned, just bringing back to ceramic mug. If you decide to stay in the cafe and have <unk>.
Hey to obviously than the furniture that we have the materials that we choose.
I love, our designers are talking about making sure we bring back the layers. The texture. The warrant those are the things that are really important operationally. What we're also after is.
Clarity of where that barista handoff experience will happen. We're also after less than four minutes.
Four P O S. Two.
So the handoff and we're also after if you order a brewed cup of coffee, it's a really fast experience because we're going to just hand, it to you right at <unk>.
The point of sale and then you can go to the coffee economy bar.
And Doctor up your coffee, how you see fit.
David Tarantino: One of the other things, we're gonna be bring them back to us, bringing the sharpies back to our paresis and it's going to give them the opportunity to put that additional human touch on.
David Tarantino: On every coffee experience as well so.
There's a lot of I think theres a lot of just simple things that go a long way of saying you know what this is a community places is a special place where people are here to connect and I think we can do that in a really meaningful way and then obviously on the mobile order side of things I want to create a separate area, where it's clear. So you know you drink is ready I can grab it.
David Tarantino: And if you need to be quick you can be quick and we'll be on time with it and then obviously we saw at the drive thru business, where we got to make sure we get the the orders correctly out the window.
Speaker Change: And then to answer your question David on the renovation program I think we're still working through what is the right schedule. Once we fully understand what the renovations are going to entail.
But my hope is you know over the coming years will be able to touch everything and get back to having that community coffee house five.
Thank you.
Your next question comes from Andrew Charles with T. D. Cowen. Please state your question.
Great. Thank you, Brian one of the things that made Chipotle successful was the digital make line that help provide capacity for traffic growth and creating production capacity. It sounds like something in your mind for Starbucks I'm curious what your view is on the sirens system automated technology and if this is something you are looking to step on the gas to accelerate retrofitting.
Pace of this in excess of the 10% of the store base per year. That's currently in place it would help to improve operations as well as the <unk> experience.
David Tarantino: Yeah.
Speaker Change: Thanks for the question obviously, the one thing that I'm really delighted about is the siren craft system, both the equipment and the process I think is a key unlock for us to deliver on this four minutes or less.
In Cafe experience and then also to set up the algorithm, where we can allow mobile orders to have specific pickup times. So that we're sequencing those mobile orders what I'll tell you is we know we've got some bottlenecks out there right that we've got to solve and the good news is some of the bottlenecks require.
For the full implementation so the hot hold the Combi oven the cold solution. The process and then there are other stores, where we don't have to quite go that far in order to achieve the throughput that we're after but what I love about this is then we can we know when transactions get to.
Certain level or mix gets to a certain level, how we need to roll out the system. Accordingly, So what I would tell you is look what I want the organization rotating towards is how do we unlock throughput at less than four minutes in that store if that store requires the false iron craft system put it in if it requires some pieces of it.
David Tarantino: And if it just requires staffing and better deployment, we will implement that so.
I really I think we need to re rotate ourselves to this idea of we are going to be a great coffee craft a company that has now really good throughput and operational standards for how we perform for each of these access modes and the good news is we've got a great group of engineers.
A great group of people that have clarity on how we solve any of these bottlenecks that we pop into or bump into so that's the way you should think about it.
Putting a full court press on solving four minutes.
Is the point and then how that cascades into our other access modes.
Your next question comes from David Palmer with Evercore ISI. Please state your question.
Speaker Change: Thanks.
Just to follow up on what you were just talking about with the back of the bar changes in trying to make the brief to his life easier service times better D. R.
Are you and then you mentioned Capex changes you know away from unit development and perhaps towards some of these changes with the siren system more or at least just the machines.
Are we really going to see what they were describing to us a while ago with the siren system or you.
Speaker Change: You're just going faster with that and more aggressively towards the stores that need it or are you envisioning something.
More radical but different in that you were going to separate the bar in different ways to make.
Speaker Change: That is more fundamentally.
Speaker Change: Departure from what we were hearing about and then you mentioned the four minute service time goal.
What is that service time today, and where where specifically are the biggest bottlenecks or pain points that are keeping you.
Keeping that gap from formats. Thanks.
Yeah, So David D I.
The big change here is having an operating standard around less than four minutes.
And there wasn't I guess clarity.
Speaker Change: On that aspect.
Instead, we were just kind of working on pain points in isolation as opposed to what is the system solution to get the customer experience and the barista experience that we know we need to deliver and so the less than four minutes actually comes from two things one talking to breaches and customers to find out what are their.
Speaker Change: Dictations.
And one of the things I'm happy to discover is before the business.
Got as big as it is in.
<unk> had also mobile order in food and cold et cetera.
Speaker Change: A lot of our partners longtime partners are used to getting these hand crafted drinks done in about two and a half minutes. So we know it's feasible to your point, though there is some additional bottlenecks that we have to deal with so in some cases, its the food and that's where it is necessary to put in the combi oven handle warming kit.
In some cases, it's the mix of polled.
And in some cases frankly, it's the mix of mobile.
And so we have to address these things throughout the system and that's why I'm, saying like putting everything against this idea of you know what we're not going to do something or said another way, we're gonna be doing the things that enable less than four minutes at the counter.
Speaker Change: Then we're also going to be doing things that enable being on time and accurate every time for mobile order pickup.
And it's also we're going to work towards getting less than four minutes in the drive through window as well so.
The good news is we've got the equipment, we just haven't over time used it as a system to serve against the need of less than four minutes and so that's the big change.
And when you when you start to use that metric you quickly discover where our stores have a real problem.
And we're gonna go very aggressive against those first and where there are other stores that frankly don't have the transaction of the mix yet that warrant putting in all this equipment, but we should put in the processes why are the place correctly, so that as their transactions get close we can put it in and avoid ever having the bottlenecks and then to just answer your question.
Speaker Change: We probably have about 50% of our stores.
Our 50% of our transactions already happening less than four minutes. So we know it's very doable and this is what I'm, referring to during peak. We know it's very doable, we just need to do it and all of our stores and every transaction. So.
We're gonna be we're gonna be maniacal about getting after it.
Thank you and your next question comes from Christine Cho with Goldman Sachs. Please state your question.
Thank you for taking my question, so I know you're not ready to put specific numbers around it but I was wondering if you could kind of talk about the major areas or buckets, where you would need to kind of invest then.
To kind of restore the traffic momentum as well as to improve the store infrastructure for your partners as well as gas and also just to confirm that 1 billion per annum cost efficiency program is that something still you can leverage in the next few years.
Oh I'm sorry, what was the last part of your question.
The 1 billion per annum deficiency unlucky perfect yeah, the productivity effort.
Is that something you think you got it so yeah look the things we're working on are.
Kind of what I shared in my opening remarks, which I believe will drive transactions, because it's going to address our.
Partner experience as well as our customer experience so.
I just spent a bunch of time talking about this getting after the less than four minutes.
In the cafe being on time and accurate and mobile order.
Against certain time standards getting the pricing architecture correct.
Hardening, our reach beyond Starbucks rewards customers and.
Speaker Change: And then obviously, creating that community house experience, where people want to be in Starbucks spend time in Starbucks.
All of those things will add up to I believe growth and the good news is we've got some great assets and tools available to US right that rewards program is a valuable tool, it's not the only tool, but it's a valuable tool that I think we could make work harder for us if we put it in concert with marketing that has more broad reach I think.
<unk> the capability of this organization is on.
Speaker Change: Innovation is a powerful tool we haven't used it correctly of late but I think if we use it correctly.
Speaker Change: With the stage gate process driven against the idea of you know.
These operating standards of less than four minutes.
Speaker Change: And then also delivering on customer expectations innovation will be more powerful so it.
It is one of those things where as we get the foundation reset I believe theres a lot of additional catalysts for growth in the business and are.
If you're asking me how do I add it all up I don't have an answer for you yet what I can tell you. It adds up to is more growth it adds up to a turnaround and it adds up to growth. So.
That's where we're going to spend our time on and then on the last piece of productivity the $1 billion I mean, the good news is the team, especially the supply chain team has done a tremendous job of just being much smarter about how we.
Work with our vendors and partners.
As well as the right way to bring them these products to market.
Powerful when you have the right product the right place at the right time, it just becomes so much more efficient for everybody involved.
Speaker Change: Both the supplier to all the way to our partner in store that has to deliver on so.
Speaker Change: Originally if you want add anything to that everything that I would add Kristina is just to say that while we'll continue to focus on efficiencies. The target that we've shared previously it will be part of as we think about reassessing the business and looking at the right near term and longer term strategies as part of our back to.
Back to Starbucks plan, we'll look at the optimal level of efficiencies, but what you can expect is we will continue to Brian's point, we have so much opportunity across the end to end supply chain as we optimized throughout the store and even as we manage spending and so we'll continue to be focused on that I wouldn't be as focused on the $1 billion that would just be focused on the fact that we will continue forward with.
Efficiencies and we'll do that as a way to help offset some of the investments we'll be making and then the future those efficiencies will help us not only support incremental investments, but they'll lead to margin expansion and earnings growth.
And your next question comes from Jon Tower with Citi. Please state your question.
Jon Tower: Great. Thanks for taking the questions and Brian Congrats and I wish you guys. All the best of luck it and it's going in the right direction again.
Maybe just first when you are talking about the menu simplification and even just the simple idea of not charging for non dairy modifiers any way to quantify the dollar amount that that's contributing to revenue today and then I guess my broader question for you Brian just looking at the brand from a high level do you feel like it's a bit over distributed.
Specifically when I look at the U S. Do you have a large chunk of U S company stores, but then you'll have a fairly large footprint of licensed stores and when you're talking about going through all these initiatives. How can you apply that not only to your customers. Your current company store base, but also to the license stores. So that the customer gets a similar experience at both venues.
Speaker Change: Yeah. Thanks.
Speaker Change: Thanks, Sean look I will tell you.
Speaker Change: I am I.
Speaker Change: I I am pleasantly surprised to see how the license business in the U S performs.
Jon Tower: I had the opportunity to spend some time with.
Hey, guys, a target and you know.
I will tell you they are hugely supportive of the idea of getting back to Starbucks and I think.
They're going to want to give people to back to Starbucks experience that we're after so.
Jon Tower: Usually optimistic.
Even when I think about like the airports and such.
There's a huge opportunity for us I think to simplify.
Some of the execution there so that we can give people to great throughput that they want so they can get on their way. So from what I can tell everybody seems to be very excited about this idea of throughput with quality.
Broader idea of just getting back to Starbucks.
Jon Tower: So I think I think this will carry not only in our license stores, but I think they'll carry it as it's their own which I think is really important.
Jon Tower: And then.
What was the other part of your question.
It was on the menu simplification I mean, there's been putting numbers around that or even just on the non dairy milk modifier Oh.
Jon Tower: Yes. So look we're early days into the menu simplification, but there's definitely room for us I think to eliminate some products frankly that add complexity have a lot of waste and.
Really don't add a whole lot to the experience and so we're gonna have to be it's going to be in some cases, it's tough because everybody has their one favorite thing that maybe is on the long tail of this but we got to clear the way. So that we can get to the big movers that people really interact with.
Jon Tower: Time and time again.
And then on the customization.
Jon Tower: Like the Alt milk.
Look I've, just seen time and time again when people start the process of their beverage.
Speaker Change: The price.
<unk> is I think warranted given the caliber of the coffee or the drink that youre getting where are we sometimes I think get twisted is in all the different customization that we offer up.
And then the complexity of the customization that people take us up on and I think a lot of it is unnecessary and I think when we simplify that aspect of it.
And then charge for the things that we should be charging for and maybe not charging for the things that don't really need to be charged for I think everyone's going to walk away feeling a lot better about ultimately their personal beverage that they've created so.
The numbers, specifically, we're still working through some of that obviously, we got a pretty good idea of what the Alt milk implication is.
I'm confident it's the right investment in.
The business to get people to re engage with the brand. Accordingly, So I don't know if you want add anything to that Rachel Yeah, I would just say as you think about the investments we're making.
Is it going to be important to returning Starbucks to growth just when you think about the shape of the year you could expect that the first half of the year is where we will be making the investments. So we expect that the back half of it will be stronger as the investments and our strategy is starting to take hold so that's the way I'd think about it I think there'll be a more near term impact as we make some of these.
Jon Tower: Investments, but we expect that the traffic will return and that we'll see customers coming back into the stores and that will help the balance so that we see gradual momentum in the back half of the year.
Speaker Change: Thank you Andrew.
And your next question comes from Peter Cella with BT I T. Please state your question.
Great. Thanks for taking the question.
Peter Cella: Brian I did want to ask again about the siren system and you know.
Peter Cella: This has been around for about two years now and I think the pushback in terms of broader development or expansion of the Saturn system has been it's too disruptive to the stores unless it's a remodeled store or new store. So I guess as you see it with fresh eyes, what do you see as the hurdle to a broader implementation of.
The siren system is it that disruptive or is it just something that you're going to have to work through given the ultimate benefit of the of the system itself. Thank you.
Speaker Change: Thanks, well look you know one of the things that we definitely have to fix is when we do renovations we can't have stores closed for.
Two weeks or three weeks or whatever it is that is too disruptive.
So the team knows that they are working on how we fix that but that almost has nothing to do with this iron system. That's just in general principle on renovations.
The siren system I would say part of the reason why I think we've maybe took a.
Peter Cella: Not the most direct path on this is because we haven't had clarity of what we problem, we're trying to solve and.
The problem. We are solving now is getting to great experiences. If you really think about right. We've got three access modes.
Peter Cella:
Peter Cella: Hey.
Sorry for access modes. If you include delivery right you got in Cafe, you've got mobile order pay you got drive through and you've got delivery alright, So theres more access modes common and now we're in three lines of business right Hot Cold and food and we have not had operating standards for time of service that we want to provide.
For each of those elements.
Peter Cella: So that's the problem, we need to solve and the good news is.
Peter Cella: Even though it wasn't.
I guess envisioned initially a lot of the equipment and process solves bottlenecks that were kind of considered one off issues, but when you put the whole thing together and you realize like Oh Geez This store.
<unk> is operating at such a transaction level, it's got such a food mix. It's got such a cold mix, it's got such a mobile or you've got to put the entire system in in order to achieve these operating standards.
Peter Cella: Excellence, you know as it relates to the customer experience so I.
Peter Cella: I would tell you part of the reason why I think we zig and zag on that Shire and craft system is because we didnt have clarity of what the problem.
Problem, we were trying to solve and now I think we've got clarity, which is what we're all about grade throughput for the access modes that our customers wanted to experience Starbucks and.
I think I'm optimistic that we can roll this out accordingly, and the places where you got the full scale bottleneck, they're going to be the first places that we implement this.
Coupled with I want to touch the stores to bring back that coffee house experience and you know look the challenge or the problem for us to solve is I don't want to store clothes for.
Weeks, and we got to figure how we can do it for less so and I think these things are all very solvable. So I.
Hopefully that answers your question on the southern craft system and more importantly, what's the problem. We're trying to solve the problem. We're trying to solve is I wouldnt agree with a great customer experience from a time standpoint to go with the great craft quality coffee drink experienced life food experience Youre getting.
Speaker Change: Thank you.
And our last question comes from Lauren Silberman with Deutsche Bank. Please state your question.
Thank you and congrats Brian I wanted to ask about value you talked about the pricing architecture, no plans to increase prices removing the upcharge on non dairy how would you assess starbucks a value perception and to what extent you see that as a driver of current headwinds and then Relatedly. How are you thinking about the architecture of the rewards program and opportunity there.
Peter Cella: <unk>.
Yeah. So look I think like I said, I think we have a real opportunity in <unk>.
Simplifying the pricing experience right because you started off with a price for.
Peter Cella: Latte or.
Whenever you start with and then the next thing you know you start customizing and right now everything has kind of a different.
Price and whether it's one pump for pumps.
Peter Cella: Frankly I'm still.
Wrapping my head around how the whole system works and that's part of the reason why I know we have to simplify it what I have found is when you get simplification in place on pricing people understand okay. This is what I'm paying and this is what I'm getting and right now I think we're surprising people a little bit on what they're paying through the customization process and we got to fix that.
But look if you actually look at just our brewed cup of coffee and you understood. The commitment we have to.
The agriculture of that coffee bean to the moment that that coffee bean roast to the moment that coffee bean.
Peter Cella: Makes its way to our store.
We use equipment like Clover vertical.
Peter Cella: Firstly ground freshly brewed.
Kylie confident it's it's it's probably the best Cup of coffee, you can get and where we're going to make it a lot easier for people to get access to it.
And I think when people discover that with a great environment I think we're back to people, saying Hey, This is really worth it and.
That's where we got to work on that as we got to prove to our customer.
I think the combination of what I've outlined is going to do just that and I think the good news is we don't have to wait we can start that process and that's why you see us doing things like bringing in the coffee economy bar not charging for all theory okay.
You're going to continue to see us make those moves.
We can and then you'll see us continue to test and learn our way into some of the other things that we need to take our time on and be smart about.
Speaker Change: Thank you.
Our last question I will now turn the call over to Brian nickel for closing remarks.
Brian Nickel: Alright, well. Thank you everybody it was great to hear some familiar voices and thank.
Thank you for the kind words, obviously I just want to reiterate I believe Starbucks is one of those grades special companies and brands.
Brian Nickel: And it's a real pleasure and honor to have the opportunity to be in this role and thank you for your time and your questions I'll just reiterate a few things you know obviously Q4 the fiscal year they were disappointing, but fundamentally we're changing our strategy, okay, and we have a clear path on how we're going to get back to Starbucks and hopefully what you've.
Heard promises were already taken steps.
To start driving this idea of throughput with quality getting the staffing rate in our stores, making movement on our pricing architecture, and bringing I think some order to mobile orders, while we also reclaim the third place an overhaul of our marketing so.
Lot of work is happening I think it's it's been clearly communicated to the organization hopefully you have a clear understanding of what we're focused on and I'm confident this early work will start to stabilize the business will make it easier and quicker for our customers to get a great Cup of coffee.
Brian Nickel: We will make our cafes more enjoyable and I think that's going to help bring customers back into our stores and most importantly, I think our <unk> is going to be really proud of the store that they work in and the experience that they provide so as I said at the top of the call I'm very optimistic.
Mystic despite the near term challenges I believe we have significant strengths a strong enduring brand we have a clear plan, we're gonna be moving quickly.
Theres a lot of important work ahead of us and look I look forward to updating each and every one of them on our results as we go and I'm confident we're going to return Starbucks to growth. So with that thank you and have a great day.
Thank you. This concludes Starbucks fourth quarter and full fiscal year 'twenty 'twenty four conference call you may now disconnect.