Q1 2025 Starbucks Corp Earnings Call
Alan Comey, Everything I Ever Knew
and many more. Thank you. Thank you.
Speaker Change: This conference call will include forward looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ from these statements.
Speaker Change: Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factors discussed in our filings with the FCC, including our latest annual report on Form 10-K, and quarterly report on Form 10-Q.
Speaker Change: Starbucks assumes no obligation to update any of these forward looking statements or information revenue operating margin and EPS growth metrics on today's call are measured in constant currency and represent non-GAAP measures.
Speaker Change: Please refer to the earnings release, and our website at Investor Starbucks Dot com, you'll find reconciliations of these non-GAAP measures to the corresponding GAAP measures.
Speaker Change: This conference call is being webcast and an archive of the webcast will be available on our website through Friday March 14th 2025.
Speaker Change: Also for your calendar planning purposes. Please note that our second quarter fiscal year 2025 earnings conference call has been tentatively scheduled for Tuesday April 29 2025.
Brian: And with that I'll now turn the call over to Brian.
Speaker Change: Yeah.
Brian: Good afternoon, and thank you for joining today.
Brian: Over the past four months, we've been focused on getting back to Starbucks and those things that have always set us apart.
Brian: A welcoming coffeehouse, where people gather and where we serve the finest coffee handcrafted buyer skilled breached us we believe it's the fundamental change in strategy, we needed to solve our underlying issues restore confidence in our brand and return the business to sustainable long term growth.
Brian: We're only one quarter into our turnaround we're moving quickly to act on the back to Starbucks efforts, we outlined on our last call and to date, we've seen a positive response.
Brian: As Rachel will outline in greater detail, our financial performance met our expectations for the quarter with the total company revenue of $9 $4 billion, a global comparable store sales decline of 4% our global operating margin of 11, 9% and overall earnings per share of <unk> 69 cents.
Brian: To be clear these results have room for improvement, but I'm confident the disciplined investments, we're making in labor marketing technology in stores. This fiscal year will help stabilize the business and position Starbucks for future growth. We're also working to change the role structure and size of our support teams to improve efficiency and accountability.
Brian: This will ensure we deliver on our commitments and our work to get back to Starbucks, Let me share with you some of the progress we've made through the quarter and what we're focusing on next.
Brian: Our path back to Starbucks in the U S is driven by four core initiatives reintroduced Starbucks to the world deliver the customer experience to win the morning, reestablish Starbucks is the community coffeehouse and ensure Starbucks is the unrivaled best job in retail recognizing our success starts and ends with our green apron partners.
Brian: Yeah.
Brian: During the quarter, we moved quickly to refocus the business, our mission and our marketing to align with our core identity as the premier purveyor of the finest coffee in the world.
Brian: We started by reducing the frequency of discount driven offers resulting in 40% fewer discounted transactions year over year.
Brian: We also removed the extra charge for non dairy milk.
<unk> and identified several other steps, we can take to make a pricing architecture more transparent for customers and just this week, we launched a new coffee forward U S marketing campaign reintroducing the brand to a broader customer audience.
Brian: Our work to reintroduce our brand is just beginning but our core business is already strengthening demonstrating that when we talk about our business customers respond.
Brian: Through the quarter, we saw a shift in our sales mix towards coffee and espresso based beverages, which over delivered and compensated for lower than expected performance across our holiday promotions.
Brian: We've been focused on simplifying our menu to position partners for success improved consistency drive customer satisfaction and enhance our economics as part of this work. We made some late simplification store holiday product lineup and believe we have more opportunity ahead as we follow a disciplined stage gate process to innovate and bring to market fewer.
Brian: Better beverage and food offerings that reflect our premium positioning.
Brian: In the coming months, you'll see us begin to optimize our menu offerings, resulting in a roughly 30% reduction in both beverages and food skus by the end of fiscal year 2025.
Brian: As we do we'll work to lead this market with breakthrough beverage and food innovation will do this by being responsive to customer trends and their changing preferences will rely on our highly engaged green apron partners for inspiration like we did with our lavender lineup last year and will be more responsive and tuned into cultural moments like we did with the Dubai March.
Brian: We also saw continued improvement in comp trends driven by back to Starbucks efforts launched during Q1.
Brian: Non Starbucks rewards customer traffic grew quarter over quarter.
Brian: Starbucks rewards membership in spend grew both quarter over quarter and year over year and price parity for nondairy no customization brought back lapsed Starbucks rewards members.
Brian: Our U S category share among <unk> also recovered in Q1, following two quarters of decline.
Brian: These things tell us our actions are resonating with customers.
Brian: Progress like this shows me that the Starbucks brand is still resilient and strong and that we have significant future potential more importantly, it shows that we can sell more of our core beverages simply by demonstrating our premium value.
Brian: A key part of the premium value, we provide is quickly and consistently delivering high quality handcrafted beverage to customers. The handoff from upper east into the customer is our brand moment of truth, and we've been working hard to get that moving right.
Brian: Through the quarter, we've continued to test and learn as we position the business to achieve our four minute throughput goal with a moment of connection.
Brian: It's become clear through our pilot work that order sequencing creates more of a bottleneck and capacity and short investments in staffing and deployment processes and algorithm technology demonstrate the greatest opportunity to deliver a four minute wait time and most of our cafes.
Brian: As a result, we've started to segment stores by transaction volume and are now targeting installation of Shire and equipment, only and are highest quartile stores, where it is needed to meet our throughput expectations.
Brian: We've also invested additional coverage hours across more than 3000 U S company operated stores through precision scheduling introduced new brewed coffee and tea routines and simplified beverage bills and soon we will launch a pilot across 700 stores looking at staffing levels to improve our green apron partners ability to serve the world's finest coffee with a moment of <unk>.
Brian: Connection.
Brian: We will use learnings from this to inform the future investments we need to make in store cover jowers deliver both an exceptional partner and customer experience and further differentiate our brand.
Brian: Looking forward, we're beginning to pilot a new in store prioritization algorithm and are exploring other technology investments to improve order sequencing order sequencing and our efficiency behind the counter.
Brian: We're also progressing efforts that build on the strength and popularity of the Starbucks App. This includes development of a capacity based time slot model that allows customers to schedule mobile orders and a mid year update that will simplify customization options.
Brian: Improve up from pricing and provide real time price changes as customers customized beverages.
Brian: Lastly, we're planning to fully deploy digital menu boards and cafes across our U S company owned stores over the next 18 months to make our offerings more easily understood and to better show customization add ons.
We also made strides to reestablish Starbucks is the community coffeehouse to make it easier for our customers to enjoy a cup of coffee the airway condiment bars will be back in all our U S company owned stores by the end of the week, we reintroduced ceramic mugs and handwritten notes on cups to better connect with customers and elevate the cafe experience for those who choose to stay.
Brian: And work.
Brian: We rolled out new Cafe service standards and expanded free refills on hot and iced brewed coffee and tea to non Starbucks rewards customers at participating stores.
Brian: We announced a new coffee house code of conduct to prioritize our spaces for customers and we continue to target a full rollout of clover vertical brewers by the end of fiscal year 2025.
Brian: We're taking a hard look at our store portfolio as well in the U S alone, we still see the potential to double our store count while improving the overall health of our portfolio. We will do this through a strong store renovation program, new store builds and store closures and we're going to make sure our stores are warm and welcoming with work continuing on.
Brian: Door design standards and cost to build.
Brian: Early customer and partner reactions to our plans show we've got the right strategy, both the reintroduce reintroduction of coffee condiment bars and the expansion of free refills were identified as top drivers of purchase intent.
Brian: In the coming months, our teams will be focused on refreshing, our menu boards and improving cafe merchandising to reflect the coffeehouse feel and better showcase our simplified menu.
Brian: <unk> started an expanded test of risers and shelves at the point of handoff to help separate the cafe and mobile experience and we'll begin to scale projects to increase and diversify seating across more of our cafes.
Brian: To deliver a great customer experience, we also have to deliver a great partner experience.
Brian: It's why everything we do starts and ends with our Green apron partners and why I'm committed to ensuring Starbucks at the unrivaled best job in retail.
Brian: In the past quarter, we more than doubled paid parental leave for eligible U S store partners and we made a new commitment to promote from within 90% of retail leadership roles over the next three years, helping thousands of partners grow their careers and their incomes as a result through the quarter shift completion average hours per partner partner retention.
Brian: Can an hourly partner engagement improved looks.
Brian: Looking forward, we'll continue to prioritize efforts that help our green apron partners succeed both at work through continued improvements to our staffing model and in their lives through industry, leading benefits competitive pay and careers that create lasting economic opportunity.
Brian: Turning to international I've had a chance to see our operations in Italy, Japan, and South Korea.
Brian: And meet with our international license business partners over the past few months as I shared with them many of our international markets setting. An example for the experience we aim to deliver in the U S and present, a great long term opportunity, particularly as we continue to grow our store footprint footprint and recover our business in certain challenged markets.
Brian: Just last week I also mean, my first market visit to China, while there I saw firsthand the strength of our brands our team and the premium customer experience we offer.
Brian: I saw how dynamic the market is and the opportunities ahead. I also saw several near term changes, we can make to stabilize and strengthen our business, while continuing to explore strategic partnerships to grow in China. We're processing these learnings and we'll share more as we do.
Brian: From my time, there I also believe there are several lessons we can learn from the strength of our supply chain in China to realize opportunities in our North American business.
Brian: If you take one thing from today's call let it be this despite near term challenges, we have significant strengths and a clear plan.
Brian: The response, we've seen since fundamentally shifting our strategy to get back to Starbucks gives us confidence we're on the track.
Brian: To turn the business around.
Brian: We are where we want to be one quarter in but much of our work is just beginning as.
Brian: As we continue to learn and implement our back to Starbucks plan I believe will make it easier to be a customer and in turn I believe they'll visit more often will also find more ways to set our partners up for success, so they're able to deliver a great customer experience every time and doing so will reinvigorate our brand drive stronger financial returns.
Brian: In return Starbucks to growth.
Brian: There is important work ahead and I look forward to bringing you along.
Brian: With that I'll turn it over to Rachel.
Rachel: Thank you, Brian and good afternoon, everyone.
Rachel: As Brian shared we're pleased with our start to fiscal year 2025, with our Q1 performance meeting our expectations are back to Starbucks strategy has already driven early progress, including gradual top line improvement, giving us confidence that we're focused on the right priorities.
Rachel: Our Q1 consolidated revenue was $9 4 billion flat to the prior year, reflecting 7% net new company operated store growth over the past 12 months offset by a 4% decline in comparable store sales.
Rachel: Our global comparable store sales decline was primarily due to a 4% decline in the U S.
Rachel: U S comparable store sales improved sequentially throughout the quarter most evident in the morning day part is non Starbucks rewards customers grew from our strategic shift to broader marketing.
Rachel: Our ticket growth in the U S remains strong at 4% due to the benefits from the prior year pricing attached and fewer discounts.
Rachel: Drivers more than offset mix shifting to lower priced beverages and removal of the extra charge for non dairy milk customization.
Rachel: Turning to store growth.
We opened 377 net new stores globally in Q1 and in the U S. Our new company operated stores contributed nearly 90% revenue increments to the trade areas.
Rachel: As we continue to evaluate our stores globally, we will make disciplined decisions to further strengthen and grow our portfolio, we establish ourselves as a community coffeehouse as we drive sustainable long term growth.
Rachel: Shifting to margin our Q1 consolidated operating margin was 11, 9% contracted 380 basis points from the prior year, primarily driven by deleverage and the investments in support of back to Starbucks, including star partner wages benefits and ours and they've been Louisville of the extra charge for non dairy milk.
Rachel: Customization.
Rachel: The contraction was partially offset by annualized nation of pricing and out of store efficiencies largely within our supply chain.
Rachel: Given the Q1 margin contraction I wanted to provide additional insight into the investments as well as the offsetting efficiencies.
Rachel: Let me start with investments a critical initial step to the back to Starbucks turnaround.
Rachel: As Brian shared to deliver our customer experience to win the morning, we invested additional coverage hours to support the service model of a four minute wait time, and enabling our hospitality point of difference moments of connection.
Rachel: These additional hours, coupled with wage and benefit rate increases resulted in 180 basis point margin pressure in the North America segment, excluding labor productivity.
Rachel: As we focus on delivering the customer experience, we continue to evaluate labor needs across our store portfolio as we surgically optimize staffing levels.
Rachel: As you likely saw we dialed up our marketing communication, including linear television media as part of our priority to reintroduce Starbucks to the world.
Rachel: We were pleased with the positive customer reactions and improvement in our comp trend.
Rachel: Overall promotional spend which is inclusive of marketing spend and discounts remains largely neutral relative to prior year.
Rachel: To improve value perception, we also removed the extra charge for non dairy milk customization and impact of 60 basis points on the segment margin in the quarter.
Brian: Following this announcement, we saw strong increases in customer interactions with our brand as Brian shared previously.
Brian: Additionally, non dairy customization grew mid single digits year over year off a double digit decline in the prior year.
Brian: Collectively these targeted investments are showing signs of early progress well.
Brian: Well there is a near term impact on margin, we expect it to our disciplined approach to test and learn we will make the right investments to drive long term growth.
Brian: Importantly, we also continue focusing on driving efficiencies across the company as we balance our investments while driving margin expansion overtime.
Brian: In Q1, our in store efficiencies increased as a result of improved partner stability as we focus on the back to Starbucks strategy.
Brian: Out of store, we further optimized our supply chain and recalibrated rates, resulting in meaningful sourcing efficiencies in the quarter collectively.
Brian: Collectively in and out of store efficiencies yield savings of approximately 150 basis points in Q1.
Brian: We will continue to secure additional efficiencies to help fund investments as we leverage a disciplined and data driven approach to our turnaround.
Brian: Shifting from efficiencies to G&A.
Brian: For fiscal year 2025, we expect our G&A percentage to be higher than prior year as we lap lower performance based compensation.
Brian: Specific to Q2, we expect G&A as a percentage of revenue to spike as we transform the support organization incurring near term restructuring charges inclusive of severance pay and related benefits.
Brian: At this time, we're still working through the impact of this transformation work and we'll share more details regarding the financial impact during our Q2 earnings call.
Brian: Q1, EPS was <unk> 69 down 22% from the prior year, primarily reflecting the impact of deleverage and heightened investments.
Brian: Q1, EPS also included a two cent year over year benefit from a lower effective tax rate, primarily driven by a discrete item, which is not expected in the balance of this fiscal year.
Brian: Yeah.
Brian: Now looking at our full fiscal year 2025, although our guidance is suspended I'd like to provide some insights into our quarterly earnings shape.
Brian: EPS is expected to be the lowest in Q2 on an absolute basis due to seasonality the organizational restructuring I just spoke about and elevated investments.
Brian: With year over year pressure also in testifying in the quarter.
Brian: EPS is then expected to improve in the latter half of the fiscal year 2025, both sequentially and year over year.
Brian: Some additional aspects to consider as you think about our full year 2025 include the coffee landscape and our channel development segment.
Brian: In regards to the coffee landscape and the trajectory of C price given our overall practices and hedging strategy our year over year coffee price impact was minimal in Q1.
Brian: We currently estimate Q2 EPS to be pressured by approximately one cent net of hedge gains.
Brian: As a reminder, our total cost of Green coffee is typically limited to 10% to 15% of our product and distribution costs.
Brian: In addition to the direct coffee pressure on EPS I just mentioned <unk>.
Brian: See price volatility also impacts our channel development segment, and then a more meaningful way.
Brian: Although we can pass those costs through our business partners higher prices to an already pressured consumer will likely impact our segment volumes and ultimate revenue and profitability.
Brian: Finally, our balance sheet remains strong and we remain committed to our triple B plus credit rating.
Brian: We continue to prioritize shareholder value through dividends, providing a predictable return of capital, while we turn around our business.
In closing we are encouraged by our Q1 results, which demonstrated the effectiveness of our back to Starbucks strategy.
Brian: Although we are in the beginning chapter and have much more work ahead of US My Thanks goes to our incredible partners across the globe, who are unwavering in their commitment to bring our strategy to life.
Speaker Change: And with that Brian and I are happy to take your questions. Thank you.
Brian: Operator.
Brian: Thank you.
Brian: As a reminder, if you would like to ask a question Press Star then the number one on your telephone keypad.
Brian: In order to allow as many questions as possible. We ask you to please limit yourself to one question at a time, but we'll come back for follow up questions as time allows.
Brian: Your first question comes from David Tarantino with Baird. Please state your question.
Speaker Change: Hi, Ken.
Speaker Change: Good evening.
Speaker Change: My question, Brian is on the sales improvement you saw through the quarter I believe Rachel mentioned the comps improved as the quarter progressed I guess can you maybe.
Speaker Change: Talk about whether that was comparison related or do you think you are saying some underlying structural improvement that you're seeing some structural improvement.
Speaker Change: What do you think is driving that you know in terms of kind of the key components of your plans whether it be advertising our store operations, maybe you can frame that up for us.
Speaker Change: Yeah.
Speaker Change: And yes.
Speaker Change: As you said the good news is we did see kind of sequential improvement throughout the quarter.
Speaker Change: And I think I mentioned this in some of our remarks. The thing that was nice to see is as we stepped away from discounting and went into more broad based marketing efforts to demonstrate the craft of our coffee.
Speaker Change: As well as the experience or the premium experience you get from Starbucks, we saw non rewards customers respond.
Speaker Change: With more traffic and more transactions.
Speaker Change: Which was really nice to see how that progressed kind of quarter to quarter.
Speaker Change: The other thing too that was nice to see is we saw our morning day part continue to show improvements quarter to quarter as well and so I think it is a combination of shifting the approach as far as reaching both rewards and non rewards customers with I think a compelling message around the craft and the quality of our <unk>.
Speaker Change: Coffee and our experience and then also I think our partners in the stores are really embracing getting back to Starbucks and <unk>.
Speaker Change: Enjoying making the espresso drinks and providing people at Kraft experience.
Speaker Change: And as you've seen even most recently the new back to Starbucks rollout that we've got in progress and I was in some stores. Even this morning, and the energy is really exciting to see.
Speaker Change: Both from our partners and our customers our customers are feeling the enhanced experience coming from our partners. So.
Speaker Change: No.
Speaker Change: Definitely baby steps in both of these areas, but all moving in the right direction.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Andrew Charles with TD Cowen. Please state your question.
Speaker Change: Great. Thanks, Brian can you talk a little bit more about trustee Lieberman's plan of attack to help build on the initial marketing work around me introducing the brand and I'm curious you know last year as disclosed about $600 million of advertising spend what level can we think about for 2025, if you can comment on that as well.
Speaker Change: Yeah.
Speaker Change: What we are definitely doing.
Speaker Change: Right now is switching the dollars out of discounting into what I would call working dollars for the brands and the brand experience.
Speaker Change: And so what youre going to continue to see is you might have saw we just broke a new AD over the weekend are highlighting.
Speaker Change: Highlighting I think a key point of difference for Starbucks, which is centered on this connection that our <unk> and our green apron partners have with our customers and one of the ways that comes through as writing on Cups, and so what I love about this is look we're taking these dollars allocating it to talk about the brand experience and at June <unk>.
Such a way, where it's very executable for people to actually experience it through our partners in the stores and so youre going to continue to see US use these dollars to turned into working dollars.
Speaker Change: To drive towards a brand.
Speaker Change: <unk> commitment, but then also an experienced commitment where hopefully every time you come into a Starbucks I don't want you to do you get your coffee or drink, but you also get disconnection and.
Speaker Change: That's we're going to continue to do.
Speaker Change: I think we're still finalizing exactly what does that spend look like ongoing.
Speaker Change: But I like the.
Speaker Change: The transition that we've made and I'm optimistic about the campaign that we've just started.
Speaker Change: Because there is a lot of additional elements still to come.
Speaker Change: The way to think about it too from a marketing as a percentage of revenue. We are increasing it you can say close to doubling it but we've reduced the guest count. So we've increased our overall net revenue, while we're putting it towards as Brian said, the working dollars in marketing.
Speaker Change: So it's neutral to the business overall, but you will see a shift in terms of how it shows up in the P&L and in the business.
Speaker Change: Thank you and your next question comes from Danilo Guardiola with Bernstein. Please state your question.
Danilo Guardiola: Hi, Thanks for the question.
Speaker Change: Brian I was wondering if you can help us quantify the impact of the operational improvements that you were starting to see is Starbucks, maybe specifically given us understand maybe what.
Speaker Change: What percentage of the stores are operating in line with the four minute Hindenburg timeline that youre expecting from the stores and what kind of comp differential do you see between the stores that are operating at the level of efficiency that you are expecting versus the once that need some incremental time to transform thank you.
Speaker Change: Yeah. So what we've done so far is we definitely put the stores into kind of core tiles as it relates to how many transactions they are working through and what we do.
Speaker Change: Through this work what we've discovered is more of the challenge comes through.
Speaker Change: Frankly.
Speaker Change: The mobile ordering system, not having a sequencing system and what happens is.
Speaker Change: The counter area gets really crowded congested and what occurs for our partners is to work switches to the task of just trying to get drinks and food solved for the rush as opposed to being able to <unk>.
Speaker Change: Consistently deliver the moment of connection while they still delivered the coffee drinks and so the good news is we have a high percentage of stores that are already comping positively.
Speaker Change: Because when we look at those stores, we see that the connection and the craft is being executed.
And we're not in as many of these bottleneck situations.
Speaker Change: So that's what we're focused on is how do we eliminate these bottleneck situations, where the mobile ordering really overwhelms kind of production experience to the point, where we can no longer provide a great service experience and so we've seen the difference in performance we've seen the difference in and that's from a.
Speaker Change: <unk> financial performance and we are also seeing the difference in partner satisfaction customer satisfaction. So.
Speaker Change: We're working through exactly how we measure these things because unfortunately currently we don't have a great system in place to measure the timeframe on these things.
Speaker Change: We are putting into place but.
Speaker Change: As I mentioned earlier the good news is I was in one of our stores. This morning, where we are already starting to put this algorithm in that.
Speaker Change: That happens kind of behind the scenes and its smooth out I would say.
Speaker Change: Russia's of mobile orders such that our teams are able to provide great moments of connection for the ink cafe customer and the mobile order customer as well as our drive thru customers. So.
Speaker Change: And we're seeing it now we're only two weeks in on this by the way and it's only in three stores, but we're seeing really good performance both in the financial performance partner satisfaction and.
Customer satisfaction.
Speaker Change: Your next question comes from Sara Senatore with Bank of America. Please state your question.
Speaker Change: Sorry, Sarah Tarpley's Amit yourself.
Speaker Change: We'll move on to the next question. Our next question comes from there.
David Palmer: David Palmer with Evercore ISI. Please state your question.
David Palmer: Thanks wanted to ask you a question about productivity you know there was a previous believes that there might be a $4 billion productivity opportunity over the four years ending 2028.
David Palmer: Obviously, that's a big number could be 250 to 300 basis points of margin help before considering other investments.
David Palmer: And that was gonna be largely Cogs, driven do you still see Starbucks still see that sort of opportunity before considering investments you might be making in the business.
David Palmer: David This is Rachel thanks for the question.
David Palmer: What I'd say is we're continue to be focused on efficiencies and we see continued opportunity both in our store as well as out of store, which is largely as you pointed out comps or through our supply chain and as I shared in my prepared remarks, we had about it collectively about 150 basis points.
David Palmer: Margin expansion this quarter due to the efficiency. So we continue to believe that's an important part of how we think about our back to Starbucks strategy, helping us to balance the investments, we'll be making and eventually leading to margin expansion over time, but I think as far as it relates to the $4 billion. We're still working through what is going to be the right level of efficiencies.
For us as we go forward and so I wouldn't I wouldn't stick to the 4 billion I would just say that we will continue efficiency work as we think about how we drive margin expansion in the future.
Speaker Change: Thank you and our next question comes from Brian Harbor with Morgan Stanley. Please state your question.
Brian Harbor: Yes. Thank you good afternoon.
Speaker Change: Just something somebody else, but that's you've made about.
Speaker Change: Port organization, you've also made some management changes what.
Speaker Change: What needs to change there I guess, how how much do you expect that to change and sort of related to that you know Rachel I understand the comments on G&A.
Speaker Change: <unk> is is this something where you might expect some favorability as we get into <unk> and you sort of.
Speaker Change: Start to see those changes take hold.
Speaker Change: Well first of all I would say the purpose of the changes is to get more accountability into our key lines of business. So.
Speaker Change: So we have that we're creating the role of achieve store officer.
Speaker Change:
Speaker Change: Mike's responsibility is going to be all about driving excellence in our stores.
Speaker Change: Putting a chief development officer in place again, ensuring we're building the right sites with the rate design.
Speaker Change: At the right cost and return.
Speaker Change: Having a clear line of sight and so similar to what we're trying to do for driving that accountability through our stores, which is really where the business happens we wanted to make sure that we've got the support center.
Speaker Change: Also.
Speaker Change: Focused on supporting the stores in an efficient manner and accountable manner.
Speaker Change: To where the business happens so structurally that's what's going on.
Speaker Change: And we're in the process of evolving that over the next couple of months.
Speaker Change: The second half of that I'll, let Rachel chime in on that piece. So Brian in terms of your question about the G&A and the impact as I as we think about the full year, we would expect while we'll have the spike in Q2 as I shared in my prepared remarks, we would expect to see start to see some savings in Q4 related to <unk>.
Speaker Change: That particular effort, but I think what's important to remember is that we're also lapping lower performance based comp this year and that starts to take an even greater impact in Q3 and Q4. So net net G&A. This year will still be higher than prior year as a percentage of revenue largely given that lap of lower base performance.
Speaker Change: From last year, but yes, you would expect just from the restructuring itself you would see some benefit in Q4 and then of course, we will expect this will drive leverage over time.
Speaker Change: Thank you. Your next question comes from Crystal Cole with Stifel. Please state your question.
Speaker Change: Thanks.
Speaker Change: Right and as we've thought about the business. Our view has been that improving the partner experience is somewhat intertwined with improving the customer experience.
Speaker Change: Are there specific customer experience issues you believe the company can resolve that should also help improve the employee experience and sort of related to this when you do it when do you expect that the mobile ordering algorithm changes to be implemented.
Speaker Change: Yeah look I think you're absolutely right the idea of setting up our partners to be successful in every customer interaction results in I think great experiences for our customers and they are highly intertwined and I actually believe that's why it's so important.
Speaker Change: <unk> that we've got kind of that great greeting moment in that grade handoff moment.
Speaker Change: And.
Speaker Change: What I'm seeing in the kind of the early days of this.
Speaker Change: Small pilot is just that we're.
Speaker Change: Two things are happening one the partners.
Speaker Change: <unk> are set up to deliver these craft drinks with a great kind of human touch or connection.
Speaker Change: At the speed that it makes our customers feel really great about getting their drink.
Speaker Change: Or their total order so.
Speaker Change: They're kind of working in tandem.
Speaker Change: Because what the algorithm does is it takes the stress out of the system of.
Speaker Change: Having the partner have to figure out how to solve.
Speaker Change: These mobile orders that just came in that Werent sequenced.
Speaker Change: Now what it does is it sequences those mobile orders so that it can allow the cafe order to get fulfilled in a timely fashion and with a touch of.
Speaker Change: Humanity and then the same thing happens with the mobile order.
Speaker Change: Because now we're better sequenced up for when people come in to give them their dream. So you know.
Speaker Change: We're going to continue to expand the pilot Theres. Some other things we want to test around this with also adding the idea of time slots.
Speaker Change: That compares to just changing promised times.
Speaker Change: So ideally you know over the next couple of months, we're going to get a lot of learning, which then will give us clarity on the rate.
Speaker Change: Timetable to rollout, but don't have definitive timing just yet.
Speaker Change: Thank you and your next question comes from Jeffrey Bernstein with Barclays. Please state your question.
Speaker Change: Okay.
Speaker Change: Great. Thank you very much.
Brian Harbor: Brian I know comps always garner outsized attention and justifiably so but.
Brian Harbor: Just wanted to talk about unit growth for a minute I know in the U S.
Brian Harbor: Obviously, the unit growth could be a more consistent driver of top line and I think you said opportunity to double our store count in the USA believe you are referring I guess to the company operated system, which in the U S is already pushing 10000, plus so the doubling I guess caught me by surprise that was above my expectation in terms of the total addressable market I'm just wondering.
Brian Harbor: As you think about that doubling like what do you think the rate of growth that's appropriate.
Brian Harbor: You look to achieve that maybe how did you arrive at that doubling and are there particular geographies or store types that have greater opportunity than others. Just curious how you think about that.
Brian Harbor: In the U S and that opportunity. Thank you.
Yeah look one of the things I'm really excited about is our ability to execute.
Brian Harbor: A smaller format.
Brian Harbor: That still has a great <unk>.
Brian Harbor: Okay and delivers the partner experience or the engine.
Brian Harbor: <unk> the calendar so that we can provide these craft drinks in a timely manner with.
Brian Harbor: That personal touch and so when you combine our ability to do the drive thru the cafe the mobile ordering in small medium large kind of executions. It just starts to open up trade areas.
Brian Harbor: You get really excited about and we're having tremendous success in places like Texas or the South East and as we continue to open stores in those areas they opened with.
Brian Harbor: Great Economics, and that's what gives us a lot of confidence versus there are other markets that frankly, we have a lot of work to do on just resetting the estate.
Brian Harbor: So that we have the right mix of the small medium large and the right mix of the access points.
Brian Harbor: So you know.
Brian Harbor: The good news is the brand has a lot of flexibility in how we execute the experience.
Brian Harbor: And that's what gives us the confidence that we could double the store count.
Brian Harbor: And then obviously.
Brian Harbor: We get the sequencing figure it out on mobile ordering I think that just frees us up to another degree that we still haven't totally comprehended I guess.
Brian Harbor: Thank you.
Speaker Change: Our next question comes from John Ivan and cope with J P. Morgan. Please state your question.
Speaker Change: It's there's been at least you know some conversation about perhaps limiting the menu in the morning. If products that were really you know some of the high repeat products that would be focused on speed accuracy consistency and maybe opening up the afternoon to products that were more differentiated and have more customization. So I wanted to get.
Speaker Change: Your thought.
Speaker Change: That was a possibility of maybe having different offerings kind of in the a M and P. M at Starbucks and secondly, and I think related to that.
Speaker Change: [noise] warming cabinets does seem to be one of the quote unquote easiest ways to speed up transaction time, specifically in the drive through could you give us an update on that element of sirens, specifically in terms of what you might expect the rollout to be.
Speaker Change: Yeah, Yeah. Thanks for the question and look that's one of the key pieces of driving our digital menu board execution is that does give us the flexibility to do the merchandising.
Speaker Change: Kind of different food experiences or drink experiences in the afternoon versus the morning.
Speaker Change: And as I mentioned I think in my prepared remarks, we are dialing back on the.
Speaker Change: The menu both in food and beverage to the tune of roughly 30% between now and the end of our fiscal year.
Speaker Change: Which then frees us up frankly to make sure we've got.
Speaker Change: What I would call the right.
Speaker Change: Food offerings in.
Speaker Change: In the morning, and then also we're looking at how do we provide the right kind of snacks slash food offerings as you get further into the day.
Speaker Change: And like I said, the digital menu boards allow us the flexibility then to merchandise accordingly.
Speaker Change: Regarding.
Speaker Change: Huddled equipment, what we find is.
Speaker Change: That's a great solution, depending on the volume or transactions that we have in the store regardless of whether there's a drive through or not.
Speaker Change: You know and so.
Speaker Change: You're right, obviously, if we had a hot hold when the person just showed up to the order board.
Speaker Change: It could be much faster, but we find the trade off in that hot hold versus just cooking fresh to order.
Speaker Change: At those moments it is not the right trade off in investing in that type of equipment and also the experience that you get from them. So.
Speaker Change: You know right now it's much more contingent upon the volume thresholds than it is a moving speed along kind of for all day.
Speaker Change: Experiences is the way I would describe it.
Speaker Change: Thank you.
Speaker Change: And your next question comes from Katherine Griffin with Bank of America. Please state your question.
Katherine Griffin: Hi, Thanks can you hear me.
Speaker Change: Yes, yes.
Speaker Change: Great. Okay. Yeah. This is catherine on behalf of various editor and so earlier I think Rachel you were talking about.
Rachel: Having less promotions as a positive impact on revenue I think the Gulf from here as you move towards more of a traffic driven same store sales growth not all but we didn't see much of that this quarter and I think you mentioned not promotional transactions are 40% lower year over year, but can you quantify what the impact of that was on ticket and.
Speaker Change: Was that because of fewer promotions and then I guess to the extent that you're encouraged by these results is is that what you're looking at you're looking for more full priced sales.
Speaker Change: Hi, I want to start by saying, we're looking for a combination I mean, our rewards customers continue to be incredibly important but we've seen value as we speak to all of our customers and as we've shifted out of discounts into more broad based marketing that has helped us reach a broader base of customers, which this quarter, even though we're early in that.
Speaker Change: Turnaround we saw good signs of progress we as Brian had shared we had growth in the morning day part he had gross growth across our customer base, but our non us our customers grew quarter over quarter and importantly, we saw their growth as high as where we were about a year ago. So that gives us a lot of confidence that it's the right strategy and in terms of the impact.
Speaker Change: On ticket as I had shared in my prepared remarks, our ticket in North America. It was about 4% little over 4% and within that ticket that was benefiting from annualized pricing, but it also benefited from fewer discounts and that was partially been offset by the mix shift towards lower priced items as well as they did.
Speaker Change: We have made to remove the pricing so we see that removal of the discount or shifting of the discount we're still discounting, but shifting the desk count as a way for us to strengthen ticket, but also strengthen the overall proposition as we speak to more customers more broadly.
Speaker Change: Thank you.
Speaker Change: And your next question comes from Peter Cella with BTG. Please state your question.
Peter Cella: Great. Thanks for taking the question.
Brian I wanted to ask about the sirens system. It sounds like you guys are only going to implement this in the highest quartile stores I'm just curious it sounds like it was a little bit of a different from what you were initially expecting last quarter and I know it's early but.
Speaker Change: I don't see other stores.
Speaker Change: Meaning system need it and can they get to the four minute coffee time without the system I'm just curious as to the timing on rolling This siren system out to the top performing stores. Thanks.
Speaker Change: Yeah look I, you're right. It is it's a new learning that we picked up over the last couple of months.
Speaker Change: Specifically as we've gotten very focused on getting the four minute solution and bringing order to mobile ordering and what has become clear is it's not.
Speaker Change: In most stores it is not driven by a lack of capacity it's more the process combined with the algorithm to sequence the mobile orders with the cafe. So there's a threshold where the volume gets to a place where the additional equipment as necessary.
But that's only happening in like the top quartile of stores and in the majority of our stores.
Speaker Change: Just.
Speaker Change: Kind of putting the right process the right deployment combined with the algorithm.
Speaker Change: We see a big unlock in.
Speaker Change: Transaction throughput capability so.
Speaker Change: That's what we're focused on.
And you know, it's a learning we picked up over the last couple of months and.
Speaker Change: I think this is what's great about taking the test and learn approach.
Speaker Change: As we learn we adopt and.
Speaker Change: What we're adopting towards making sure that we get the best experience for both the partner and our customer.
Speaker Change: Thank you. Your next question comes from Christine Cho with Goldman Sachs. Please state your question.
Speaker Change: Thank you so Brian as you come into the coffee business with a fresh pair of eyes and I was hoping to get your assessment on the challenges of trying younger customers back into the stores.
Speaker Change: Do you still view this as an important strategic focus in your turnaround plans in North America and if so why do you think there are more hesitant is at premium prices is it that they are drinking less coffee in general are they attractive tomorrow, though coal coffee houses.
Speaker Change: And more importantly, how do these observations inform your menu and marketing strategy going forward. Thank you.
Speaker Change: Yeah look obviously I think we've talked about this one of the things. We wanted to do is broaden our reach so we've said we want to be winning with Gen Z.
Speaker Change: All the way through to the over 50 60 crowd. So.
Speaker Change: And what we've discovered is and this is actually a really nice piece of the business is the younger customers definitely attracted to the whole <unk> proposition that we have the matcha lots a solution.
Speaker Change: You might have seen we most recently brought out the unsweetened Macho and then.
Speaker Change: Caught a little bit.
Speaker Change: Social media Buzz with the Dubai Matcha.
Speaker Change: And so what we're seeing we're seeing nice movement actually.
Speaker Change: All age groups.
Speaker Change: And you know it does appear that if we bring smart flavors with T refresh yours cold beverages.
Speaker Change: Inclusive of eating.
Speaker Change: Ice coffee or.
Speaker Change: Cold brew.
Speaker Change: Continuing to see progress with the younger customer so I think it's just a.
Speaker Change: It's a much more balanced approach is how I would describe it as opposed to a.
Speaker Change: What we're just focused on young and cold drinks.
Speaker Change: Not where we want to be about we want to be about being a solution frankly for.
Speaker Change: All those at once.
That third place experience with a customized handcrafted drink.
Speaker Change: And the nice thing is we can do that through T. We can do that through cold, we can do that through coffee.
Speaker Change: And so we're seeing nice progress on all those fronts.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question comes from Lauren Silberman with Deutsche Bank. Please state your question.
Speaker Change: Thank you very much I wanted to ask about the partner investments you added additional hours to 3000 stores you talked about the 700 to start pilot. How are you assessing the current level of staffing across the U S system and magnitude of investment that might still be necessary and then to what extent do you see opportunities to offset these investments other air.
Speaker Change: I know you think their run rate bargains or whether it be enough. Thank you.
Speaker Change: Yeah. So.
Speaker Change: We put in the labour into.
Speaker Change: Those 3000 stores from a precision standpoint, which was really just going back and looking at the labor tables to find out where potentially we just gotten too thin.
Speaker Change: In certain areas and so we've implemented that the good news is we've seen a positive bonds on that front in regards to the pilot that we've just about to kick off this is all about understanding the.
Speaker Change: Labour model necessary to have a great customer connection for our partners deliver the speed and handcrafted experience we won.
Speaker Change: And what we know is if we do all those things.
Speaker Change: Our partners are excited about the job at hand, and our customers love the experience that they receive and we see that playing out as they'll come more often.
Speaker Change: And it further differentiates the Starbucks business and the premium value that we provide so this is all about delivering the brand experience.
Speaker Change: Reinforcing the premium experience that you get and doing things frankly that you really can't get anywhere else you know when you get a handcrafted beverage with.
Speaker Change: The personal connection that we provide it's a huge point of difference it's meaningful for our partners and it's meaningful for our customers and just like recently with bringing back the rating on cups and bags. The feedback I've received from our partners as they loved delighting their customers than you would have heard from our customers is they love.
Speaker Change: These little messages of moments of connection from our partners. So this is back to the core of what makes Starbucks a unique experience.
Speaker Change: That's what we're working towards understanding what type of model do we need in order to deliver that experience and then obviously, we'll figure out how we can grow the business accordingly with that type of investment.
Speaker Change: Rachel mentioned longer term, what we're looking for is to grow margins from where we are today and grow the business from where we are today. The goal of doing all of this isn't just to stand still the goal and doing all of this has put the brand on its front foot establish the premium value of the premium experience that we provide and then use that as a launching point to grow.
Speaker Change: So the business.
Speaker Change: Both from transactions that then play out into obviously the economics.
Speaker Change: And if I would just add to that really quickly Lauren what I would say is when we think about the labor investments, which are you know we have a precision staffing model. We use so they are targeted while there is a near term impact there is a near term unfavorable impact as we make these types of investments it will be accretive to the business longer term as these investments will drive.
Brian: Traffic to Brian's point, that's that's why we're doing this and so it wouldn't be in every store.
Brian: I mean, it's really about what the store needs and it's based on that precision staffing. So I think about it is first and foremost the way we make this work is through traffic and ensuring that we drive the traffic over the longer term and then to balance all of the investments were making while we do expect these investments will be accretive then they'll we'll see broader traffic.
Brian: Improvement from these collective investments that we're making I do think it's important to just remind that we will continue to work on efficiencies as well, we still have opportunities in the business across our business to be able to balance this and all of this will lead to margin expansion in the future.
Speaker Change: Thank you and your next question comes from Sharon Zackfia with William Blair. Please state your question.
Sharon Zackfia: Good afternoon, I guess as I think about the different channels that you have come in at the North America, whether it's walk in or drive through or mobile what what part of the equation is the furthest off from that for a minute total and as you think about labor deployment is there a way to kind of disaggregate that.
Sharon Zackfia: Duction or those channels as they come in to make it kind of more aligned.
Speaker Change: Yeah look thanks for the question I will tell you probably right now.
Speaker Change: The biggest challenge is the fact that the mobile ordering has no sequencing. It's just first in first out.
Speaker Change: And.
Speaker Change: When you compare that to how drive thru works on kind of all the access points drive throughs are very I would say controlled access point right. You've got the Q that creates a governor you got the order board, where we actually give a great breeding and then you get to the window and we give a great hand off.
Speaker Change: That operates pretty well.
Speaker Change: We have really good metrics.
Speaker Change: Know how to get the window times, where after you know obviously you had the unexpected order that might slow things down, but we can recover quickly the place where you run into problems frankly is the fact that there is just no gating on the mobile orders and.
Speaker Change: The problem we run into is you've seen this you know all these orders come flooding in frankly, they come flooding in faster than even our customers can get there. So all these drinks are sitting on the counter and it's at the expense of providing any other experience for a customer that's right in the store.
Speaker Change: Like the thing I was most excited about is this morning I swung by one of our stores with this pilot and there was no congestion at the counter.
Speaker Change: And what was also really nice is the in cafe customer you know I love. This term we have around here that you know they they asked for there for here Cup and they're like we call. It a mug hug right there, they're like holding onto that ceramic mug and they're enjoying their moment in the cafe and theres not all of this congestion surrounding the counter so it's just a much more.
Speaker Change: Peaceful coffee experience.
Speaker Change: Meanwhile, when the mobile order customer comes in the drinks are synced up in rhythm.
Speaker Change: With people coming in to get their drinks and go and so that's what we're after.
Speaker Change: And that's why you know I go back to this of look we put a lot of things in place I think and really shorter rate. The coffee condiment bar do you think it was great.
Speaker Change: This was on.
Speaker Change: Expected, but literally one of our customer she stopped me it was like Hey, I just wanted to say thanks for the coffee economy bar.
Speaker Change: Because she was able to do her own customization.
Speaker Change: And be on her way and then we changed the operation of getting brewed coffee.
Speaker Change: At the Pos so it was a really fast transaction for that customer that chose to come into our store get a brewed cup of coffee customized for themselves and move on so.
Speaker Change: What we're after is getting rid of that kind of a choke point that happens around the calendar.
Speaker Change: And it really happens because right now mobile ordering is just a first in first out proposition and we got to fix it and that's that's what we got a full court press on is solving the sequencing of that to deliver these moments of connection in what I would think is a reasonable time period call it four minutes or less so.
Speaker Change: I was really excited about what I saw.
Speaker Change: And the good news is we've got a lot of stores that are doing it and then when we make this better with technology behind it.
Speaker Change: I just think there's you know.
Speaker Change: The brand will be right back where it needs to be which is it's a premium experience. It's a crafted experience. It's an experience that our partners provide with some level of humanity, but you actually don't get anywhere else and it just creates an environment, where you like being there whether you're a partner or a customer.
Speaker Change: Sorry long answer to that but.
Speaker Change: This is what I'm most excited about because it was really good learning over the last couple of months to understand where we got is your win in order to get the unlock.
Zach Fathom: Your next question comes from Zach Fathom with Wells Fargo. Please state your question.
Zach Fathom: Hey, good afternoon, Brian on the formats are less how does in store compare to MLP today as I think it was a few quarters ago. There was there was a high mix of customers that walked away from MLP orders due to high wait times. So curious if you could talk about where that's trending today and then separately.
Zach Fathom: Big picture, if you were able to get all transactions under four minutes, how would you frame that comp opportunity.
Zach Fathom: Yeah, well I would frame it as it would go up.
Zach Fathom: And what I would also tell you is.
Zach Fathom: The good news is we've got some really good learning that when the mobile order <unk>.
Zach Fathom: Promise time gets beyond 15 minutes, that's when we have people kind of bailing. So you know what we're testing is if you can do these time slots or if you can do these promise times in such a way where it doesn't get passed you know let's call. It 12 to 15 minutes.
Zach Fathom: Then we know we're going to delight the mobile order customer and then that frees up the capacity so that the in store customer can have roughly a four minute experience and what we've seen over and over again is that happens now granted this is my pilot store I'm going off of <unk>.
Zach Fathom: Everything starts to move in harmony.
Zach Fathom: It's like the partners arent rushed or overwhelmed so they have the ability to provide the experienced the connectivity that we won the craft and the product that they want to provide the customer feels like theyre seeing theyre valued <unk> been heard and they have a moment of connection and.
Zach Fathom: That's that's what we want to ultimately deliver that that's frankly, why Starbucks is Starbucks because in the end you get this craft customized beverage.
In a reasonable amount of time in a way that actually has a touch of humanity that you frankly may not good and other points of your day and.
Zach Fathom: As we improve that experience.
Zach Fathom: It's really amazing to see just how the whole vibe of the coffeehouse, just kind of calms down and.
Zach Fathom: You can kind of settle in.
Zach Fathom: And the four here where are the ceramic mugs and glasses and plates just to add another level of like Hey. This is this is a spot where I can slowdown take a minute whether I'm connecting with others are just taking a minute for myself.
Zach Fathom: This is what occurs and at the same token for the customer that needs to get in get out.
Zach Fathom: We're setting them up for success to versus right now the first in first out mobile situation overwhelms the proposition at times and when it happens it's not good and so we got to figure out how we don't let those instances occur ongoing.
Speaker Change: Thank you.
Speaker Change: And the last question comes from Jon Tower with Citi. You May ask your question.
That's great. Thanks for taking the questions quick clarification, and then a question Rachel quick clarification piece on the second quarter are you from an EPS growth standpoint, suggesting that it's going to be lower than what we saw the 23, 5% contraction in the first quarter in the second quarter. That's the clarification and then on the question piece I'm just.
Speaker Change: Curious, Brian like from a high level you guys are the global coffee leader with respect to sales and the footprint and yet you hold a premium price point across many of the markets and menu items. So.
Speaker Change: Can you help us think through now obviously, you're talking about even doubling the store base in the U S to something like 34000 stores over time, how you how you think through the companies.
Speaker Change: How do you balance the two forces of being the most distributed potentially and yet keeping pricing and price points, where they are today and what that means for pricing power over time.
Speaker Change: John I'll start and I'll take the first part which is yes, we expect that margin and earnings well on an absolute basis will be the lowest in Q2, that's based on seasonality, but its also reflecting the organizational restructure as well as the elevated investments and what that means is earnings year over year pressure will intensify and that's largely driven by the.
Speaker Change: The organizational restructure so that's how I would think about Q2, but then we would expect gradual improvement in the back half of the year and specific to EPS, we would expect that you'll see improvement sequentially and year over year in the back half of the year.
Speaker Change: To your second question look I think this is where innovation has to be a part of our model and the good news is it's also one of the things Thats always been a part of the Starbucks business and Youre going to continue to see us innovate on food and beverage.
Speaker Change: It's going to be.
Speaker Change: Both from a standpoint of making sure that we've got the right pricing architecture across the menu and then it also serves the right occasions, whether it's a morning occasion or an afternoon occasion as well as age we want to make sure. We got the right flavors and T slash coffee.
Speaker Change: So that were relevant for the different taste profiles based on People's age. So innovation is going to be a key piece of the puzzle to keep the brand relevant.
Speaker Change: Keep the menu relevant and then when you do that innovation, we're gonna be very cognizant of the pricing architecture that we're bringing forward to support still hey, It's this is a premium experience, but we want to make sure we maintain being accessible and so youre going to see us leverage.
Speaker Change: Food and drink innovation too.
Speaker Change: To carry the day as it relates to.
Speaker Change: <unk>.
Speaker Change: Pricing architecture occasions, as well as TACE.
Speaker Change: So I think that was the last question yeah, Okay, well, let's wrap up so first of all thanks for all the questions.
Speaker Change: You know obviously, we're a couple months into this but.
Speaker Change: I'm truly energized by the just seeing the resiliency the humanity of this brand and the relevance of this brand around the world you know the opportunity to travel not only kind of coast to coast, but then.
Speaker Change: To Asia, and Europe, and Latin America.
Speaker Change: It really is.
Speaker Change: So inspiring to see what our brand is able to do for.
Speaker Change: For our partners and our customers around the world and along those lines I do want to say a big. Thank you don't all of our partners around the world because they make the brand so special and what we're.
Speaker Change: <unk> is doing is making sure that we create the systems. So that we can continue to provide that special experience for everybody. So.
Speaker Change: Q1, obviously in 2025 results met our expectations clearly show some signs of progress.
Speaker Change: But I think it's clear we still have much work to do the good news is I feel like we know the work that we need to do and we're working to build a starbucks.
Speaker Change: I think we'll all be really proud of because we're going to have a clear mission and purpose.
Speaker Change: And we're going to once again be love for a coffee love for the warm love for kind of a welcoming coffeehouse the green apron partners that we have.
Speaker Change: There's a there's a great.
Speaker Change: Piece.
Speaker Change: In our building when you walk around here.
Speaker Change: One of the questions you asked like what's one word to describe Starbucks and the word that.
Written up on the wall is loving I think that should not be lost on what we're trying to do for our customers and our partners and so.
Speaker Change: It is a critical year in front of us.
Speaker Change: A lot of work to do to get back to Starbucks, but I believe we.
Speaker Change: We do this work we will position the company for tremendous future growth and I want you to also here. We're moving quickly on all these things I am committed to executing with excellence and once we have clarity on those things we will deliver on our commitments and so look in closing I'm confident that we're going to create economic opportunity.
Speaker Change: For our partners, providing experience thats worth it for our customers and generate long term sustainable returns for our shareholders. So.
Speaker Change: This is why we love doing these jobs and I'm just really excited about what's in front of us at Starbucks. So thank you for joining us and have a great afternoon.
Speaker Change: This concludes Starbucks first quarter fiscal year 2025 conference call you may now disconnect.