Q2 2025 Starbucks Corp Earnings Call
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Diego: Good afternoon, My name is Diego and I will be your conference operator today.
Speaker Change: I'd like to welcome everyone to Starbucks second quarter fiscal year 2025 conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question simply press Star then the number one on your telephone keypad. If you would like to withdraw your question Press Star then the number two on your telephone keypad.
Speaker Change: I will now turn the call over to Tiffany Willis Senior Vice President of Investor Relations. Mr. Willis you May now begin your conference.
Tiffany Willis: Good afternoon, and thank you for joining us today to discuss Starbucks second quarter fiscal year 2025 results.
Speaker Change: Today's discussion will be led by Brian Nickel, Chairman and Chief Executive Officer, and Cathy Smith, Executive Vice President and Chief Financial Officer.
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 SEC, 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.
Speaker Change: GAAP results in the second quarter fiscal year 2025 include restructuring charges that are excluded from our non-GAAP results.
Speaker Change: Revenue operating margin and EPS growth metrics on today's call are all measured in constant currency and represent non-GAAP measures.
Speaker Change: Please refer to our earnings release, and our website at Investor that Starbucks Dot com to 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 June 13 2025.
Speaker Change: And for your calendar planning purposes. Please note that our third quarter fiscal year 2025 earnings conference call has been tentatively scheduled for Tuesday July 29 2025.
And with that I'll now turn the call over to Brian.
Speaker Change: Thank you for joining today seven months ago, we began work on our back to Starbucks strategy.
Brian Nickel: Since then we've learned a lot and we've moved quickly in the changing market dynamics to reset our business and our team to focus on the customer and our green apron partners who serve them.
Brian Nickel: Learnings to date tell me a few things first we now have the right leaders in place to lead a customer driven culture and to drive our turnaround second my optimism has turned into confidence that our back to Starbucks plan is the right strategy to turn the business around and to unlock opportunities ahead.
Brian Nickel: We're relentlessly focused on the customer and we're continuing to invest in a green apron service model that enables throughput and connection with our customers.
Brian Nickel: We're also reestablishing our coffee houses as a third place where customer spend time and build community.
Brian Nickel: Third we're not just building back our business, we're building backup better business I know from experience that when you focus relentlessly on the customer to take care of your people improve your operations and carefully manage costs the financial results will follow.
Brian Nickel: We're already seeing tangible progress and positive signs from the work we are doing to test learn and then quickly scale.
Brian Nickel: Our goal is that every transaction is higher quality and more profitable.
Brian Nickel: Current market dynamics have given us even more focus and conviction to get back to Starbucks, We don't know what the state of the consumer will be in the months to come but I'm confident we are building a globally resilient business rooted in the strength of our brand focused on the customer and enabled by World class partners at the local level that can succeed in any economic environment our turn.
Brian Nickel: And around is on track and I see more opportunity than I imagined.
Brian Nickel: Turning to performance for the quarter total company revenue was $8 8 billion with a global net new store growth of 213 coffeehouses, our global comparable store sales decline of 1% of global operating margin of eight 2% and overall earnings per share of <unk> 41.
Brian Nickel: These results are far below our capability, but I believe they will be temporary because theres. So much opportunity in front of US I also believe there are better measures than EPS right now to track the progress, we're making to turnaround the business. We are starting to make disciplined investments across the four pillars of our back to Starbucks plan in partners coffeehouses the customer experience.
Brian Nickel: And our marketing and menu.
Brian Nickel: We're also focused on managing costs and improving our financial fundamentals. So there's growth returns we capture more of every dollar spent in our coffeehouses.
Brian Nickel: We're already starting to see early indicators of recovery in our North America business partner engagement is up turnover has dropped to under 50%, which is a new record low transaction declines are slowing across every day part quality transactions are driving more of our sales and the customer experience continues to improve.
Brian Nickel: And finally, our Canadian business has returned to positive comps with positive transaction growth.
Brian Nickel: Let me walk you through why I'm more confident than ever in our back to Starbucks plan and the work we're doing.
Number one our success starts and ends with our customers and our green apron partners over the past quarter I've spent a lot of time and a coffee houses meeting with partners and listening to customers you can feel the excitement or back to Starbucks plans to change our partners have been looking for they are bought in and they're leading a green wave of hospitality.
Brian Nickel: We put the focus back on our customers and we've centered our work on supporting our Green apron partners. So they can deliver an exceptional customer experience. It's the right thing to do for our partners our customers and the business.
Brian Nickel: During the quarter, we launched an update to shift marketplace that lets partners pickup in trade shifts within their district. It is increase the pool of partners to fill last minute shift changes by 10 times and has resulted in record high shift completion with a half a million more shifts filled year over year.
Brian Nickel: This translates into more moments of connection with their customers higher transaction capture and a better experience for our partners. As a result turnover is the lowest on record and tenures on the rise, resulting in more capable proficient partners and to help our leaders develop and take ownership of the experiences they create in their coffee houses where.
Brian Nickel: Getting North America store managers together for a leadership conference. This June.
Number two we are the community coffeehouse, we've moved quickly over the past several months to make small, but impactful improvements to the coffeehouse experience, we're creating moments of connection with handwritten notes on cups, and we're making it more enticing to standard cafes with ceramic mugs and.
Brian Nickel: An expanded free refill policy and the return of great seats. As a result, we've seen more customers choose to sit and stay in our cafes and we continue to receive overwhelmingly positive feedback from customers demonstrating that small details and hospitality drive satisfaction.
Brian Nickel: The third place is our heritage it's needed more than ever and we're reclaiming. It that's why we're evolving our coffeehouse design standards to provide customers a welcoming space to connect and build community.
Brian Nickel: We will begin to bring reworked coffeehouses online soon and we think they will truly deliver an exceptional experience.
Brian Nickel: The uplifts feel premium, but keep renovation costs down and minimized closure days, they're warm and invite customers in they create a sense of craft and they are great seats for different occasions.
Brian Nickel: Expect to see these uplifts begin to open in New York City in Southern California in the months ahead.
Brian Nickel: Well, we still see long term potential to double our overall U S footprint, we have to improve the health of our portfolio as a first step we're taking a critical look at our current portfolio to ensure every coffeehouse. We operate provides a great customer experience and we're beginning the work to build a stronger long term development pipeline that is better map to growth markets and delivers.
Brian Nickel: Improved unit economics.
Brian Nickel: Number three delivering the customer experience to win the peaks using.
Brian Nickel: Using a test and scale approach to win the peaks, we're shifting our focus from beverage production to craft and connection.
Brian Nickel: We're finding through her work that investments in labor rather than equipment are more effective at improving throughput and driving transaction growth.
Brian Nickel: Learnings last quarter came from a 700 coffeehouse staffing and deployment pilot.
Brian Nickel: It confirmed that the right staffing combined with the right deployment improve speed of service and connection while growing transactions. We also began testing a new order sequencing algorithm. It proved effective in reducing in cafe in drive thru service times without impacting the mobile order experience in test locations average cafe wait times.
Brian Nickel: By an average of two minutes, bringing 75% of Cafe order wait times under four minutes at peak.
Brian Nickel: Building on feedback from partners and these learnings, we're investing strategically in labor to optimize our operations bring back a premium experience and better support our partners throughout the peak and the balance of the day.
Brian Nickel: Beginning in May we'll scale, a new green apron service model to more than 2000 of our U S company operated locations and to more than a third of our U S. Coffee houses by the end of this fiscal year.
Brian Nickel: This new model combines and unifies new service standards and expectations changes to partner plays in deployment streamlined routines in our order sequencing algorithm.
Speaker Change: I'm confident based on our pilot work and spending time with store managers and Green apron partners across the country that this new model would create more flexibility within our operation improve improve peak throughput better capture demand deliver a more premium customer experience and accelerate transaction growth.
Speaker Change: As we improve partner deployment and the technology supporting them. We're also rethinking our approach to equipment development and deployment. We've paused. The continued rollout of our Capex heavy siren cold in food equipment and have chosen not to move forward with the deployment of cold pressed cold brew equipment.
Speaker Change: We believe this evolved labor focused approach has more potential to improve throughput and connection while minimizing future capital expenditures on equipment.
Speaker Change: Looking forward, we're on track to fully rollout clover vertical brewers in the U S with equipment already installed in 70% of our company operated coffeehouses.
Speaker Change: And this summer, we'll begin to pushing updates the Starbucks app that lets customers scheduled or mobile order pickup and improved price transparency throughout the order process.
Speaker Change: Number four reintroduce the Starbucks experience to the world.
Speaker Change: We're reintroducing the Starbucks experience to the world through a focus on brand and coffee storytelling and an overhauled approach to product innovation.
Speaker Change: We kicked off Q2 with a new U S brand campaign.
Speaker Change: And tied to the launch Starbucks Monday invited customers enjoy coffee houses for a free brewed coffee after the big game it generated record breaking customer engagement and drove our second highest Monday gross sales day ever.
Speaker Change: Customers are also responding to our new adds within the quarter. Our data shows that the percentage of customers ranking Starbucks as their first choice is the highest it's been in two years on social media to our new fan focused approach has increased engagement on tictoc by nearly three times quarter over quarter.
Speaker Change: Turning to our menu, we've continued to rationalize and update our product lineup to focus on coffee and craft and to create room for relevant innovation that drives demand in.
Speaker Change: In response to customer feedback, we recently removed sugar from our Matcha Lee.
Speaker Change: Lifting module sales by nearly 40% versus last year, we launched a new coffee forward cortado platform, which has quickly become a popular core offering and we continue to educate customers on the range of premium coffee, we serve building on the strength of our Clover vertical brewer.
Speaker Change: In the near term, we're making the most out of our beverage pipeline. This summer, we're bringing back the best selling summer Berry refreshes with pearls launching the new limited time ice tour charter oat milk shaken espresso and bringing new innovation to our Frappuccino platform.
Speaker Change: In the longer term, we're using an agile test and learn approach to build a culturally relevant innovation pipeline across beverage and food.
Speaker Change: To do this we're developing enduring platforms that reshaped the business and create long term potential for the brand.
Speaker Change: In the coming months, we will begin to pilot innovations that our sales driving brand building and can be executed consistently work is underway to craft artisanal food, including the exploration of waste a freshly baked assemble and serve certain items in our cafes at scale. We are using learnings from the launch of freshly baked in prepared items in the U K.
Speaker Change: In other international markets to inform our test and scale approach in the U S.
Speaker Change: Next we're exploring how to lead in health and wellness with a new platform that resonates across demographics, which we expect to launch later this year and we're looking at new beverages that create an entry point to our craft coffee and drink experiences.
Speaker Change: To help reclaim the third place and boost the afternoon day part. We're also exploring an app for Tivo menu that includes sparkling beverages Super Bowl coffee drinks and snack bites lastly, we're beginning to move towards a more regular cadence of limited time flavor launches inspired by Barry says and our biggest fans.
Speaker Change: It's early days, but we're moving quickly to improve the appeal of our product pipeline and to support real time culturally relevant menu innovation.
Speaker Change: Finally, we remain on track with the rollout of digital menu boards, which are already in more than 25% of our U S company operated coffeehouses, they're a key unlock to market day parts differently and to introduce innovation that isn't tied to our seasonal product cycles.
Speaker Change: Turning to international Starbucks has built a globally beloved brand supported by a business that has executed locally in every country and every community where we operate in a fast changing environment. This model underpinned by her back to Starbucks plan improves our resiliency and has proven effective in both challenging and good times.
Speaker Change: In the second quarter eight of our top 10 international markets returned to flat comp or comp growth.
Speaker Change: In the U K, we posted positive comps and have started gaining market share with great feedback on our fresh baked launch in the middle East our regional business partner returned to positive transaction comps for the quarter and in Japan, the business posted their 16th consecutive quarter of comp growth and has increased both brewed coffee and espresso comps through a focus on the coffee.
Speaker Change: <unk> experience.
Speaker Change: To support our continued recovery in future growth, we are using learnings from international markets to inform our test and scale approach across our global footprint.
Speaker Change: And we're building on the success of our U S brand campaign to localize and extend our marketing across key international markets in.
Speaker Change: In China, we've also seen indicators of progress following near term changes to our product offerings.
Speaker Change: Including the introduction of true taste sugar free beverages, and new price points on select products.
Speaker Change: We've got more work to do in the market, but our brand remains strong.
Speaker Change: Our business is supported by a supply chain and roasting operation that is almost entirely local and our team continues to make progress on a market specific back to Starbucks plan.
Speaker Change: As we see signs of progress I want to be clear that we remain committed to China for the long term, we see great potential for our business. There in the years ahead and remain open to how we achieve that growth.
Speaker Change: Lastly, we continue to extend the reach of our brand beyond the walls of our coffee houses with our global channel business during the quarter, we delivered relevant innovation to customers at home and on the move including a new line of waste to energy and Frappuccino light beverages and partnership with Pepsico.
Speaker Change: In summary, our Q2 results are disappointing, especially as measured by EPS, but behind the scenes. We made a lot of progress and have real momentum with our back to Starbucks plan.
Speaker Change: I've, let other turnarounds and everything I've seen tells me we're on the right track I believe we have incredible opportunity in front of us that will create tremendous value for all stakeholders at this stage in our turnaround EPS shouldn't be used as a measure of our success, we're testing and learning with speed and where we're seeing real change is in our coffee houses as we scale.
Speaker Change: This work across our full footprint combined with the strength of our brand. We know we can return the business to strong profitable growth.
Speaker Change: If you tweak if you take away anything from today's call let it be this.
Speaker Change: We are putting the customer back at the center of all we do we're setting our green apron partners up for success with the best job in retail we've got the right team in place to lead we're confident we have the right strategy and are making the right investments to unlock opportunities ahead.
Speaker Change: And we see evidence of progress from the work, we're testing and scaling which we believe will lead to improvements in our financial results.
Speaker Change: Some of the investments, we're making now will take some time to create material returns in some elements of our plan will move faster than others as.
Speaker Change: As we continue to build and invest in our back to Starbucks plan, we'll keep looking for material offsets learning from our customers and partners and adjusting our tactics to return the business to grow.
Speaker Change: There is important work ahead and I look forward to bringing you along.
Speaker Change: With that I'd like to introduce and welcome Cathy Smith, our new Chief financial officer to share some detail on our results for the quarter.
Cathy Smith: Thank you, Brian and good afternoon, everyone I have been a huge Starbucks fans for many years and I'm Super excited to be here sorry.
Cathy Smith: Starbucks has been my third place for countless meetings and interviews and a landing spot when I had time to reflect.
Cathy Smith: Somewhere I can go and no I'd find a welcoming barista delicious beverages, and a warm coffee house experience.
Cathy Smith: In my short time in this role it is clear there are substantial opportunities for growth and value creation.
Cathy Smith: Like Brian I am confident the four pillars of the back to Starbucks strategy are right.
Speaker Change: I have seen this pattern before the.
Brian Nickel: The right focus strategy.
Cathy Smith: Test learn iterate.
Cathy Smith: Focus on the leading indicators.
Cathy Smith: Look for signs of progress.
Cathy Smith: Work on cost per transaction, then move to scale.
Cathy Smith: The desired financial results, we will take a while but I have started to see the leading indicators and early evidence that precede all turnarounds.
Cathy Smith: We will maintain the discipline to ensure small investments yield expected outcomes before scaling.
Cathy Smith: In service of long term durable growth and strong returns on invested capital.
I also know that the turnaround is going to take some time.
Cathy Smith: We are committed to providing transparency along the journey.
Cathy Smith: I'll now cover our Q2 results.
Cathy Smith: Our Q2 consolidated revenue was $8 $8 billion up 3% in constant currency to the prior year, reflecting 7% net new company operated store growth over the past 12 months, partially offset by a 1% decline in comparable store sales.
Cathy Smith: Our global comparable store sales decline was primarily due to a 2% decline in the U S with our U S transaction decline improving this quarter to negative 4%.
Cathy Smith: All transactions are not where we expect them to be we are seeing several indicators that are back to Starbucks strategy is positioning the business on the right track.
Cathy Smith: In the U S market share brand sentiment and customer contacts regarding wait times are all improving.
Cathy Smith: We saw stabilization in our non Starbucks rewards member traffic, indicating our broad based marketing campaign to reintroduce Starbucks to the world is resonating with our customers.
Cathy Smith: Additionally transaction recovery in our comparable stores was strongest in our morning day part and we saw improvement quarter over quarter as we have invested in staffing and deployment demonstrating that they deliver the customer experience to win the peaks pillar of our back to Starbucks.
Cathy Smith: AG is effective.
Cathy Smith: Our ticket growth in the U S for the quarter was 3%, reflecting annualized nation of prior year pricing and fewer discount driven offers in the current year.
Cathy Smith: We are driving more durable growth by moving away from highly discounted offers building the foundation of a healthier base business to grow from.
Cathy Smith: Outside the U S, Canada experienced both positive comparable store sales and transaction comp in the quarter. Our Canadian market has benefited from food innovation that has resonated with customers fueling 12, 5% higher food sales.
Cathy Smith: Shifting to China, China's comparable store sales were flat for the quarter with positive transactions and expanding margins driven by their focus on delivering great product innovation and improving value perception.
Cathy Smith: Additionally, customer and partner engagement scores improved year over year.
Cathy Smith: In our international segment, we're seeing faster improvement as evidenced by eight of the top 10 markets with flat or positive comps.
Cathy Smith: Our international cafes are starting their back to Starbucks plan from a more consistent brand experience.
Cathy Smith: It's early but it's encouraging to see positive signs.
Cathy Smith: Turning to store growth, we opened 213 net new stores globally in Q2, primarily consisting of company operated growth in the U S and China.
Cathy Smith: Well, we have solid new store economics, we have room for improvement and are evaluating our global store portfolio and new store pipeline as Brian mentioned.
Cathy Smith: Our cafes will have authentic coffee housewives with customers in mind.
Cathy Smith: Our core model will have both cafe and drive through with welcoming environment and efficient workflow behind the bar.
Cathy Smith: We are also committed to reducing our new store build costs to drive greater new store returns.
Cathy Smith: Shifting to margin our Q2 consolidated operating margin was eight 2% contracted 450 basis points from the prior year primarily.
Cathy Smith: Primarily driven by deleverage and additional labor in support of our back to Starbucks strategy.
Cathy Smith: Our strategic and surgical addition of labor into our stores is critical for us to deliver the customer connection and experience our customers expect.
Cathy Smith: While we prioritize delivering on our customer promise, we are optimizing workflow driving efficiencies with new algorithms, simplifying our menu and improving the layout.
Cathy Smith: Although our labor investments drove margin compression in the quarter the investment in labor allows us to capture additional demand and transactions, which will accelerate our return to growth.
Cathy Smith: Shifting from margin to G&A.
Cathy Smith: In Q2, G&A declined by 3% versus the prior year, driven by the lapping of certain proxy solicitation and advisory costs.
Cathy Smith: And cost savings from the corporate restructuring, we completed towards the end of the quarter.
Cathy Smith: Last quarter, we shared our intention to include these restructuring costs in our non-GAAP results considering the stage of our turnaround we may have additional restructuring costs in the near term as we evaluate our store portfolio and operations.
However, we still expect that any additional restructuring initiatives will be completed within a finite period of time, and therefore have elected to exclude the corporate restructuring charges from our non-GAAP results.
Cathy Smith: As Brian stated our EPS performance in the quarter was poor Q2, EPS was <unk> 41 cents down 38% from the prior year, primarily reflecting the impact of expense deleverage and heightened store investments.
Cathy Smith: That said, our considerable progress against our back to Starbucks strategy might be more telling at this stage of our turnaround than EPS.
Cathy Smith: We've made tangible progress on all four of our back to Starbucks pillars, and while this strategy will take time to be fully implemented and produce financial returns. We are laying the foundation for profitable durable growth.
Cathy Smith: To conclude my remarks on our Q2 results, we remain committed to our capital allocation strategy and continue to invest in our business for high returns and maintain our strong balance sheet targeting a triple B plus b, a a one credit rating and return cash to shareholders via dividends.
Cathy Smith: <unk>.
Speaker Change: Shifting to broader topics, while I know you would like to have some insight into our financial outlook I'm still learning the business and it would be premature for me to provide such insight.
Speaker Change: Although I expect our third quarter FY 'twenty five topline to follow normal seasonality I recognize our U S business drives our results and it will take time for our back to Starbucks strategies to be fully implemented and are over 17000 stores nationally.
Speaker Change: I know that our shareholders have many questions top of mind, So I will address two topics in detail tariffs and coffee prices.
Speaker Change: Starting with tariffs, although the tariff environment continues to be dynamic we mobilized a cross functional team and are actively managing and mitigating risks where possible.
Speaker Change: As it relates to coffee I'd like to first remind everyone that we source high quality arabica coffee from 28 countries with the majority of our supply coming from Latin America.
Speaker Change: Our coffee team is leveraging our global footprint to further diversify and redirect coffee shipments as appropriate.
Speaker Change: Excluding coffee our largest areas of tariff exposure include merchandise currently sourced from China, and some imported beverage components.
Speaker Change: For these impacted areas, we are actively working on strengthening our supply chain, including localizing and moving production as needed.
Speaker Change: For example for the upcoming holiday season, we have made progress mitigating our tariff exposure by shifting production to alternate sites.
Speaker Change: Now shifting to coffee prices the market continues to be volatile and our coffee team has done a fantastic job opportunistically building, our supply and securing favorable pricing.
Speaker Change: Due to our purchasing and hedging practices, our moving average cost of coffee lags the market.
Speaker Change: As a reminder, our total cost of Green coffee is typically limited to 10% to 15% of our product and distribution costs.
Speaker Change: And we continue to actively manage imbalanced coffee inventory with related coffee costs.
Speaker Change: In closing, while our financial results are far from Starbucks potential I am confident we have the right strategy and are starting to see early evidence and leading indicators.
Speaker Change: We are building new muscles to test iterate and scale quickly all focused on customers and listening to partners.
Speaker Change: I wanted to thank our partners, who are dedicated to bringing our back to Starbucks strategy to life.
Speaker Change: [noise] alongside you I have confidence that we will deliver the experience customers crave and value creation, our shareholders deserve.
Speaker Change: And with that Brian and I are happy to take your questions. Thank you operator.
Speaker Change: Thank you and as a reminder, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Speaker Change: In order to allow as many questions as possible. We ask you to please limit yourself to one question at a time.
Speaker Change: We'll come back for follow up questions as time allows.
Speaker Change: Our first question comes from David Palmer with Evercore ISI you May proceed.
Speaker Change: Oh, Thanks, So I just wanted to follow.
Speaker Change: Follow up on some of those points that you made in the opening comments.
Speaker Change: You mentioned investments in labor and orders sequencing, perhaps over equipment in terms of solving speed and throughput.
Speaker Change: I'm just thinking it through it sounds like maybe more opex and less Capex thing what you might have thought originally and perhaps this is going to be more of a rapid pace.
Speaker Change: Of the improvement that you want to get too it's gonna be more easily deployed.
Speaker Change: Are there any numbers that we can think about in terms of labor investment maybe per store capex thinking that you would be associated with this maybe less than before and and then and then anything else that you can think of like that would be important from a staging perspective, because it sounds like a lot of changes are happening. Thank you.
Brian Nickel: Yeah, Hey, Dave This is Brian Yeah. Thanks for the question and look I think your instincts are right.
Speaker Change: What we've learned over the last couple of months.
Speaker Change: Specifically behind both the algorithm pilot and the labor pilot is the combination of staffing deployment and technology gives us the outcomes of a great customer connection experience as well as the right speed and throughput.
Speaker Change: Associated with what we want to achieve both in cafe.
Speaker Change: Mobile order and drive through.
So we're not seeing the need for the equipment.
Speaker Change: In order to get to the customer experience.
Speaker Change: That we want to provide.
Speaker Change: Both on the level of speed and connection.
Speaker Change: And then look I think what we're doing as far as taking from pilot to scale.
Speaker Change: I can kind of share with you kind of the journey, we've been on so far alright, I started with three stores on the algorithm started in five stores with the labor pilot and now will be in roughly 1500 stores.
Speaker Change: <unk> posted 2000 stores by I think may.
Speaker Change: And then hopefully by the end of this fiscal year will be over 3000 stores with the labor program.
Speaker Change: And the algorithm program and.
Speaker Change: So this just allows us to get to I think the service experience that we want to provide.
Speaker Change: Across the stores at a pace that we think makes sense. So that we train we staff, meaning we hire.
Speaker Change: And then we're able to deploy correctly and then put in the technology behind it.
Speaker Change: The other thing Thats nice to see is we're seeing transactions respond with the improved speed of service and be better I'll call. It deployment slash staffing.
Speaker Change: To enable the connection and the speed that we want.
Speaker Change: So I think that gives you a highlight on it.
Speaker Change: Too early to say what will be the actual speed and the cost associated with it.
Speaker Change: But the one thing I would say is and I think you heard this in kathy's comments in my comments is we're going to be also looking to make sure that we are very.
Speaker Change: <unk> <unk>.
Speaker Change: Judicious in the costs that continue to go forward in the business.
Speaker Change: As we make these investments into the store, we're going to see where we can find material offsets.
Speaker Change: And the business and then obviously, we're banking on some growth to come with the.
Speaker Change: The investment.
Speaker Change: And the labor and the store experience.
Speaker Change: I highly highly believe margin then ultimately responds to the financial results grow with the growth of the business.
Speaker Change: Thank you Andrew.
Speaker Change: And your next question comes from Sara Senatore with Bank of America. Please state your question.
Speaker Change: Thank you I wanted to I guess follow up on it.
Speaker Change: <unk> comment which is about the margin.
Speaker Change: Margin was down in North America collection like most of that 600 basis points session Labor I know you talked about that as a headwind I guess I'm trying to understand it feels like Starbucks has been investing pretty heavily in labor for a few years now and I'm not sure. If this is what we're seeing before you see suddenly offsets or.
Speaker Change: Fundamentally that economics of the box, maybe look different than it has historically and I'm just trying to sort of piece together, it's a little slower in terms of earnings recovery than maybe some of the previous turnaround as they've seen for me, Brian and so I can't tell if it's if it's a macro issue or if there's something else here.
Speaker Change: Again says that the the boxes are going to be sort of fundamentally different than they used to be.
Speaker Change: Yeah look I think what's been going on in the <unk>.
Speaker Change: If you look back on the history, we've definitely invested in our color.
<unk> value proposition or the partner value proposition.
Speaker Change: But I think along those lines over the last couple of years, we've actually been moving labor from the stores.
Speaker Change: I think with the hope that equipment.
Speaker Change: Could offset the removal of the labor.
Speaker Change: I think what we're finding is that was just.
Speaker Change: That wasn't an accurate assumption with what played out.
Speaker Change: And unfortunately at the same time price was being taken up for a myriad of reasons right. There was an inflationary environment. So on and so forth. So I think what we find ourselves right now.
Speaker Change: As you know what we're.
Speaker Change: Covering is the equipment doesn't solve the customer experience that we need to provide but rather staffing the stores and deploying with this technology behind it does and then where we're already starting to see is an impact on that transaction and the number of transactions that are incremental.
Speaker Change: The combination.
Speaker Change: Asian of coming over top with marketing as well to talk about.
Speaker Change: The experience of the Starbucks coffee company combined with the in store experience as it relates to technology and staffing.
Speaker Change: We're already starting to see some nice improvements in just kind of give you would always talk about there.
Speaker Change: Our non <unk>.
Speaker Change: Rewards customers.
Speaker Change: We've seen a nice clip up in transactions.
Speaker Change: And obviously, our rewards customers, where we've removed a lot of the discounting we're seeing a lot of choppiness. There because we frankly were using a rewards program Morris coupon program as opposed to a rewards program and so youre going to see us evolve that program going forward, but the quality of the transactions that were building back look better.
Speaker Change: Not discount based I would say, it's kind of the core of what Starbucks is it's experienced based it's coffee quality based drink based.
Speaker Change: So I like where we're headed I think we're going to build back better transactions.
Speaker Change: Which sets us up for I think some great growth going forward and I think margins will be part of that growth story.
Speaker Change: In the longer term.
David Tarantino: Thank you and your next question comes from David Tarantino with Baird. Please state your question.
David Tarantino: Hi, Good afternoon. My question is about the portfolio comments you made are evaluating the portfolio I was wondering if you could elaborate specifically on what you're evaluating there in terms of the existing base and then.
Speaker Change: Yes, Brian should we think about a slower pace of unit growth in the in the near term that eventually accelerates later as you do this evaluation or are you going to continue to grow as you as you do this evaluation.
Yeah. So thanks, David for the question, yes, so to answer the first part of your question.
Speaker Change: Look we have seen our costs go way up on our new builds as well as our renovations and it's.
Speaker Change: It's just not.
Speaker Change: The cost structure, we think we should have going forward, nor do I think it's necessary to have a grade.
Speaker Change: <unk> built.
Speaker Change: And give the customer experience and the partner experience that we need to provide so we're working hard on how we re set both renovation costs as well as new build costs.
And with that it's only logical to say well why don't we slow down what we're building right now and then as we get the new design and build nailed down we.
Speaker Change: We will ramp our way back up because as I said in my comments earlier, we still believe there is tremendous opportunity to double the store count from where we are today I just want to double it with the right build at the right cost. So that we can provide the right customer experience partner experience and so that's what we're working on right now actually before even up on this call.
Speaker Change: I had the opportunity to look at.
Speaker Change: Something I think is pretty exciting for how we're going to have much better cost and what we build but you know it takes a little bit of time to move that through the development pipeline. So that it shows up in market, but I love, where the team is headed on the cost side of this I also lowered the teams headed on the design side of this and then when you layer that in with I think a great third place.
Speaker Change: Right labor staffing deployment, and some technology behind it to enable speed and throughput that we want.
Speaker Change: I have high confidence that we can double our store count as I've mentioned before.
Speaker Change: <unk>.
Speaker Change: Thank you.
Speaker Change: And your next question comes from Brian Harbor with Morgan Stanley. Please state your question.
Speaker Change: Yes. Thanks, good afternoon could you comment on just the menu simplification you did I think the thought before was that that wouldn't have too much of an impact on transactions and people sort of gravitate to other items is that in fact, what you saw and then you know you did sort of teased some other interesting things that could come over time.
Speaker Change: From an innovation perspective, how do you how do you sort of sequence those things and how.
Speaker Change: How would you think about when is the right time for that.
Speaker Change: Yeah, Yeah, well look here just on the transaction front, we still believe we're making the right decisions by simplifying because it frees us up to do what I believe is more like platform innovation more compelling and relevant innovation.
Speaker Change: Frankly versus hanging on to what I would say just slow movers.
Speaker Change: At.
Speaker Change: I'm sure there's somebody that wishes, we didn't remove it but.
Speaker Change: They were slow movers, and we've got to open space absolutely at the Big movers.
Speaker Change: To your point on transactions you know one of things that gives me a lot of optimism is just if you think about from Q1 to Q2.
Speaker Change: Percent of stores.
Speaker Change: That had positive transaction comp went up by like 80%. We went from call. It 13, 5% of our stores with transaction concept were positive to now almost a quarter of our system with positive transaction comps. So I know, we're making progress.
Speaker Change: Just by seeing how we are improving our transaction comps as it relates to our existing store base.
Speaker Change: This thing is that obviously translates into what percent of stores are delivering sales comp right and now we're closing in on 42% of this somewhat positive sales comp and the thing that's really exciting to us the morning.
Speaker Change: We're almost right around 50% of our stores are a positive sales comp so.
Speaker Change: Again, we're making great progress both across the system with the back to Starbucks programs, just on getting back to being focused on the customer simplifying the operation for our partner and then being very crystal clear on what are the things that we need to be spending our time on and that is all around providing a.
Speaker Change: Great Coffee house experience.
Speaker Change: And.
Speaker Change: I think we're starting to see it in the results.
Speaker Change: And then obviously as I mentioned earlier in the pilot so the innovation that you talk about that.
Speaker Change: You guys are going to chuckle about this a little bit, but we're using the stage gate process to make sure that what we bring in truly does provide meaningful innovation, whether it's food whether its strengths.
Speaker Change: Or whether it's an afternoon targeted program.
Speaker Change: I think it's just really smart of us to know how does it impact the business and how does it ultimately perform at the customer and how is it able to be executed consistently with our partners. So I'm really excited about the pipeline that we're building.
Speaker Change: To be Frank the pipeline was a little thin and we are building it back and I think at the same token the team's doing a nice job.
Speaker Change: Taking advantage of what news, we do have to make it.
Speaker Change: And as impactful as possible without getting in the way, but we want to accomplish in the store with the back to Starbucks program and I think youll see that even coming up in the summer months as we start to rollout some new news.
Your next question comes from Andrew Charles with PD Cowen. Please state your question.
Andrew Charles: Great. Thank you, Brian you talked about building a globally resilient business and with investor concerns surrounding a recessionary macro and Starbucks is under performance in past periods of economic curation, what levers as the brand have as it's been.
Andrew Charles: So to protect U S traffic if the macro deteriorates further maybe said differently what parts of the back to Starbucks playbook can you accelerate if the macro becomes more challenging in the U S.
Andrew Charles: Yeah, Hey, thanks for the question and look here's what I would tell you is.
Andrew Charles: The one thing that we've heard consistently over and over again is getting back to this idea of the third place and the connection and doing it in a way where we're on time with the mobile order and accurate.
Sure.
Andrew Charles: Less than four minutes in the cafe less than four minutes in the drive through and then with a great seat is a real point of difference.
Andrew Charles: It is one of those things that people would say hey look this is a simple everyday luxury that I can still continue to participate in kind of regardless of what.
Andrew Charles: Some of the economic challenges are around them as what some of the feedback we're getting.
Andrew Charles: If it's a major step backwards in a macro environment of course will be impacted but my experience has been the best way to go. After these things is with your best offense and our best offense is to make a great third place with a great drink with a great great for reis to providing that connection.
Andrew Charles: In the innovation pipeline, we've got some news that I think will cut through in any environment. So.
Andrew Charles: Some of those things you can go a little bit faster on because it doesn't require additional equipment or anything but.
Andrew Charles: We'll recognize what's happening with the customer and will adjust accordingly.
Andrew Charles: Yes.
Andrew Charles: Thank you Andrew.
Speaker Change: Next question comes from Christine Cho with Goldman Sachs. Please state your question.
Andrew Charles: Thank you so much.
Christine Cho: Thank Brian you mentioned that the under 15 minutes school on the mobile order delivery in the last call and I think you started to test the mobile order sequencing algo qualitative PFS choice.
Any early thoughts here and how you size the opportunity.
Christine Cho: Can you walk us through how the partner and customer experience the change with that thank you so much.
Christine Cho: Yeah, so yeah, so the debt.
Christine Cho: That is a pilot that we've gone from three stores to now we're in over 400 stores and what I'm happy to report on Us.
Christine Cho: Really what we're trying to do is figure out how we could continue to be on time with mobile orders, while providing better speed of service and customer connection for the drive thru.
Christine Cho: Being cafe, and then obviously the hand off as it relates to the mobile order and.
Christine Cho: The pilot has been proving just that.
Christine Cho: We I think pulled out over two minutes and the in store time.
Christine Cho: And we've definitely seen the drive thru.
Christine Cho: Exceed the four medical which is great. So we're averaging less than four minutes in the drive thru and we pulled out about two and a half minutes in the cafe and we got about 75% of the stores that are in the pilot now achieving what I would call. The four four <unk> metrics.
Without having anybody be dissatisfied with the time of their mobile order experience. So.
Christine Cho: All really good stuff happening for the customer as it relates to the partner. The good news is a lot of this just happens behind the scenes for the partner.
Christine Cho: Because what happens is behind the scenes the technology is figuring out how to route which order to the store and to the certain.
Christine Cho: Station, so that when they pull out the ticket. It is already done the work so that they are pulling the chicken is the right drink for them to make so that they will be successful hitting those feed times and enables the partner to have the time to have the connection with our customers as well.
Christine Cho: One of the things that really just wanted to see in these stores is it's just a lot calmer.
Christine Cho: People move with purpose, but its a lot calmer theres the opportunity to provide.
Christine Cho: Great connection and Thats really what we want the technology can do behind the scenes is just be that behind the scenes. So that our partners are set up for success to connect and do their craft with our customers on every transaction.
Speaker Change: And your next question comes from Jeffrey Bernstein with Barclays. Please state your question.
Jeffrey Bernstein: Great. Thank you very much.
Speaker Change: I wanted to say Hello to Kathy and throw a question your way.
Speaker Change: You mentioned ROIC and returning to strength.
Speaker Change: This was not normally a metric highlighted on Starbucks calls, perhaps that got more attention in your prior roles.
Speaker Change: Was wondering if you can share metrics in your first months, how you think about the.
Speaker Change: The ROIC framework at Starbucks and maybe how it might come into play as you make decisions going forward. Thank you.
Speaker Change: Thank you and good afternoon, I look forward to meeting you soon yeah. So I for a very very long time believe at the end of the day, our shareholders want really two things give me a durable sustainable growth and give me a good return on invested capital for the risk I'm willing to take for that growth and so it's very very simple to me.
Speaker Change: So if we focus on those two metrics I think we'll get to good outcomes for all of us and for our shareholders.
Speaker Change: That said to your point I think we've got a little bit of work as Brian shared with the portfolio, while they still give us great IR ours by most standards not by our standards and so we have historically done better and I think we can do better and we will so we'll think about that.
Speaker Change: All the while though we're going to make sure we invest in the back to Starbucks strategy and then we will find their offsets.
Speaker Change: I love deploying a few tools like zero based budgeting, which will come into our vernacular. This next year, which will help us get after some of those may be stranded costs. So all of that though in service of durable growth and a good return on invested capital.
Jon Tower: Thank you and your next question comes from Jon Tower with Citi. Please state your question.
Jon Tower: Downtown.
Speaker Change: Sorry about that I got to figure out how to use the mute button.
Speaker Change: Thanks for taking the question just maybe following up to the labor pilot comment that you had spoke about earlier I think you said 500 stores and 3000 stores by the end of fiscal 'twenty five do you see that being deployed across the whole U S store base over time or is it more a select number of stores and then may.
Speaker Change: On top of that do you see any sort of incentives changing for store level labor, maybe at the GM level or at the hourly level or do you feel pretty good about where that sits today.
Speaker Change: Yes, so look I do well first thanks for the question I do see us rolling this across all of our U S company stores.
Yes, it will be in different forms right because we have some stores that are cafe in very urban we have some stores that are.
Speaker Change: Drive through mobile cafe that are more urban.
Speaker Change: So what it ultimately looks like as far as being deployed in the store will be contingent upon the business that they run and I'll. Just give you. An example, I was just in Chicago.
Speaker Change: Last week and a half.
Speaker Change: The.
Speaker Change: The labor pilot in their stores and the one store as a downtown Chicago store.
Speaker Change: A lot of transactions Big mobile business Nice cafe business and.
Speaker Change: Not surprising we added a lot of labor against the mobile order side of the business and for perspective. This store is doing like 250 transactions in 30 minutes.
Speaker Change: And so.
Speaker Change: The woman that runs it is Alicia in Fabulous leader.
Speaker Change: The place is just running like Super smooth.
Speaker Change: No form of chaos.
Speaker Change: The customers that wanted to have an in cafe experience upgrading cafe experience customers that wanted to just grab and go having a great grab and go experience in that place. She increased a lot of the labor towards the peak and then also some of the shoulder hours and primarily in the mobile ordering space and in the algorithm is going.
Speaker Change: Behind the scenes help us manage how those orders flow versus like a suburban store.
Speaker Change: One of things we saw with <unk>.
Speaker Change: Putting in this additional labor as we committed a person to just be stationed at the drive.
Speaker Change: And in this case one of the things Jessica that was the store manager of the store.
Speaker Change: She has done a fabulous job of taking the labor that we're generating as a result of the peak pickup into our weekend business.
Speaker Change: And so I'd just give this as examples of it's going to be we're going to need to move both the labor and the deployment to match, what the business actually flow looks like and.
Speaker Change: What's great to see is in both of those scenarios, which are two very different stores youre seeing transaction growth youre seeing a team that is highly engaged highly energized I think moving with simplicity moving with connection and then also just moving to our customer which is really exciting and so.
The plan is we will be moving this green apron service model across all our stores in the U S and it'll be a rollout is very focused.
Speaker Change: And.
Speaker Change: We will make sure that our managers and our district managers and the whole leadership is dialed into what we are after with this green apron service model and.
Speaker Change: The early signs are very promising.
Speaker Change: Thank you and your next question comes from John Ivan Co with J P. Morgan. Please state your question.
John Ivan: Hi, Thank you.
Speaker Change: Question is on the drive through and you know really in the context.
John Ivan: Yeah.
John Ivan: Siren station, particularly around the ice machine and food warming cabinets at least from my understanding we're really geared at least partially to significantly improving speed of service at the drive thru, especially where you had a very high blended mix or you had a high food mix. So you know really I'm going to go to part with this question is.
Speaker Change: Do you think those components are firing might make sense in the future or are you just spending them for now and the second part of the question and you've alluded to afternoon. A couple of times does it make sense for Starbucks to actually split its menu to some extent a product set are available in the morning, and other products that may be a little bit more time intensive or.
John Ivan: Customized that would only be available in the afternoon. Thank you.
John Ivan: Yeah. So so to answer your first question. Obviously, there are some stores to your point that would warrant putting in the <unk> system.
John Ivan: When they've got a very high mix of drive through and a very high level of transactions.
John Ivan: So it's not that we're not going to ever use the sirens system. It's just not something that we need to be rolling out across all 10000 stores.
John Ivan: So it is going to be very targeted and it's going to be on a very I would say use basis.
John Ivan: As it relates to the store has a need.
John Ivan: And then in that case, we will implement it.
John Ivan: For the bulk of our stores the majority of our stores.
John Ivan: Just not the necessary solution.
John Ivan: We have plenty of capacity, if we deploy use the technology and.
Execute with excellence the way I know we can.
John Ivan: To your other question about how you think about the menu look that's kind of what I'm alluding to is when we do things like an app for Tivo menu alright that would be available in the afternoon from like say two to five.
John Ivan: We definitely want to reinforce the artisanal craft aspect that we provide for when people want to have that little snack or that will pick me up drink in the afternoon and it gives us some flexibility to do some different things in the afternoon.
John Ivan: And maybe we wouldn't be able to do in the morning, So digital menu boards will help enable that.
John Ivan: The way, we can market it and then frankly, just being clear in how we market.
John Ivan: The actual menu and what the experiences will help with that so.
John Ivan: Yeah, we're going to we want to take advantage of what our capabilities are.
John Ivan: We are open from <unk>.
John Ivan: Six in the morning until seven eight and nine o'clock at night, and we got to be smart about delivering on beverages and food for the occasions that move throughout the day.
Speaker Change: And your next question comes from Chris <unk> with Stifel. Please state your question.
Speaker Change: Thanks, Bryan on the last call you mentioned several near term changes that can be implemented in China to stabilize there.
Speaker Change: They appear to be working but can you describe some of those changes and whether you believe they have stabilized the transaction declines.
Speaker Change: Yeah. Thanks for the question on China, Molly and her team have done a really nice job of.
Speaker Change: Getting after.
Speaker Change: Some key things that we need to do to be more competitive in the market.
Speaker Change: <unk>.
Speaker Change: They've started to implement I think some very relevant marketing they've also brought forward some very relevant product innovation.
Speaker Change: Both in flavors and now most recently in this.
Speaker Change: Sugar and flavors separation program.
Speaker Change: And then also the dumpling program that they have so they've already started the process of figuring out products at certain prices combined with I think very relevant innovation and some additional marketing that's connecting in a very culturally relevant way and the good news is Molly and the team are just getting started.
Speaker Change: So a lot of their ideas still.
Speaker Change: Our yet to roll out, but the things that they've rolled out most recently have definitely made a very nice impact.
Speaker Change: The flat comp with four points of transaction growth.
Speaker Change: It was really nice to see and.
Speaker Change: I think the team is going to build on the momentum that we're starting to create in the China market.
Speaker Change: Thank you and your next question comes from Danilo Gargiulo with Bernstein. Please state your question.
Speaker Change: Great. Thank you.
Speaker Change: Bryan the question is on pricing and you were mentioning that good intention of not increasing prices in 2025, and arguably with general inflation rising given a pet as you might have a golden opportunity to be pricing below competitors, and perhaps hampton the value positioning of Starbucks.
Speaker Change: At the same time the coffee prices are increasing so are you planning to maintain prices in 'twenty 612, or would you be prioritizing margin protection and also can you help us quantify the impact of rising coffee prices our margin. Thank you.
Yes, so I think as I've stated before our intention is to not move on pricing for the balance of this fiscal year.
Speaker Change:
Speaker Change: And we've also done some other things I think to enhance the value proposition like not charging for all theory youre going to be seeing us on the pricing front also rollout.
Speaker Change: The App here in the next couple of months.
Speaker Change: Easier ways for people to navigate.
Speaker Change: And get pricing transparency into their transaction.
Speaker Change: Which I think is also going to help clarify things for our customers and then look as it relates to.
Speaker Change: 2026, we're going to be working on a lot of things to figure out how we can improve margin.
Speaker Change: And.
Speaker Change: I think it would be premature to say, we got to use price as the only way to protect margin.
Speaker Change: I think we're going to be looking at ways to grow the business and also.
Speaker Change: Really a hard look through the zero based budgeting approach.
Speaker Change: Youre seeing where else there might be some offsets.
Speaker Change: Frankly price would be the last lever I would like to pool, but.
Speaker Change: We'll assess as we get closer to 2026, and then do what we believe is the right thing for both the customer and the business and the brands.
Speaker Change: And I think your last question was in regard to coffee.
Speaker Change: Prices as it relates to the business.
Speaker Change: The good news for US is it's actually a small piece of.
Speaker Change: The total cost of sales proposition.
Speaker Change: The team does a great job.
Speaker Change: <unk> coffee.
Speaker Change: And I think <unk> seen historically.
Speaker Change: They've done a really nice job on that and they are currently doing a really nice job on that as well. So I don't know if you wanted to add any more detail.
Brian Nickel: That is typically 10% to 15% of our product and distribution cost. So as Brian said, it's small and maybe the only other thing to layer on as our team has historically for a very long time had a great sourcing hedging and Mark our warehousing program that then will mute the prices.
Brian Nickel: Both on the upside when prices are raised at rising and when they're coming back down so but all of that said I think the bigger picture is where Brian left which is the smaller piece of our total product and distribution costs.
Speaker Change: Thank you and your next question comes from Peter Sklar with BT I G. Please state your question.
Peter Sklar: Great. Thanks for taking my question.
Speaker Change: Brian since the fall of 'twenty for Starbucks.
Speaker Change: Embarked on pretty meaningful change in investment behind advertising a lot of linear television behind sporting events Some radio.
Speaker Change: Can you just talk a little bit about the return on that investment that you're that you're seeing how you're measuring that and should we continue to expect that this will be the cadence on the forward you'll continue to invest behind when your television and radio.
Speaker Change: Even increase that going forward. Thank you.
Speaker Change: Yes, thanks, yes.
Speaker Change: Yeah look we're feeling really good about how the marketing is taking hold.
Speaker Change: One of the.
Speaker Change: Brand trackers that we do we just got back that brand first choice is the highest Starbucks has been since 2023.
Speaker Change: The other thing that also I'm really delighted to see the progress that we're making with our non rewards customers from a transaction standpoint.
Speaker Change: We were at a really big deficit and kind of that fall when I first got here and literally every quarter. It has improved from a transaction basis and even as we enter the third quarter I'm continuing to see further improvement.
Speaker Change: And the other thing that's really nice to see is as we've removed a lot of the discounting.
Speaker Change: No.
Speaker Change: Sin.
Speaker Change: Higher quality transaction show up so it's showing up in ticket a little bit to.
Speaker Change: To the tune of like a point roughly but what I'm. Most excited about is when you talk to customers.
Speaker Change: They're giving us feedback that im really.
Speaker Change: Getting a better experience from Starbucks and it's interesting it's just little things.
Speaker Change: Like the Breeze to asking me do I want to stay or is this to go.
Speaker Change: Writing the little note on the Cup.
Having that connection and handle having economy bar back so I think bringing these things to life in advertising and then having it be reinforced when youre in store is one of those cycles that just build on it and look I think trust and the team are doing a great job and I would say it's beyond just the linear TV, it's social it's the.
Speaker Change: So it's all of the different aspects of how we communicate with customers and.
I think we're going to continue to get better from here as it relates to.
Speaker Change: The marketing side of the business.
Speaker Change: Thank you and that was our last question I will now turn the call over to Brian Nagel for closing remarks.
Speaker Change: Alright, well. Thanks, Thank you for your time and all the questions.
Speaker Change: Obviously I'd be remiss, if I don't mention the hard facts in front of US, which is our our Q2 2025 financial results were disappointing and.
But I think the thing I want you to know is behind the scenes.
Speaker Change: We really are showing a lot of signs of progress and I think as I've said before our turnaround is going to take a little bit of time and we've got much more work to do as we build back a better business I can't emphasize enough is that just about building back the business is about building back a better business, but I'm more confident frankly than ever about the opportunities ahead of us.
Speaker Change: Frankly, I think there's more opportunity than I, even imagined when I first came into the job. So I've learned a lot over the last seven months.
Speaker Change: We've got a great team.
Speaker Change: That is in place that is committed to winning with customers and doing it in a way where we set our partners up for success.
Speaker Change: I think I've said this before as Ive led turnaround like this before.
Speaker Change: And I really do have a lot of confidence as we continue to scale the work underway and we manage costs smartly, our Starbucks transformation that we're going to lead I think is going to be both impactful and enduring and our aim is just that we want to build a starbucks with a clear mission and purpose maybe left for its coffee it is.
Speaker Change: Warm and welcoming coffeehouses, our talented green apron partners in the community that we built and we're focused I can't emphasize enough. We're focused on moving quickly, but we're also focused on executing with excellence. So that we can deliver on all these commitments. So look in doing so I'm confident we're going to stabilize the business I think we are starting to show that right now in our results.
Speaker Change: And then we're going to build resilience so that we frankly create <unk>.
Speaker Change: Economic opportunity for both our partners.
Speaker Change: And then obviously, we want to provide an exceptional experience for our customers and then we want to clearly generate terrific long term returns for our shareholders. So lastly, I just wanted to say thank you to our partners for supporting the changes that we're making and for the feedback that they continue to provide I can't emphasize enough how much they are at the leading edge of our <unk>.
Speaker Change: Back and I hope that all of our partners are really proud of the work that we're doing and they are proud to continue to wear the green apron.
Speaker Change: So with that have a great afternoon and.
Speaker Change: I'm sure we'll be in touch take care.
Speaker Change: This concludes Starbucks second quarter fiscal year 2025 conference call you may now disconnect.