Bloomberg Audio Studios, Podcasts, radio News. All Right, Brian, congratulations on the recent quarter. Obviously, investors I had been looking for some sort of sense that there would be a return to growth under your leadership in the thirteen months that you've been on the job one percent on the
same store sales basis. Do you have confidence that the performance that you saw in your physical fourth quarter is not only going to be repeatable, but more importantly something that you can build on for the current quarter and beyond.
Yeah, Rollian, great to be here, and absolutely we believe this was a critical moment in our turnaround plan of the back to Starbucks strategy.
You know, it was great to see.
Once we got the green Apron service standard into the business, we saw a lot of really good things happen, you know, most specifically, our partners were set up with bigger rosters, more hours, and they were able to give customers better connection, great craft products, which then translated into transaction increases.
As you saw in September.
We have positive comps driven by those transaction gains that continued into October, and we believe we can build from here because we've got a strong operational footing and really excited about what we've got coming for holiday.
So we think it was a.
Critical moment in the fourth quarter for the turnaround of the US business. And when you think about North America, the thing that's great is Canada had a great quarter as well.
They were low mid single digit.
COMP growth driven by transactions as well, and they've done a really great job there. And then when you look around the world, we had terrific successes in many markets, and most notably China had its second consecutive quarter of comp growth. So it was a critical moment for us, and we're optimistic about where we go from here.
You've put a lot of emphasis on service. Obviously with the Green Apron project. What does that look like in terms of US staffing though, I mean, you obviously have to hire more people, but more importantly, you have to retrain a lot of your existing staff as well. I guess receptive have they been to that and have you faced any challenges?
You know, I got to give our partners a lot of credit.
They really have embraced both the back to Starbucks strategy and the Green Apron service standard. And when I'm in stores, you know, what I hear from folks is.
Like thank you.
We're getting back to being a great coffeehouse again. Our baristas and partners, they love doing the craft. They love having the moments of connection with our customers, and our customers love it as well. And so the fact that we've staffed the stores up and we've added more people, we've added more hours, it actually has set them up to be able to do their job I think with excellence. And you know, it's always terrific to be able to
hire more people. And when you've got great leaders in the stores, they're able to train the new people, I think, really quickly. And we've tried to keep this very focused on what we're looking for, right. We want a great greeting when people walk in. We want a great experience at the handoff. We're working on doing these uplifts so then our customers have great seats if they just I
had to stay. And we've put some technology in behind the scenes to help put order to all those orders coming in, whether it's through the drive through, mobile order or in the cafe. So you know, we're seeing great responses from our partners, and I couldn't be prouder of the progress they've made.
In really short order. You know, we've only been doing this since the middle of August.
Yeah, And with regards to the actual physical Starbucks locations, I mean, there are a lot of layers to what you're doing here. Of one, obviously trying to make the interior is a little bit more accommodating and comfortable, but at the same time also efficient. You're also looking to sort of create more I guess lower cost models for building and operating some of these locations. Are those two in conflict with each other those strategies.
No, Actually, they can work really well together.
You can have great design, you can have a great seat, you can have a great atmosphere, and then also be very cost conscious. And that's what we're doing here, is we want to make sure all our base costs go into giving the partner the back of house they need to be successful, and then the customer the front of house experience where they love being in our coffee houses. And so that's what we're doing these coffee house uplifts. We're able to turn these around in a night or two.
We don't have to close the store, and the transformation is meaningful. You know, the feedback we're getting from customers is really, really positive, both on the design as well as just the whole atmosphere, the vibe that they're getting. And I think the combination of the green Apron service with this coffee house uplift just really gets people to a different place and they believe now they're getting that Starbucks experience that frankly, you don't get anywhere else.
How much will the pace of those uplifts pick up? I mean you've only done a few dozen stores at least in the most recent quarter here. I mean you've got more than ten thousand company operated locations right here in North America. So when do we start to see the other thousands of locations, I'll get that uplift.
Yeah.
So we've done about seventy so far, and we are focused on this fiscal year getting over a thousand done. And the good news is, once we get that scale operation going, we build know how, we will be able to then hopefully accelerate the build schedule accordingly into the out years because we would love to touch all the stores that need it. And then the good news is too, as we build new stores going forward, we're building the new stores.
With the right design package, the right experience.
So we have some work to do with our existing coffee houses, but I'm optimistic we will demonstrate that we're able to do this at scale, and then we'll build on our ability to do thousands of stores going forward.
There is still cost involved in this. You had a restructuring charge in the most recent quarter. The sales growth is coming back, there are still some concerns about where the margins could be under pressure as you go through this transition. What do you tell investors who asked that question.
Yeah, Look, I think the margins will follow the top line success, and I see no reason why we can't get back to earning what we used to earn.
Even pre COVID.
So I'm very optimistic for where we can get to on the bottom line. You know, kind of the way we've talked about it is our future is we're going to have more transactions, a bigger business, and every transaction is going to be more profitable than it currently is today. I love the fact that our culture has really adopted this mantra of we're going to be better tomorrow than we were today, and the same thing is true on
the bottom line. So that's where we're headed, and I'm confident as we continue to put transactions into the business. Customers continue to experience the Starbucks experience, they see the tremendous value, it will flow to.
The bottom line, and it'll reward everybody.
Accordingly, you seem confident, you seem optimistic. I am curious as to why you didn't feel it was appropriate yesterday with regards to the earnings releasing the call to reinstate some sort of guidance. I know your CFO Kathy Smith said you would probably do that in January at an investor day, but why not now?
You know, we basically believe we want to do it at the investor day so that we can give people a comprehensive look of where we're going, not just for the fiscal year twenty SI, but rather a long term look on how we're resetting this business up for success. I believe the reason why I'm here, why our leadership team is here, is not about what happens next week or frankly next month. It is about where we are
three years from now. So I'm optimistical about what's going to happen in the short term, but we want to use this investor day to really give people guidance on where we see this business growing in the future. So we'll see everybody in late January, and I think we've got a great story to share with people, and I look forward to seeing people there.
I want to talk about the coffee and the food. Obviously, one of the biggest buzz right now around Starbucks is to add on foam protein.
I am curious.
I mean, obviously it's in the zeitdece but is there any way you can articulate whether it's actually been a cretive with regards to sales and the bottom line. I mean, what do transactions look like for those protein drinks.
Yeah, so we're early days in the protein platform, but it's proving to be very incremental, which is terrific to see. One of the best early indicators is our rewards. Customers that had some low frequency, we're seeing their frequency pick up.
We're also seeing our awareness build. And as the awareness builds and we see people try whether it's a protein cold foam or the protein latte execution, we see them actually loving it and coming back and doing it more often, and in some cases even doing it in the afternoon, so they may get a different experience in the morning and then they come in the afternoon and get the protein latte solutions. So we're looking really promising on this
protein platform. Obviously we'll learn a lot, we'll listen to what customers say. But I love the fact that over ninety percent of the drinks now you can get protein added, and it's very much on trend with how people want to eat and drink, and so look, I think this is a piece of Starbucks getting into the right health and wellness frame of reference and then also giving customers the personalization that they want around protein.
I am curious about price, particularly in light of some upstart competitors that have come into this space like Dutch Bros. As well as Seven Brew, Lucking Coffee, and a few others here. Do you feel like you need to compete with those names on price or can you sort of maintain this sort of a relative premium or luxury model that I think Starbucks has had a perception of being.
Yeah, Look, we're always going to compete, okay, And one of the things that I love is we're competing from a position of strength, and that strength comes from the fact that one thing I like to remind people is we are the biggest coffee drive through business. We are the biggest mobile order or digital coffee business. Now I think we're also the biggest delivery coffee business, and then
obviously we are the biggest cafe coffee business. And when we provide people the experience, meaning the connection, the community aspect, the humanity of Starbucks combined with the craft of our coffee and the personalization, we see customers saying this is tremendous value and it is well worth it. And so I always say to our team, we have to be on the offense. We have to recognize the scale that we have, and then we have to do the customer
experience better than anybody else. And we are, after being the world's greatest customer service company, and I think that's a place of strength when you compare a lot of the other competitors that you mentioned before I let you.
Go, Brian, I do want to ask you a little bit more about international strategy, particularly with regards to China. Starbucks is at a footprint there since at least the late nineteen nineties. Bloomberg reported this week that you are close to finalizing the deal for a partnership with a private equity firm that would allow you to expand your footprint in China even further. How much further do you want to go with that and how far along are you in sealing that partnership.
Yeah.
Look, I'm really excited for our China business. You know, they've had two consecutive quarters of comp growth. The team, I think is really doing a great job of listening to customers, reacting and building on the strength of the Starbucks brand as it relates to finding a partner for our China business. This process I think is really I think validated what I knew, which is China is a
tremendous growth opportunity. And the process is also demonstrated to us that the partners that we were fortunate that came to the table are excited about getting this brand to go from eight thousand stores to fifteen twenty thousand stores, and their expertise is.
In the local China market.
I think it's going to help our team get into those Tier three, four or five cities faster and with the right execution so that we are able to build on this positive momentum that we have. So I'm looking forward to wrapping up the process and I'm looking forward to our China team being one hundred percent focused on just growing that business into the future in a big way.
You think wrapping up that process will happen before the investor day in January.
You know, you never know on the timing on these things, but you know, I love the partners that we're working with, and I'm optimistic that we're going to get this deal done in the not too distant future.