Core Insights - Starbucks is facing long wait times at airport locations, which has drawn attention from the new CEO, Brian Niccol, who aims to improve customer experience and sales [4][8][11] - The surge in air travel, particularly during peak times like Thanksgiving, has exacerbated congestion at airport Starbucks, highlighting operational challenges [6][5][12] - Starbucks' licensed locations, which account for 12% of its revenue, face unique operational challenges, impacting profitability compared to company-owned stores [22][23][21] Group 1: Customer Experience and Operational Challenges - Customers have reported long wait times at airport Starbucks, with some experiencing waits of over 10 minutes, compared to shorter waits at non-airport locations [3][4] - The new CEO has set a goal to reduce service times to four minutes to enhance customer satisfaction and reduce long lines [9][4] - The implementation of mobile order and pay at airport locations has not fully resolved the chaos at counters, as many travelers may not have the app [10][11] Group 2: Air Travel Trends and Revenue Opportunities - A record 1.05 billion people boarded flights in the U.S. in 2023, indicating a strong recovery in air travel post-pandemic [7] - Concessions, including Starbucks, contribute about 4% of U.S. airport revenue annually, making them vital for passenger experience [12] - Airports are undergoing renovations and expansions, creating more opportunities for food and beverage brands, including Starbucks [15][14] Group 3: Licensing Model and Financial Implications - Starbucks operates about 60% of its U.S. locations, with the remaining 40% run by licensees, which limits its control over airport operations [21][20] - Licensed locations generated $4.51 billion in revenue for Starbucks in fiscal 2024, but the company earns less per dollar spent compared to company-owned stores [22][23] - The operational challenges at licensed locations can affect Starbucks' brand reputation, as customers may not distinguish between company-owned and licensed stores [24][20]

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

[Part I - Business and Risk Factors](index=7&type=section&id=Part%20I) [Business Overview](index=7&type=section&id=Item%201%20Business) Starbucks is the world's premier roaster, marketer, and retailer of specialty coffee, operating in 87 markets with a focus on global expansion and ethical sourcing [Human Capital Management](index=7&type=section&id=Human%20Capital%20Management) Starbucks employs approximately 361,000 people globally, prioritizing partner well-being through competitive compensation, comprehensive benefits, and an inclusive environment - As of September 29, 2024, Starbucks employed approximately **361,000 people worldwide**, with **211,000 in the U.S.** and **150,000 internationally**; approximately **5% of U.S. company-operated store partners are unionized**[25](index=25&type=chunk) - In the U.S., the workforce is **70.9% female** and **28.4% male**, with diverse partners comprising **51.9% of the retail team** and **37.9% of corporate roles**[20](index=20&type=chunk) - The company offers significant U.S. benefits, including comprehensive health insurance for partners working 20+ hours/week, 100% upfront tuition coverage, and a 401(k) plan with a 5% company match[21](index=21&type=chunk) [Segment Financial Information](index=10&type=section&id=Segment%20Financial%20Information) The company operates through three reportable segments: North America, International, and Channel Development, with company-operated stores generating the majority of revenue - The company's three reportable segments are North America, International, and Channel Development[28](index=28&type=chunk) - Company-operated stores generated **82% of total net revenues** in FY2024, while licensed stores accounted for **12%**[31](index=31&type=chunk)[37](index=37&type=chunk) - The Channel Development segment operates largely through a licensed model with the Global Coffee Alliance (Nestlé) and collaborative relationships with partners like PepsiCo[28](index=28&type=chunk) [Product Supply and Competition](index=13&type=section&id=Product%20Supply%20and%20Competition) Starbucks manages coffee purchasing and roasting to ensure quality, mitigating price volatility through contracts, and faces intense competition across various retail channels - The price of high-quality arabica coffee is volatile, subject to a premium above the 'C' commodity price, and influenced by supply, demand, weather, and political conditions in producing countries[41](index=41&type=chunk) - The company uses fixed-price and price-to-be-fixed purchase commitments, along with hedging instruments, to secure an adequate supply of green coffee through fiscal 2025[41](index=41&type=chunk) - Competition is faced from specialty coffee shops, large quick-service restaurants, and products sold through grocery, warehouse, and convenience channels[45](index=45&type=chunk) - Starbucks operates in 87 markets and its primary objective is to maintain its standing as a leading global brand through store expansion, innovation, and a focus on ethical sourcing[14](index=14&type=chunk) Global Store Count as of September 29, 2024 | Store Type | North America | International | Total Stores | % of Total | | :--- | :--- | :--- | :--- | :--- | | Company-operated | 11,161 | 9,857 | 21,018 | 52% | | Licensed | 7,263 | 11,918 | 19,181 | 48% | | **Total** | **18,424** | **21,775** | **40,199** | **100%** | Revenue by Segment (FY 2024) | Segment | % of Total Net Revenues | | :--- | :--- | | North America | 75% | | International | 20% | | Channel Development | 5% | Retail Sales Mix by Product (Company-Operated Stores) | Product Type | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Beverages | 74% | 74% | 74% | | Food | 23% | 22% | 22% | | Other | 3% | 4% | 4% | [Risk Factors](index=15&type=section&id=Item%201A%20Risk%20Factors) The company identifies numerous risks that could materially affect its business, including brand value erosion, strategic initiative failures, and dependence on the North America segment - Brand value is critical and can be eroded by negative consumer responses, boycotts, or publicity related to company actions, ethical perceptions, or labor practices[63](index=63&type=chunk) - The company is highly dependent on the financial performance of its North America operating segment, which accounted for approximately **75% of consolidated total net revenues** in fiscal 2024[78](index=78&type=chunk) - Increases in the cost or decreases in the availability of high-quality arabica coffee beans, dairy, and other commodities could adversely impact business operations and financial results[87](index=87&type=chunk) - Changes in labor availability and costs, including wages and benefits, as well as union organizing efforts, could adversely affect the business; unions represent partners at hundreds of U.S. company-operated stores[98](index=98&type=chunk) - Material failures, interruptions, or security breaches of information technology systems, which store customer data and are critical for operations like mobile ordering and payments, could harm the business[112](index=112&type=chunk) [Cybersecurity](index=32&type=section&id=Item%201C%20Cybersecurity) Starbucks maintains a comprehensive cybersecurity program overseen by the CISO and Board, with no material incidents identified to date - The cybersecurity program is led by the CISO and overseen by the Board's Audit and Compliance Committee, which receives quarterly updates[119](index=119&type=chunk) - The program includes processes for identifying and managing risks, an incident response plan, employee training, and management of third-party risk[116](index=116&type=chunk)[118](index=118&type=chunk) - As of the filing date, Starbucks has not identified any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[118](index=118&type=chunk) [Properties](index=34&type=section&id=Item%202%20Properties) As of September 29, 2024, Starbucks operated 21,018 company-operated stores, mostly leased, and owns most roasting facilities Major Owned and Leased Properties | Location | Approx. Size (Sq. Feet) | Purpose | | :--- | :--- | :--- | | York, PA | 1,957,000 | Roasting, warehousing and distribution | | Seattle, WA | 1,294,000 | Corporate administrative | | Minden, NV | 1,080,000 | Roasting, warehousing and distribution | | Kunshan, China | 630,000 | Roasting, warehousing and distribution | - As of September 29, 2024, Starbucks had **21,018 company-operated stores**, almost all of which are leased[121](index=121&type=chunk) [Part II - Market, Financials, and MD&A](index=35&type=section&id=Part%20II) [Shareholder and Market Information](index=35&type=section&id=Item%205%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Starbucks common stock trades on Nasdaq under 'SBUX', with approximately 17,000 shareholders, and underperformed major indices over the past five years - There was no share repurchase activity during the fiscal fourth quarter ended September 29, 2024[126](index=126&type=chunk) Stock Performance Comparison (Sept 2019 - Sept 2024) | Index | Value of $100 Invested on 9/29/2019 | | :--- | :--- | | Starbucks Corporation | $122.41 | | S&P 500 | $209.84 | | Nasdaq Composite | $236.74 | | S&P Consumer Discretionary | $177.00 | [Management's Discussion and Analysis (MD&A)](index=38&type=section&id=Item%207%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2024, Starbucks' consolidated net revenues grew 1% to $36.2 billion, but operating margin contracted to 15.0% due to reduced traffic and increased costs, prompting a "Back to Starbucks" strategy [Results of Operations (FY 2024 vs FY 2023)](index=40&type=section&id=Results%20of%20Operations) For fiscal 2024, consolidated net revenues increased 1% to $36.2 billion, driven by new store openings but offset by decreased comparable store sales and a 130 basis point operating margin contraction Consolidated Revenues (in millions) | Revenue Type | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | | Company-operated stores | $29,765.9 | $29,462.3 | 1.0% | | Licensed stores | $4,505.1 | $4,512.7 | (0.2)% | | Other | $1,905.2 | $2,000.6 | (4.8)% | | **Total net revenues** | **$36,176.2** | **$35,975.6** | **0.6%** | - The **130 basis point contraction in operating margin** was primarily driven by investments in store partner wages and benefits, deleverage, and increased promotional activity[140](index=140&type=chunk)[144](index=144&type=chunk) - The effective tax rate increased to **24.3% in FY2024** from **23.6% in FY2023**[146](index=146&type=chunk) [Segment Performance](index=43&type=section&id=Segment%20Performance) In FY2024, North America revenue grew 2% with margin contraction, International revenue declined 2% with significant margin contraction, and Channel Development revenue decreased 7% but saw margin expansion - **North America:** Revenue grew **2% to $5.4 billion**, but operating margin contracted **90 bps to 19.8%** due to wage investments and deleverage[149](index=149&type=chunk)[150](index=150&type=chunk) - **International:** Revenue declined **2% to $1.0 billion**, and operating margin contracted **220 bps to 14.2%**, driven by promotional activity and wage investments[153](index=153&type=chunk)[154](index=154&type=chunk) - **Channel Development:** Revenue decreased **7% to $926 million**, but operating margin expanded **120 bps to 52.3%**, despite lapping the gain from the sale of Seattle's Best Coffee[157](index=157&type=chunk)[158](index=158&type=chunk) [Financial Condition, Liquidity, and Capital Resources](index=46&type=section&id=Financial%20Condition%2C%20Liquidity%2C%20and%20Capital%20Resources) As of September 29, 2024, Starbucks held $3.8 billion in cash, maintained a $3.0 billion undrawn credit facility, and returned $3.8 billion to shareholders in FY2024 - Cash and investments totaled **$3.8 billion** at the end of FY2024[161](index=161&type=chunk) - The company has a **$3.0 billion unsecured revolving credit facility** and a **$3.0 billion commercial paper program**, both with no outstanding balances at year-end[162](index=162&type=chunk)[165](index=165&type=chunk) - In FY2024, **$3.8 billion was returned to shareholders**, consisting of **$2.6 billion in dividends** and **$1.3 billion in share repurchases**[140](index=140&type=chunk)[169](index=169&type=chunk) Material Cash Requirements (as of Sept 29, 2024, in millions) | Obligation Type | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $11,942.3 | $1,808.5 | $3,202.2 | $2,433.1 | $4,498.5 | | Debt principal payments | $15,700.0 | $1,250.0 | $3,000.0 | $2,350.0 | $9,100.0 | | Debt interest payments | $6,359.4 | $588.3 | $968.9 | $798.6 | $4,003.6 | | Purchase obligations | $1,296.0 | $1,010.0 | $245.9 | $40.1 | — | [Critical Accounting Estimates](index=50&type=section&id=Critical%20Accounting%20Estimates) Management identifies critical accounting estimates including income taxes, impairment of long-lived assets, and goodwill, with the China reporting unit's goodwill assessment noted as a critical audit matter - Key critical accounting estimates include income taxes, impairment of long-lived assets (property, plant, and equipment), and impairment of goodwill and indefinite-lived intangible assets[182](index=182&type=chunk) - Goodwill impairment testing requires management to make significant assumptions about future cash flows, revenue growth, operating expenses, and discount rates[187](index=187&type=chunk) - The goodwill impairment assessment for the China reporting unit was deemed a critical audit matter by the independent auditor due to the high degree of judgment required for its valuation assumptions[358](index=358&type=chunk)[360](index=360&type=chunk) - FY2024 financial results were pressured by reduced customer traffic, leading to a new 'Back to Starbucks' strategy under new CEO Brian Niccol to bring customers back and return to growth[134](index=134&type=chunk)[135](index=135&type=chunk) Key Financial Highlights (FY 2024 vs FY 2023) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Total Net Revenues | $36.2 billion | $36.0 billion | +1% | | Operating Income | $5.4 billion | $5.9 billion | -8.5% | | Operating Margin | 15.0% | 16.3% | -130 bps | | Diluted EPS | $3.31 | $3.58 | -7.5% | | Capital Expenditures | $2.8 billion | $2.3 billion | +21.7% | [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for fiscal years 2024, 2023, and 2022, including detailed notes on accounting policies and financial components [Notes to Consolidated Financial Statements](index=61&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies, including revenue recognition for stored value cards, debt and lease obligations, segment reporting by geography, and a subsequent acquisition in the U.K - Revenue from unredeemed stored value cards (breakage) totaled **$207.6 million in FY2024** (**$187.6 million in company-operated stores** and **$20.0 million in licensed stores**)[251](index=251&type=chunk) - As of September 29, 2024, total long-term debt principal was **$15.7 billion**, with **$1.25 billion due in fiscal 2025**[314](index=314&type=chunk)[317](index=317&type=chunk) - The total operating lease liability was **$10.2 billion**, with a weighted-average remaining lease term of **8.6 years** and a discount rate of **3.4%**[319](index=319&type=chunk) - In FY2024, the U.S. generated **$26.7 billion in revenue (74% of total)**, and China generated **$3.0 billion (8% of total)**[349](index=349&type=chunk) - Subsequent to year-end, on October 14, 2024, Starbucks acquired 23.5 Degrees, a U.K. licensed partner, converting **113 licensed stores to company-operated**[354](index=354&type=chunk) Consolidated Statement of Earnings Highlights (in millions) | Metric | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Total Net Revenues | $36,176.2 | $35,975.6 | $32,250.3 | | Operating Income | $5,408.8 | $5,870.8 | $4,617.8 | | Net Earnings Attributable to Starbucks | $3,760.9 | $4,124.5 | $3,281.6 | | Diluted EPS | $3.31 | $3.58 | $2.83 | Consolidated Balance Sheet Highlights (in millions) | Metric | Sep 29, 2024 | Oct 1, 2023 | | :--- | :--- | :--- | | Total Current Assets | $6,847.4 | $7,303.4 | | Total Assets | $31,339.3 | $29,445.5 | | Total Current Liabilities | $9,070.0 | $9,345.3 | | Long-term Debt | $14,319.5 | $13,547.6 | | Total Liabilities | $38,780.9 | $37,433.3 | | Total Deficit | $(7,441.6) | $(7,987.8) | [Controls and Procedures](index=96&type=section&id=Item%209A%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of September 29, 2024, with an unqualified auditor opinion - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 29, 2024[363](index=363&type=chunk) - Management concluded that internal control over financial reporting was effective as of September 29, 2024[364](index=364&type=chunk) - The independent auditor, Deloitte & Touche LLP, provided an unqualified opinion on the company's internal control over financial reporting[366](index=366&type=chunk) [Part III - Corporate Governance and Executive Compensation](index=99&type=section&id=Part%20III) [Directors, Officers, Compensation, and Accountant Services](index=99&type=section&id=Items%2010-14) Information for Items 10 through 14, covering corporate governance, executive compensation, and related matters, is incorporated by reference from the forthcoming Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, and principal accountant fees is incorporated by reference from the forthcoming Proxy Statement[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk) [Part IV - Exhibits and Financial Statement Schedules](index=100&type=section&id=Part%20IV) [Exhibits and Financial Statement Schedules](index=100&type=section&id=Item%2015%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed as part of the Form 10-K, with financial statements included in Item 8 and schedules omitted if not applicable - This section contains the list of all financial statements and exhibits filed with the 10-K[380](index=380&type=chunk)

Starbucks now offers access to delivery powered by DoorDash through its own app.As of Monday (Nov. 11), customers across the United States and Canada (excluding Quebec) can order delivery through the Starbucks app, the company said in a Tuesday (Nov. 12) press release.Starbucks customers can also continue to order delivery through the DoorDash app, as those in a growing number of locations have been able to do since the rollout of that capability began with a pilot program in select markets in 2022, accordi ...

This industry-leading company has been struggling in recent years.Starbucks (SBUX 1.01%) dominates the retail coffee industry, with its massive store base and global presence. Since its initial public offering in 1992, the business has usually been a wildly successful investment. But this hasn't been the case recently, with shares generating a negative 8% total return in the past three years. Adding Starbucks to your portfolio might be something you're considering. Here are three facts about this top restau ...

Shares of Starbucks Corp (NASDAQ:SBUX) are 1.1% lower this morning, following a downgrade to "sell" from "neutral." Specifically, Redburn Atlantic downgraded shares of the coffeehouse chain and lowered its price target from $84 to $77, citing the consensus outlook for the company that does not "adequately reflect" the associated costs. The Wall Street analyst pointed towards Starbucks' recently suspended outlook and the fact that same-store sales, net revenue, and income all declined in the fourth quarter. ...

Core Insights - Starbucks is facing challenges with slumping sales and decreased customer traffic, prompting new CEO Brian Niccol to implement a back-to-basics strategy [2][5] - Former CEO Howard Schultz expressed confidence in Niccol's ability to revitalize the company, while stating he will not return to the CEO role [3][6] Company Strategy - Niccol's strategy aims to restore Starbucks' core identity and enhance customer experience, including the reintroduction of the condiment bar and personalized service with hand-written names on cups [5][6] - The company's Q4 earnings call revealed a 3% decline in revenue compared to the previous year, indicating ongoing struggles to attract customers [5] Leadership Transition - Brian Niccol took over as CEO in September, succeeding Howard Schultz, who has been pivotal in Starbucks' growth from 11 stores to 35,000 locations globally [4] - Schultz, who has served multiple terms as CEO, has stated he will not return to the position, allowing Niccol to lead the company forward [6]

Core Viewpoint - Starbucks is facing challenges in regaining investor confidence after a disappointing fiscal year, despite a brief stock surge following the appointment of Brian Niccol as CEO [1][2][9]. Group 1: Leadership Change and Stock Performance - The announcement of Brian Niccol as the new CEO led to a 24.5% increase in Starbucks' stock price in a single trading session [1]. - However, the stock has remained relatively stagnant over the past few months, with the current price similar to that of four years ago [2]. Group 2: Recent Financial Performance - Starbucks reported weak fourth-quarter fiscal 2024 earnings, including a 2% global sales decline, a 4% decline in comparable transactions, and a 6% decline in non-GAAP earnings per share [11][12]. - Despite strong sales growth, margins have decreased, and earnings have not improved significantly since before the pandemic [11]. Group 3: Strategic Changes Under New Leadership - Niccol's strategies include better staffing to reduce turnover, ensuring adequate staff during peak hours, and adjusting mobile ordering to avoid overwhelming employees [7]. - The company plans to reintroduce condiment coffee bars, simplify the menu, invest in equipment for in-store experience, eliminate non-dairy milk upcharges, and pause price increases through at least fiscal 2025 [7][12]. - Niccol emphasizes the importance of restoring the "third place" concept, aiming to enhance the cafe experience with personal touches and comfortable seating [8]. Group 4: Investment Outlook - While Starbucks is not currently a "screaming buy," it presents a decent investment opportunity with a P/E ratio of 29.3 and a solid dividend yield of 2.5% [14]. - The company has raised its dividend for the 14th consecutive year, indicating a commitment to returning value to shareholders [14]. - Future growth potential is being highlighted, making Starbucks an exciting investment opportunity for those confident in the new strategies [15].

Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on Starbucks (SBUX), and highlights the disparity between brokerage recommendations and actual stock performance [1][3]. Summary by Sections Brokerage Recommendations - Starbucks has an average brokerage recommendation (ABR) of 1.98, indicating a consensus between Strong Buy and Buy, based on 30 brokerage firms' recommendations [2]. - Out of the 30 recommendations, 16 are Strong Buy and 1 is Buy, which accounts for 53.3% and 3.3% of all recommendations respectively [2]. Reliability of Recommendations - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies show brokerage recommendations often fail to guide investors effectively [3]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, with five "Strong Buy" recommendations for every "Strong Sell" [4]. Alignment of Interests - The interests of brokerage firms may not align with those of retail investors, leading to a lack of insight into future stock price movements [5]. - It is suggested that investors should use brokerage recommendations to validate their own analyses or utilize more reliable tools like the Zacks Rank [5][6]. Zacks Rank vs. ABR - Zacks Rank is a proprietary stock rating tool that categorizes stocks from Strong Buy to Strong Sell based on earnings estimate revisions, which is a different measure from ABR [7]. - The Zacks Rank is based on quantitative models and is more timely in reflecting changes in earnings estimates compared to the potentially outdated ABR [10]. Current Earnings Estimates for Starbucks - The Zacks Consensus Estimate for Starbucks has declined by 18.7% over the past month to $3.15, indicating growing pessimism among analysts regarding the company's earnings prospects [11]. - This decline in consensus estimates has resulted in a Zacks Rank of 5 (Strong Sell) for Starbucks, suggesting caution despite the Buy-equivalent ABR [12].

Core Insights - Starbucks' mobile app experienced outages on the first day of its holiday menu launch, preventing customers from placing orders [2][4][5] - The app has been a significant growth driver for Starbucks, but it has also created operational challenges for employees due to the volume of mobile orders [3][5][6] - The company acknowledged the outage and stated that it was a temporary issue affecting the order ahead and pay feature, while still serving customers in stores and drive-thrus [4][5] Group 1 - The outage occurred during a peak time for coffee orders, with reports of issues starting around 8 a.m. ET [3] - Customers reported being directed to place orders in-store instead of through the app [3][4] - The holiday menu includes new offerings such as a gingerbread-flavored chai and themed merchandise [4] Group 2 - Starbucks has seen a growth in mobile orders over recent years, but employees have expressed feeling overwhelmed by the volume, especially with customized drinks [5] - The new CEO, Brian Niccol, mentioned plans to implement "guardrails" on mobile orders to simplify the process for baristas [6]