Core Viewpoint - Starbucks is undergoing a significant turnaround under CEO Brian Niccol's "Back to Starbucks" plan, aiming to regain customer loyalty and improve financial performance, although challenges remain ahead [1]. Financial Performance - For the second quarter of 2025, Starbucks reported revenue of $8.8 billion, a 2.3% increase year-over-year, but this figure fell short of Wall Street expectations [2]. - The company experienced a same-store sales decline of 1%, marking the fifth consecutive year-over-year drop, with a 4% decrease in U.S. transactions, while China saw a 4% increase in transactions but was offset by a 4% decline in average ticket size [3]. - Earnings per share fell by 50% in Q2, primarily due to increased labor costs, as the company focuses on investing in its workforce to enhance customer experience [4][5]. Strategic Initiatives - Starbucks is investing in its workforce, which is considered its most valuable asset, to improve customer experience, although there are concerns about the sustainability of higher labor costs and the potential impact on operating margins [5]. - The company is leveraging its strong brand presence and competitive advantage to navigate financial challenges, with a new marketing campaign in the U.S. showing positive consumer resonance [6][7]. - Positive operational trends include a new sequencing algorithm that allows 75% of orders to be served in under four minutes, and a 40% year-over-year sales increase for matcha beverages after customer feedback led to the removal of sugar from the powder [8]. Investor Sentiment - While management remains optimistic about Starbucks' future, it is advised that investors exercise patience and wait for tangible financial improvements, particularly in same-store sales and operating margins, before considering investment [9][10]. - The current price-to-earnings ratio stands at 25.8, which is viewed as a high valuation for a company undergoing a challenging turnaround [11].

Core Insights - Starbucks is focusing on hiring more baristas and increasing their working hours to improve customer service and sales growth, as stated by CEO Brian Niccol [1][2][3] - The company plans to implement the Green Apron Service model in about one-third of its US locations by the end of the 2025 fiscal year [2] - Starbucks' shares fell nearly 7% after announcing its investment in employee hours, which marks a shift from previous staffing strategies that led to understaffing [3][4] Staffing Strategy - The new approach represents a departure from the past few years where Starbucks reduced labor hours and relied on new equipment to maintain service levels [3][4] - Niccol acknowledged that the assumption that equipment could replace labor was inaccurate, leading to the decision to increase labor hours [5] Operational Changes - A pilot program at 700 stores demonstrated that adding labor hours improved service for both mobile orders and walk-in customers [5] - Starbucks is also utilizing a new order sequencing algorithm in 400 stores, which has reduced customer wait times and allowed employees more time to engage with customers [6][7] Customer Experience - The changes aim to create a more comfortable environment for customers, enhancing the connection between baristas and patrons [6][7] - Additional initiatives under Niccol's leadership include requiring purchases for in-store seating and encouraging baristas to personalize to-go cups [7]

Core Viewpoint - Hertz Global Holdings has experienced significant volatility, including a bankruptcy due to the COVID-19 pandemic, followed by a turnaround plan that has not gained traction [1] - Investor Bill Ackman has made a substantial investment in Hertz, believing in its potential for a brighter future [1][2] Investment Details - Pershing Square disclosed the purchase of 12.7 million shares of Hertz, leading to a significant increase in Hertz's stock price [2] - Ackman sees potential in Hertz's rental car business amid tariff uncertainties, particularly due to its fleet of over 500,000 vehicles valued at approximately $12 billion [5][6] Asset Valuation - A 10% increase in used car prices could result in a $1.2 billion gain for Hertz's automotive assets, which is significant compared to its current market capitalization of $2.7 billion [6] - Ackman believes that the market undervalues Hertz's assets, although the recent stock price increase may have corrected this perception [6][10] Operational Improvements - For Hertz to realize its potential, it must achieve specific operational metrics, including revenue per unit of $1,500, daily per-vehicle operating expenses below $45, and depreciation per unit of roughly $300 [8] - The company also needs to improve fleet utilization to 85%, up from a historical average of 80% [8] Future Outlook - Ackman predicts that Hertz could reach $30 per share by 2029, with the stock currently trading below $9, indicating significant upside potential [7] - The company must rotate its fleet away from electric vehicles and reduce operating costs to improve unit revenue and margins over time [9]