Starbucks(US:SBUX)2025-01-29 01:51Financial Data and Key Metrics Changes - The total company revenue for Q1 2025 was $9.4 billion, flat compared to the prior year, reflecting a 7% net new company-operated store growth offset by a 4% decline in comparable store sales [34][9] - The global operating margin was 11.9%, contracting 380 basis points from the prior year, primarily due to deleverage and investments in support of the "Back to Starbucks" strategy [37][34] - Earnings per share (EPS) for Q1 was $0.69, down 22% from the prior year, reflecting the impact of deleverage and heightened investments [45][49] Business Line Data and Key Metrics Changes - The US comparable store sales declined by 4%, but there was sequential improvement throughout the quarter, particularly in the morning daypart [34][34] - Ticket growth in the US remained strong at 4%, benefiting from prior year pricing and fewer discounts [35][34] - The company opened 377 net new stores globally in Q1, with nearly 90% of revenue incrementality coming from new company-operated stores in the US [36][34] Market Data and Key Metrics Changes - Non-Starbucks Rewards customer traffic grew quarter-over-quarter, indicating a positive response to the strategic shift in marketing [15][34] - Starbucks' category share among quick-service restaurants (QSRs) recovered in Q1 after two quarters of decline [16][34] Company Strategy and Development Direction - The company is focused on a "Back to Starbucks" strategy, which includes reintroducing the brand, enhancing customer experience, and establishing Starbucks as a community coffeehouse [11][8] - The company plans to simplify its menu, aiming for a 30% reduction in both beverage and food SKUs by the end of fiscal year 2025 [14][12] - Investments are being made in labor, marketing, technology, and store renovations to stabilize the business and position for future growth [10][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's resilience and potential for future growth, despite acknowledging that there is room for improvement in current results [17][9] - The management highlighted the importance of delivering a high-quality customer experience and the need for operational improvements to achieve a four-minute wait time in stores [18][20] - The company is optimistic about the early progress of its "Back to Starbucks" strategy, which has already shown signs of gradual top-line improvement [33][49] Other Important Information - The company plans to fully deploy digital menu boards in cafes across US company-owned stores over the next 18 months to enhance customer understanding of offerings [21][20] - The management is committed to ensuring Starbucks is the best job in retail, with significant investments in partner benefits and career growth opportunities [26][27] Q&A Session Summary Question: Sales improvement through the quarter - Management noted sequential improvement in comparable store sales, driven by a shift from discounting to broader marketing efforts that highlight the quality of Starbucks' coffee [54][55] Question: Marketing plans and advertising spend - The company is reallocating funds from discounting to brand experience marketing, with an increase in marketing as a percentage of revenue expected [58][62] Question: Operational improvements and store efficiency - Management indicated that many stores are already performing well, and the focus is on eliminating bottlenecks caused by mobile ordering systems [66][67] Question: Productivity opportunities - The company continues to see opportunities for efficiencies, particularly in COGS and supply chain, but is still evaluating the potential for a $4 billion productivity opportunity [72][74] Question: Partner experience and customer experience - Management emphasized the interconnectedness of partner and customer experiences, with ongoing efforts to improve both through staffing and operational changes [85][86] Question: Menu offerings and transaction speed - The company is reducing its menu by approximately 30% to improve speed and efficiency, particularly during peak hours [100][99] Question: Store growth potential - Management expressed confidence in the potential to double the store count in the US, particularly in high-growth areas like Texas and the Southeast [90][94]