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DATE
Tuesday, July 29, 2025 at 8:15 p.m. ET
CALL PARTICIPANTS
Chairman and Chief Executive Officer — Brian Niccol
Executive Vice President and Chief Financial Officer — Cathy Smith
RISKS
Operating Margin: Cathy Smith reported, "our fiscal third quarter consolidated operating margin was 10.1%, contracting six fifty basis points from the prior year," directly reflecting deleverage and increased investment costs.
EPS Decline: Cathy Smith stated, "fiscal third quarter EPS was 50¢, down 45% from the prior year, primarily reflecting the impact of expense deleverage and our back to Starbucks investments."
Negative Comparable Sales: Global comparable store sales declined 2% in the fiscal third quarter ended June 29, 2025 (non-GAAP), with U.S. comparable sales down 2% and U.S. transaction comps down less than 4%.
G&A Expense Rise: Cathy Smith cited, "In the fiscal third quarter, G and A increased by 18% versus the prior year, driven by our investment in Leadership Experience 2025."
TAKEAWAYS
Total Company Net Revenue: $9.5 billion (non-GAAP) for the fiscal third quarter ended June 29, 2025, reflecting 3% growth (non-GAAP), with 6% net new company-operated store growth over the past twelve months as of the fiscal third quarter and partially offset by a 2% global comparable store sales decline.
EPS: $0.50, a 45% decrease from the prior year for the fiscal third quarter, attributed to expense deleverage and investments tied to the "Back to Starbucks" strategy.
Operating Margin: 10.1%, representing a contraction of 650 basis points from the prior year, for the fiscal third quarter (non-GAAP) due to increased labor and leadership expenses.
International Revenue: Exceeded $2 billion in quarterly revenue for the first time in the fiscal third quarter (non-GAAP, constant currency), driven by growth in China, the UK, Mexico, and improved EMEA performance.
China Comparable Sales: China comparable store sales grew 2% in the fiscal third quarter, led by product innovation and pricing strategies.
Canada Performance: Achieved positive comparable sales for the second consecutive quarter in Canada for the fiscal third quarter (non-GAAP, constant currency), led by product innovation, particularly in food.
Mobile App and Digital: Nearly 34 million ninety-day active Rewards members for the fiscal third quarter, with growth in non-discounted transactions among this base.
Green Apron Service Model: Rollout across all U.S. company-operated coffee houses set for mid-August 2025; Early pilots of the Green Apron service model showed improved transactions, sales, and service times in company-operated stores over an eight-week test period.
Partner Engagement: Retail partner engagement scores, coffeehouse leader engagement, and shift completion have all increased in the fiscal third quarter, while hourly partner turnover reached 49.1%, and shift completion hit a record 98.2%.
Customer Metrics: Customer connection scores improved quarter over quarter and year over year in the fiscal third quarter, and customer complaints fell both quarter over quarter and year over year; value perceptions among Gen Z and millennials are near two-year highs as of the fiscal third quarter.
Menu Innovation Pipeline: New protein cold foam to launch in late fourth quarter 2025, with a reimagined artisanal bake case and a 1971 dark roast coffee to launch in early calendar year 2026; additional beverage and food innovation tests underway.
Store Portfolio Strategy: Targeting at least 1,000 coffeehouse uplifts in North America by calendar year 2026 with a target investment of approximately $150,000 per store for the coffeehouse uplift program and minimal downtime, alongside prototype plans for lower-cost new formats.
Delivery Business: Delivered over 25% transaction growth year over year in the delivery business, providing incremental business.
Channel Development: Fiscal third quarter channel development segment revenues grew 10% year over year, supported by higher revenue in the Global Coffee Alliance and continued market leadership in at-home and ready-to-drink coffee.
Labor Investment: Over $500 million in additional labor hours to be deployed into the U.S. company-operated portfolio over the next year, starting with Green Apron service.
SUMMARY
Management highlighted rapid progress on structural and operational transformation, with the Green Apron service model described asStarbucks(SBUX 3.36%)'s "biggest investment ever in operating standards and customer service," with the goal of full U.S. rollout of Green Apron service by mid-August. Strategic priorities now focus on rightsizing store builds and renovations, launching a major menu and loyalty innovation cycle in fiscal 2026, and optimizing cost structure across the P&L to support heavy investments. Investor Day is scheduled for early 2026, where leadership plans to detail short- and long-term earnings potential, referencing fiscal 2019 as a profitability guidepost without setting formal targets. International segment momentum was emphasized, highlighting China’s return to positive total comparable sales in the fiscal third quarter and active pursuit of a local strategic partner. Management expressed continued conservatism regarding the immediate U.S. comparable sales trend for the fourth quarter given macro uncertainty, while reinforcing early sequential improvement in transaction metrics.
Brian Niccol stated, "We slowed new builds and major renovations to prioritize a new coffee house uplift program," clarifying capital deployment shift.
Cathy Smith highlighted, "We have reduced the percentage of discounted transactions by a third," indicating a recalibrated approach to pricing and promotion.
Niccol reported the sunset of the U.S. mobile order and pickup only concept in fiscal 2026, citing it was "overly transactional, and lacking the warmth and human connection."
Management is prioritizing the rollout of SmartQ technology, described as an advanced order sequencing algorithm, resulting in a "double-digit improvement in cafe orders handed off in under four minutes," according to Niccol.
Niccol noted, "We've received significant interest from more than 20 interested parties and we're evaluating options."
The new GROW report launching in first quarter fiscal 2026 will enable sharper store-level performance management, with a focus on five key drivers of same-store sales growth.
Leadership confirmed intent to maintain investment-grade credit ratings as stated during the fiscal third quarter and return cash to shareholders via dividends, while remaining "conservative on how the current year over year trends will change in [the fourth quarter] for The U.S. Company-operated business," per Smith.
INDUSTRY GLOSSARY
Green Apron Service: Starbucks' foundational operating model investment rolling out across all U.S. company-operated coffee houses; establishes repeatable, consistent, scalable service standards focused on customer experience.
SmartQ Technology: Starbucks’ proprietary advanced order sequencing algorithm aimed at improving service speed and order accuracy.
GROW Report: A new Starbucks internal tool launching in first quarter fiscal 2026 to help coffeehouse leaders focus on the five key drivers of same-store sales growth and improve outlier performance.
Starting Five Approach: Starbucks' method for innovation development, engaging operational teams and baristas at the outset to ensure process consistency and operational feasibility.
Full Conference Call Transcript
Brian Niccol, chairman and chief executive officer, and Cathy Smith, executive vice president and chief financial officer. This conference call will include forward-looking statements which are subject to various risks and uncertainties that could cause actual results to differ from these statements. 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. Starbucks Corporation assumes no obligation to update any of these forward-looking statements or information. GAAP results in the third quarter fiscal year 2025 include restructuring charges that are excluded from our non-GAAP results.
Revenue, operating margin, and EPS growth metrics on today's call are also measured in constant currency and represent non-GAAP measures. Please refer to the earnings release and our website at investorstarbucks.com to find reconciliations of these non-GAAP measures to the corresponding GAAP measures. This conference call is being webcast and an archive of the webcast will be available on our website through Friday, 09/12/2025. Also, for your calendar planning purposes, turn the call over to Brian. Good afternoon, and thank you for joining today.
Brian Niccol: It's clear back to Starbucks is the right plan. It is grounded in feedback from our customers and partners, and it's rooted in what has always set us apart, a welcoming coffee house where people gather, where we serve the finest coffee, handcrafted by our skilled baristas. This quarter, we've made meaningful progress and we are ahead of our expectations. We're moving quickly to transform both the business and our culture. We're testing, learning, and focusing on the work that has the biggest impact. We're fixing the operational foundations of the business, building a platform for innovation in 2026. Some of the changes are already visible while others will be seen in the months ahead.
There's still much to do, I'm excited by what I see. I'm confident that we're not just getting back to Starbucks. We are building a better Starbucks where everyone can experience the best of Starbucks. One that is stronger, more resilient, and consistently growing. A Starbucks that is once again the gold standard in customer service, partner experience, the coffeehouse experience. Let me start by sharing the results then talk about the progress we are making. For the quarter, total company net revenue was $9.5 billion with a global comparable store sales decline of 2%. A global operating margin of 10.1%, global net new store growth of 4%, and earnings per share of $0.50.
In North America, Canada led the way with its second consecutive quarter of positive comparable sales. While in The U.S., comparable sales declined 2%. We are clearly in the early stages of our turnaround in The U.S., but our work is gaining momentum. In our international business, we achieved record-breaking quarterly revenue. It is worth noting that China delivered two points of comparable sales growth and six points of transaction growth. Through Q3. Our EPS in the quarter reflects the strategic investments we're making in our Back to Starbucks strategy. Like leadership experience 02/2025, which we believe will power our future growth.
While our financial results for the quarter don't yet reflect all the progress we've made, I see meaningful signs from across our U.S. Business that we're on the right path. Here are a few examples. We've energized our partners, and they see and feel the difference. Retail partner engagement scores are up, and coffee house leader engagement is nearing historic highs. Hourly partner turnover is 49.1%, and shift completion is at a record 98.2%. Customers are liking our marketing and noticing that our speed, hospitality, and accuracy are improving. Customer connection scores are up and customer complaints are down. Both quarter over quarter and year over year.
Customer value perceptions are near two-year highs, driven by gains among Gen Z and millennials. Who make up over half our customer base. Saw the percentage of company-operated coffee houses with positive full-day transaction comps and positive morning transactions improve for the third straight quarter. Non-rewards customers delivered transaction growth year over year for the first time since the post-pandemic recovery. Our college and university license business saw year over year comparable sales growth in the low double digits, showing renewed brand love from younger customers. We have huge strengths that differentiate us and form the foundation of our turnaround. We have three strong businesses, in cafe, drive-thru and digital that are each substantial on their own.
And we're rapidly growing a fourth, with a delivery business that delivered year over year transaction growth of more than 25% and looks to be highly incremental. Average peak drive-thru times are under our service time goal, at three minutes and twenty seconds across our more than 7,600 drive-thru coffee houses. Our mobile app is highly rated, and our reputation as a digital leader is a huge strength. We saw non-discounted transactions grow among our nearly thirty-four million ninety-day active members, in our rewards program. And we have one of the largest social communities in the industry with over 65 million. These strengths and signs of progress are why I remain confident in our ability to win.
Have a lot of work underway, today I want to focus on three critical areas, operational changes in our coffee houses, transforming our coffee house portfolio, and then how we plan to build on foundational changes with a wave of innovation in 02/1926. Let me start with the operational changes. We've already taken several steps to improve the customer and partner experience. Including bringing back condiment bars, eliminating the upcharge for nondairy milks, implementing a new coffee house code of conduct, and rolling out coffee house walk certifications. In June, we brought together 14,000 coffeehouse leaders from across North America for leadership experience 2025. We focused on coffee, craft, connection, opportunity, and sharpened our commitment to customer service excellence.
The momentum from the event continues to inspire our coffeehouse leaders as they drive our transformation. The most significant change will come as we begin fully scaling Green Apron's service across all U.S. Company-operated coffee houses in mid-August. Green Apron service is a new foundational operating model that establishes repeatable consistent, and scalable standards. It is Starbucks' biggest investment ever in operating standards and customer service. Green Apron service starts with the five key moments, including crafting connection, that define the experience we want every customer to have. Every time they visit. It is enabled by an evolved staffing model, which includes adjustments to roster size, labor hours, peak coverage and deployment. We're also rolling out our SmartQ technology.
An advanced order sequencing algorithm designed to ensure consistent timely service across all our access points. We've accelerated the rollout of Green Apron service well ahead of schedule because of the strong early results from our pilots. Just eight weeks into our 1,500 store test, partner feedback has been tremendous. Coffee House is using Green Apron service have driven improvements in transactions, sales, and customer service times. Peak transaction comps have already started to grow all-day transaction comps are outperforming the broader North American portfolio. Where we've deployed SmartQ, we've seen a double-digit improvement in cafe orders handed off in under four minutes, with 80% of in-cafe orders now meeting that target.
Drive-thru service times are consistently under four minutes, and mobile order and pay is more accurate and on time. SmartQ is bringing order to mobile order. Once all elements of Green Apron service are fully implemented together, and customers come to appreciate the improved experience, we believe these trends will continue to improve. To ensure they do, launching a new grow report in Q1 fiscal year 2026. It's a simple tool that helps coffeehouse leaders focus on five key drivers of same-store sales growth. And it'll provide sharper insights to improve our outlier performance and incentivize retail leaders. The GROW report and our Coffee House Walks are emblematic of a fundamental shift in our expectations for retail leaders.
Who will be spending more time in stores focused on operational excellence and customer service. Lastly, still have an opportunity to meet the demand we already have by reducing unacceptably high out of stock. The supply chain team is focused on it and in our pilots, we've been able to improve item availability. Now I wanna talk about the changes we're driving to our coffee house portfolio. Every coffee house we operate should be warm and welcoming. And provide a place for customers to connect and gather. They should have a great seat for any occasion, and they should provide customers access to a high quality, mobile order and pay experience, and a drive-thru where possible.
We slowed new builds and major renovations to prioritize a new coffee house uplift program. With a target investment of approximately $150,000 per store and minimal to no downtime. Uplifts are intended to quickly replace thousands of seats we removed and introduce greater texture, warmth, and layered design. Work is accelerating now in New York City. We'll begin in Southern California later in Q4. And by the end of calendar year 02/1926, we will have completed at least 1,000 uplifts across North America. We've also begun work on the coffee house of the future, We have a new standalone prototype that will open in fiscal 2026 that has 32 seats, a drive-thru, and a roughly 30% lower cost to build.
A small format version with approximately 10 seats is under construction in New York City and will open in the next few months. We believe this new prototype will deliver an exceptional customer experience improve unit economics, and unlock growth opportunities. In more markets. We plan to complete an evaluation of our North American portfolio by the end of this fiscal year to ensure we have the right coffee houses in the right locations to drive profitability deliver the Starbucks experience. As a part of this work, we plan to sunset our mobile order and pickup only concept in fiscal 2026. We found this format to be overly transactional, and lacking the warmth and human connection that defines our brand.
We have a strong digital offering and believe we can deliver the same level of convenience through our community coffee houses with a superior mobile order and pay experience. Together, we expect these changes to our operating model and our coffeehouse portfolio strategy will improve and transform the foundations of our North American business so that we are reestablishing that moment of connection between a barista and their customer, bringing back warm and welcoming coffee houses with great seats, delivering drinks in four minutes or less in the cafe, and drive-thru, while bringing order to mobile order, rightsizing store renovations and new build costs, eliminating unproductive menu items, and reducing our reliance on deep discounts and promotions.
Because of this hard work, we are creating an operating platform to build on with a wave of innovation in 2026 across digital, loyalty, and our menu. This quarter, we made the most of legacy plans in place. But we have much higher ambition. Building on our back to Starbucks plan, and new foundations, we will bring a consistent drumbeat of innovation to market through fiscal year 2026. We're building a robust menu innovation pipeline, leveraging our starting five approach and stage gate process. That is centered on premium coffee experiences and exciting beverages beyond coffee, artisanal food that resonates across dayparts, and the function forward modern offerings that customers want. In late Q4, we'll introduce protein cold foam.
This is the first breakthrough innovation built and tested with our starting five approach. It taps into what has become one of our most popular modifiers, cold foam. Which grew 23% year over year. Protein cold foam with no added sugar is an easy way to add 15 grams of protein to virtually any cold beverage, and customers can also add the flavor of their choice. Early in calendar year 02/1926, we'll launch a reimagined artisanal bait case and a bold new 1971 dark roast coffee available on our Clover Vertica, Brewer In All US company-operated coffee houses. As we move further into 2026, expect more experiential beverages, and nutritious satisfying bites for the afternoon daypart.
This month, we'll start testing new coconut water-based tea, and coffee beverages in select markets, and we'll lean into customer needs with upcoming tests gluten-free and high protein options to create food that's as artisanal as our beverages. In 02/1926, we'll also introduce new platforms, including global flavors, and customizable energy offerings. And of course, we'll continue to own our hit seasons like fall with the pumpkin spice latte, and holiday. Rewards program is a huge asset for us. With those nearly thirty-four million ninety-day active members. In early 2026, we'll launch significant innovations in our store Starbucks rewards program, addressing key customer feedback, and introducing exciting new features, designed to grow loyalty, brand love, and engagement.
We have an incredible digital business, and in 02/2006, we'll lean in further with the new Starbucks app and significant enhancements to mobile order and pay that will further improve our ability to deliver a great customer experience at pickup. As we work to turn around The US business, we believe we have huge opportunities outside The US too. This quarter, our international business posted more than $2 billion in quarterly revenue for the first time ever. Many of the changes we are driving in The US, like lower cost store builds and renovations, can scale around the world. Creating opportunities to grow the business faster. In China, the near-term changes we made are paying off.
Through Q3, we achieved our third consecutive quarter of revenue growth, and total comp turned positive. Beverage innovation and new customization options drove customer frequency, and our changes to non-coffee pricing broaden our customer base and bolstered afternoon and evening sales. As you know, we've been working to identify a strategic partner with a like-minded vision and values to help us capture future growth opportunities in China. We've received significant interest from more than 20 interested parties and we're evaluating options. We remain committed to our China business and want to retain a meaningful stake. The intense interest in partnering with us is a testament to the great team strong brand, and long-term opportunity for Starbucks in China.
It really is a vote of confidence. Finally, we will only enter a transaction if it makes sense for Starbucks. Across other markets, performance continues to improve as well. In The UK, we see continued momentum with improving comparable sales performance in the low single digits driven by a focus on connection, beverage consistency, food innovation, and labor investments to support peak operating hours. The momentum stretches across EMEA as well, with overall Q3 revenue and comparable sales up year over year. Our business in Turkey, for example, is performing strongly despite a challenging economic environment, we opened our seven hundred and fiftieth store in the market.
In Latin America, we maintained double-digit year over year growth in system sales, revenue, and operating income. Mexico is approaching the 1,000 store milestone and provides a road map for profitable growth in the region. As we look forward, we see significant opportunity to accelerate growth across our international license markets. The team is focused on it and is thinking big. As I look back on the progress we've made this quarter and my ten months here, I believe more than ever in our back to Starbucks plan. We've had to fix a lot, but we've done the hard work on the hard things.
We've moved quickly to build a more consistent operating model set clear customer service standards, and bring order to mobile orders. We're rightsizing our new store builds and renovations to improve economics, and we're addressing inventory availability. Though these are areas we know we can move even faster. And we're fixing our cost structure and finding offsets across our P and L to support investments at the store level. This transformation lays the operating foundation for ambitious innovation agenda, and I'm confident by the 2026, Starbucks in The US will look and feel very different. Delivering the industry's best customer experience. We're not just getting back to Starbucks. We're building a better Starbucks.
Where everyone can experience the best of our brand. As we do, we believe we'll drive a stronger top line and in time healthy sustainable profits will follow. Know there's a lot of interest in our long-term plans, and I'm pleased to confirm that we will hold an Investor Day in 2026. I look forward to seeing many of you in person. Before I close, I wanna say thank you to our Green Apron partners. The energy and enthusiasm that leadership experience was inspiring. And I continue to see that same momentum every time I visit our coffee houses. Back to Starbucks is coming to life through the passion and leadership of our coffee house leaders, and Green Apron partners.
I'm grateful for the way they're embracing change, and delivering world-class customer experiences. Thank you. They're truly creating the green wave. I also appreciate how our support center partners are embracing the changes in how we get work done. We're all committed to building a culture centered on performance, accountability, and prioritizing support for our coffee house teams. Thank you for the important role you're playing in driving this change. And with that, I'll turn it over to Kathy to share more detail on our financial results for the quarter.
Cathy Smith: Thank you, Brian, and good afternoon, everyone. I'm now four months into my role at Starbucks. I am confident we have the right strategy in place. We are moving with pace and urgency and are seeing encouraging results from our pilots. We are testing, learning, and iterating quickly as we work towards rebuilding a better Starbucks known for exceptional customer service and serving the world's finest coffee. I'll now cover our Q3 results. Our Q3 consolidated revenue was $9.5 billion up 3% to the prior year, reflecting 6% net new company-operated store growth over the past twelve months, partially offset by a 2% decline in comparable store sales.
Our global comparable store sales performance was led by 2% decline in The U.S. With U.S. Transaction comps down less than 4%. While our transactions remain impacted by highly discounted promotions in the prior year, we are seeing continued progress. U.S. Company-operated transaction comps improved for the third consecutive quarter. The percentage of US company-operated stores with positive full-day transaction comps and positive morning transactions also improved for the third consecutive quarter. Are seeing improvement across most urbanities most notice notably in central business districts. And non-Starbucks Rewards members transactions grew year over year for the first time since the post-pandemic recovery. We're also making progress with our Starbucks rewards customers.
With quarter over quarter improvements in the number of transactions not on promotion. We'll continue to drive growth and loyalty with our rewards customers through a reimagined loyalty program next year. Our ticket growth in The US for the quarter was 2%. Reflecting fewer discount-driven offers in the current year. We have reduced the percentage of discounted transactions by a third putting us back to more normalized levels as we build back a healthier transaction base and focus on improving the overall value proposition for our customers. Rounding out North America, Canada had another strong quarter with sales comp growth in the low single digits. Propelled by product innovation, particularly in food.
Our US licensed store portfolio revenue declined in Q3 driven by the grocery and retail channels. However, we saw strength in airports, where sales volumes grew in the quarter despite TSA traffic declines. As well as in the college and university segment. As Brian mentioned. Licensed stores are a critical part of our portfolio. And we have been actively addressing licensee economics and profitability to fulfill our aspiration to be a world-class licensor. Outside The US, the international segment again delivered strong performance, with seven out of the top 10 markets comping positively with particular strength in The UK and Mexico. China continues to grow and improve profitability.
Starbucks China's comparable store sales grew 2% in the quarter, driven by a 6% improvement in comparable transactions. The market's comp growth was driven by a successful product innovation, including the new Zero Sugar full flavor platform a strong integrated marketing campaign, and outsized delivery growth. Japan had negative comparable sales in the quarter, as the market lapped strong LTL performance in the prior year and has been challenged by soft consumer sentiment. However, our brand continues to be strong and our core coffee and tea products are performing well. In our channel development segment, our Q3 revenues grew 10% year over year due to higher revenue in the Global Coffee Alliance.
We remain market share leaders in the North America at home and ready to drink coffee categories and continue to work with our partners to innovate and broaden our reach beyond our cafes. Turning to store growth, we opened three zero eight net new stores globally in Q3, primarily consisting of company-operated growth in The U.S. And China, and international license growth. As Brian mentioned, we are conducting a comprehensive evaluation of our portfolio to ensure our coffee houses can represent our brand and customer promise. Which we expect to complete by the end of the fiscal year. As we look to the future, we are focused on disciplined capital deployment.
With work underway to reduce the cost of both new stores and renovations without compromising a warm welcoming community coffee house environment. Shifting the margin, our Q3 consolidated operating margin was 10.1%, contracting six fifty basis points from the prior year. of Back to Starbucks, including additional labor hours and leadership experience 2025. Shifting to G and A. In Q3, G and A increased by 18% versus the prior year, driven by our investment in Leadership Experience 2025. This event was a galvanizing moment for our coffee house leaders and they returned to their communities inspired to take and deliver world-class customer service across our stores in North America. Q3 EPS was 50¢. Down 45% from the prior year.
Primarily reflecting the impact of expense deleverage and our back to Starbucks investments. Including labor and leadership experience 2025. Our effective tax rate was higher this quarter due to a discrete tax item in the quarter as we optimize cash deployment across markets. This combined with the leadership experience investment drove approximately $0.11 of our Q3 EPS decline on a year over year basis. To conclude my remarks on our Q3 results, we remain committed to our capital allocation strategy and disciplined capital investment. Maintaining our strong balance sheet and BBB plus BAA1 credit rating and returning cash to shareholders via dividends.
While we have not provided official guidance for the year, I'd like to offer some preliminary thoughts on our broader outlook and the shape of Q4. As Brian said, we continue to make the most of the existing innovation plans and believe we have a strong fall platform. Including the return of our popular pumpkin spice latte. That overlays the transformative work taking place on the company brand, and customer experience. Taking into account that we have a lot in flight, combined with the uncertain consumer environment, we are conservative on how the current year over year trends will change in Q4 for The U.S. Company-operated business. We know we lose the benefit of ticket and that transactions are improving.
Just where they will net out is unclear. We are pleased to be ahead of schedule with key foundational programs like Green Apron service, and we are confident that 2026 will continue to improve as we see the effects of our back to Starbucks strategy begin to scale. Both the tariff environment and coffee price continue to be dynamic. We continue to mitigate expected tariff exposure outside of green coffee and are pleased to see green coffee prices moderate. We have also increased our coffee coverage relative to last quarter as prices have declined.
Due to our coffee buying and hedging practices, you should expect to see both moving average coffee costs and coffee tariff impacts lag the market with year over year coffee cost increases expected to peak in the 2026. Our margins in the near term are impacted by critical investments in our stores, partners and customers, However, the early signs of progress we're seeing in partner engagement transactions in our critical dayparts and customer feedback give us confidence that these investments will yield the returns to drive much healthier margins over time.
As we progress on our back to Starbucks strategy, we will invest over a half a billion dollars of additional labor hours into our US company-operated portfolio over the next year. Beginning with our Green Apron service rollout in mid-August. To offset these investments, we are focusing on driving a healthier and more efficient cost structure that allows us to weather macro headwinds drive strong sales flow through, and simultaneously fund our back to Starbucks strategy. We are working on resetting and improving our cost structure across the entire P and L with disciplined prioritization, driving more efficiency, accountability, and agility into the organization.
In closing, I'm impressed with how far we've come and know we have more work to do. We know this turnaround is a multiyear effort. We are rebuilding our core foundation on which we can scale and innovate to deliver the best of Starbucks customer experience. While instilling stronger discipline in our cost structure and capital deployment plans. A lot is happening today behind the scenes, and these efforts will come together more visibly by the end of next year. And when they do, I am highly confident that our financial performance will follow. First, in our comps, then in our earnings.
I'd like to thank our partners around the world for their commitment to transforming Starbucks into the premier customer service organization that all our stakeholders. Partners, customers, and shareholders will be proud of. And with that, Brian and I are happy to take your questions. Thank you, operator.
Diego: Thank you. In order to allow as many questions as possible, we ask you to please limit yourselves to one question at a time. We will come back for follow-up questions as time allows. And your first question comes from David Tarantino with Baird. Your line is now live. Hi.
Brian Niccol: Good afternoon and congrats on the early progress.
David Tarantino: Wanted to ask about the investment you're making in the stores Thank you, Kathy, quantifying that $500 million in labor hours.
Diego: Can you maybe just frame up
David Tarantino: some of the cost offsets you mentioned to that number and whether you think it's possible to fully offset that number or whether you're gonna need to see sales leverage in addition to the cost offsets to get the right return. I guess how are you thinking about the overall margin impact from that collective effort?
Cathy Smith: Yeah. Good afternoon, David. Thanks for the question. First and foremost, let's make sure we understand, though, that the Green Apron service is a foundational operating model that establishes the repeatable, consistent, scalable standards that we want and need in customer service. And so that is such an important investment But to answer your question then, we are, as we shared even last quarter, working across the entire P and L. So named it in the prepared remarks, but from cost of goods sold to operating expenses to G and A, the team is taking on both short term and long term cost structure efficiency, work that we're doing. So we're not ready to quantify the exact offset.
Would tell you we see lots and lots of opportunity, and we're getting after it. Some of it will start to come, together pretty quickly, and some of it is gonna take us a little bit longer. What I would tell you is we're working on 26, 27, and 28. So we're putting in the more durable sustainable activities to make sure we don't just address it once, but we actually address it long term. What's really exciting though is when we start to grow, we'll actually like what comes through to the bottom line. When we start to see that top line come through.
Diego: Thank you. And your next question comes from David Palmer with Evercore ISI. Please state your question.
Cathy Smith: Great.
Diego: Yes, just building on what David was just talking about, I guess, conceptually,
David Palmer: right now, we're in an investment mode and we can imagine that margins may not be moving up very quickly, might be moving down a little bit here in the near term. But I'm wondering how you're thinking about things evolving longer term. I would imagine there'll be an Analyst Day. You'll wanna go through each of the pieces of this. But can just conceptually, do you see the company going back to pre-COVID levels of margin that might be you know, that 17% type margin corporate wide, that little over 20% in The Americas, Is that reasonable to expect? And what sort of journey do you think would you know, how long could that take?
And what are the big things that are the that must get right that you're thinking over the next two or three years that would really get you there if you think you could get back there? And thank you.
Cathy Smith: Good afternoon, David. I'll start, and then I'm sure Brian, can add to So first off, you asked about maybe longer term kind of earning potential. And first off, Brian, mentioned it in his remarks, we're excited. We've put a date on the calendar, a time early 2026. We're we believe we'll be in a good position to share not just, short term, but really longer term how we see about see this company, playing out. So we're really excited about, putting a date out there for the investor day, early 2026. Then to answer your question around 2019, is that the right benchmark, and ask aspiration? What I would tell you is it's a good guidepost.
It helps us to understand what is possible. Obviously, you have to drive top line first and foremost. That's the most important thing. So but once we do start to drive the top line, can we set up a cost structure below that delivers kinds of profitability that we would expect. And so 2019 is just my best guidepost, our best guidepost right now. We'll see as we approach that guidepost if that's if there's more room past that. But right now, let's look at that as our guidepost. It provides a really clear if you unpack the PNL, a really clear path to get there, and that's what the team's working on. Right now is literally that path.
And it's gonna take a little bit. I'll leave it there.
Brian Niccol: Yeah. Hey, David. This is Brian. The only thing I would add is, you know, I've gotten this question before. Around, you know, do you think Starbucks over earned? And, you know, as I better understand the business and I see the opportunities in front of us, I don't think that is the case. I think there is tremendous opportunity in front of us where we get the operating foundation in place, we put into place the innovation that we know resonates with customers, and then we continue to do the right things so that our partners are set up for success.
Deliver the innovation and the ongoing operating model And as Kathy mentions, we put a really strong focus on our cost structure the idea then is you build back a better Starbucks. And that's what we're after. So, you know, 2019 serves as a good road map, but we have aspirations to not only achieve that, but hopefully exceed that. And you know, as we go on this journey, we'll bring you guys along with us and look forward to sharing thoughts on how this all unfolds at the Investor Day early next year.
David Palmer: Thank you.
Diego: Your next question comes from Brian Harbour with Morgan Stanley. Please state your question.
David Tarantino: Yes, thanks. Good afternoon, guys. Could
Brian Harbour: Just on the Green Apron service thing, obviously, you've sort of accelerated that, it sounds like. Could you talk about sort of how fast you would expect that to spread through the whole company store base? How fast those investments will happen. And think you talked about at your conference sort of making sure there was an assistant store manager in every location Is that also part of that 500 or I guess, you know, what exactly is sort of included there?
Brian Niccol: Yeah. Look. So the Green Apron service model will rolling out the middle of this month. And, you know, obviously, it takes a little bit of time to get it across all our stores and implemented where our rosters are the right size and then deployed correctly. But, you know, what we've seen in pilot is you know, it takes you know, a little bit of time for us to get into a rhythm with the new labor that we have on the team. And it also takes a little bit of time for our customers to that they're getting a different kind of service experience.
The good news is once both of those things stick, we see transactions move in the right direction from there. And so you heard in my earlier comments, I'm excited about is it as the time goes on, we see this building and building and building. And then when you start thinking about the innovation you can layer on top of that, now you're building from a place of strength with innovation as opposed to you know, kind of a place of weakness or trying to recover with innovation. In regard to the assistant managers, that's gonna be part of the roster.
And it really is an element of then, I think, staying true to our mission of we wanna promote within greater than 90%. And this presents a tremendous opportunity, and we talked about this at our leadership experience, tremendous opportunity for people to grow with Starbucks through the assistant manager role. And so that's what you see unfolding over time. As we get the roster size right, we'll then figure out how we can promote within that roster and within the organization to that assistant manager role which then nicely sets us up to build a pipeline for the future growth of new stores with managers and so on and so forth.
So you know, I'm delighted that Mike and the operating team have just done a really great job of bringing the Green Apron service model from you know, an idea to true execution that's now scalable, and now we're in the process of scaling it. So, really excited for mid-August to get here. Been really excited for us to build on that strong foundation.
Diego: Thank you. And your next question comes from Sara Senatore with Bank of America. Please state your question.
Katherine Park: Thank you. Just a clarification, Brian, on your last
Sara Senatore: comment and a question about food innovation. So it sounds like actually operational improvements Given it takes customers' time to sort of appreciate them. So has it been marketing? I know you've invested maybe in more traditional marketing. I guess to what do you credit the sequential improvement if the operations are sort of still early days? And then just on food, I think this is the second quarter where you've called out food in Canada. Are there any kind of lessons you can take from that, that can be applied to The U.S.? Because I know food feels like it's been an opportunity for a very long time.
So just trying to understand what maybe moves the dial on that. Thank you.
Brian Niccol: Yeah. Thanks, Sarah. So yeah. Look. To answer your question, on the operating side, I do believe we're operating better as a system. Green Apron service model is not across the system yet, but remember, we rolled out the five key moments We brought forward know, the, condiment bar, We brought forward, obviously, the idea of, know, speed as it relates to less than four minutes in cafe, and also less than four minutes in the drive-thru. And this is one the things that I think is always impressive is when you give clarity to operating leaders, they understand what the mission is, and then they figure out how best to achieve it.
What the Green Apron service model does is it takes that and makes it even more consistent more reliable, and also gives, frankly, our partners more tools to achieve those key customer metrics that we're after over and over again. So we've made operational progress, which I'm really excited about. And I think Green Apron service then will kind of institutionalize it and become our system. And, hopefully, I think we'll become famous for Green Apron service and be the defining customer service company that I think Starbucks should be. And that's what we're after. That's our mission. To answer your other part of this question, though, I do think our marketing is playing a positive effect. On the business.
You might have heard in our comments we're seeing both nondiscounted rewards customer transactions pick up and we're also seeing nonrewards transaction customers increase and were up year over year in third quarter. So think we've got a couple things working in our favor. Much better marketing. And I think a stronger operating system right now. And I think we're gonna continue to drive against both of those things going forward. So, I'm I'm delighted that what you're seeing is people respond to the marketing and the message. And then I'm also delighted and frankly impressed by our operators on their ability to take a clear message and figure out how to make that happen in their stores.
Now we're gonna, I think, amplify that with the Green Apron service model.
Cathy Smith: Good.
Brian Niccol: Oh, food. Your question on food. Yeah. The team in Canada is an job. I was actually just up in Toronto with the team, and you know, up there, they've done some waffles and pancakes and think they're just getting ready to do some, bagel, bites. Which are also really exciting. And, yeah, of course, there is opportunity for us to figure out what they're doing up in Canada from a food standpoint to figure out what makes sense for us to bring not only to The US, but around the world. And I would also share with you I happen to be in London, you know, a week or so ago. And the same thing.
The team is doing a great job on enhancing their food and their bake case. And is one of the things I think, frankly, Starbucks has an opportunity in general on is we have 40,000 stores around the world. We have examples of success all over the place, and we're gonna do a much better job of taking advantage of where we see success somewhere in the else in the world and reapply it globally. And so, you'll continue to see us figure out how we can leverage these things, around the world share it with our licensed partners, and then, obviously, where it makes sense, bring it into The United States market. As well.
Diego: And your next question comes from Lauren Silberman with Deutsche Bank. Please state your question.
Sara Senatore: I wanted to just follow-up on the Green Apron service model.
Lauren Silberman: Can you help contextualize, like, anything around the traffic lift that you might be seeing in test stores? Whether you're seeing it across day parts, channels that are more significant. Then my actual question is just on the rewards program, which is always an important to the branch growth. What do you think is missing in the current platform, and what are the key elements of the reimagined program of the future? Thank you. Yeah. So, look, one of the things that's exciting about the Green Apron service model is I think you
Brian Niccol: might have heard my remarks. I think it was maybe, like, the first three weeks I was with the company. I had the opportunity to do an earnings call with everybody. And know, one of the things I wanted to do is make sure we won the morning. And one of the things we're seeing right out of the gate is those peaks we're seeing really nice progress. And then we also see growth throughout the day. We still have an opportunity in the afternoon, and I think you heard me talk about this. We're gonna figure out how we the right food and the right drinks so that we're more relevant in that afternoon occasion.
But early on, not surprising, we said we wanted to win the morning, and we wanted to have a more effective full day of business, and that's what we're seeing out of the Green Apron service model. So that's where we are. And then to your question on rewards, right now, I'd say the rewards program became too much of a one size fits all. In a discounting mechanism as opposed to a program that really recognizes people for their loyalty and builds more engagement. And, you know, the feedback we've gotten from customers that are part of it is, if I'm a really big loyal customer, I think there should be more recognition of that.
And if I'm of a less frequent customer, we should then up the program so that it fits for them. So, you know, it's you're gonna see us really tailoring the system to become more about recognizing the loyalty, recognizing the engagement, and then building the brand through this rewards program as opposed to what I think, unfortunately, became a system of just discounting and a one size fits all. So that's where we're moving towards. And I'm I'm really excited about what that program will entail and I'm excited that we'll probably be able to show you kind of all the bells and whistles, when we're together. In February.
Lauren Silberman: Thank you.
Brian Niccol: Yeah.
Diego: Your next question comes from Jon Ivankoe with JPMorgan. Please state your question. Hi. Thank you so much. You have so much color in the prepared remarks that I'm going to read the transcript to catch all of it. But often oftentimes, innovation, you know, and consistency and speed and accuracy are oftentimes enemies of one another. So, Brian, I guess, how do we handle, you know, so much innovation that we talked about in some of your prepared remarks? Without maybe slowing down or complicating the line complicating operations, the coffee house experience.
And are there any solutions around equipment, or do you have an opportunity to consider splitting the dayparts at Starbucks maybe having some afternoon innovation that really is available only in the afternoon that allows you to focus specifically on the morning? How are you thinking about I guess, both this opportunity and risk?
Brian Niccol: Yeah. Thanks, John, for the question. One of the principles for our innovation is it cannot negatively impact our ability to deliver on cafe orders less than four minutes, right, the drive-thru less than four minutes, and then being on time and accurate with our mobile order. So that is know, one of the key entry points for any innovation that we have to do. With that said, what I also think we're doing much better job of now is making sure that we understand what are the current approaches for how we make drinks, how we prepare food so that when we do the innovation, we aren't always having to reinvent the process of how you make the drink.
You know? And so what you're gonna see, John, is it's innovation, that is unique It's what customers have been asking for. It's what meets customer needs. And then we do it in a way where our partners give us feedback that we're able to execute it consistently and with the right type of throughput. And this is why it's so important that we have this approach of the starting five because this innovation is being kinda cobuilt with our baristas in our stores versus we build it in the support center, we throw it over the wall, and we hope that our baristas can figure it out. Like, those days are over.
The way we're gonna do this is we're gonna build it together. We're gonna build it with the field and our baristas in store at the start of the process. And so been very powerful for us. And even the protein platform that we're gonna be bringing out you know, later this year is a great example of how we done just that system where, you know, we tapped into our baristas to help us fine-tune the program. So that it's executed in a way that can be a great drink every time, on the speed requirements that our customers expect, and it sets our partners up to be successful with every drink that they're preparing.
So, and this is also part of the reason why we had to initially set out on menu simplification. You gotta clear out kind of the low hanging things that are, frankly, distraction in taking away people's time so that it frees up space to do meaningful innovation that we know can be executed by our partners in our stores. So the Green Apron service model, hugely important to get that established and set. And we were purposeful to make sure we did that first before we layered in the innovation. But the good news is we're we're testing this with the Green Apron service model. We see our ability to then implement the innovation that we're talking about bringing.
Down the pike. So very excited about what's to come, and, I love the fact that these things are built by baristas, and the ideas can come from anywhere. And that's the kind of company we need to be.
David Palmer: Thank you.
Lauren Silberman: And your next question comes from
Diego: Andrew Charles with TD Cowen. Please state your question.
David Palmer: Great. Thank you. One six housekeeping first. Just curious, how many mobile order and pay stores are in the portfolio as you go through the process
Andrew Charles: of system optimization? And my real question is that if I go back earlier this month, there was an eight ks highlighting a bonus contingent on reducing operating expenses through fiscal 2027. You help us understand what level of reduction is necessary to hit this?
Brian Niccol: So, to answer your first question, roughly, like, 80, 90 stores in the, mobile order pickup space. And then on, you know, your second question, you know, look. Incentives are a powerful tool. And, you know, I wanted to have an incentive for the organization to get after the cost side of things. And I think the good news is seeing people galvanize around getting after what these incentives have set out to do. And so, you know, you'll see how that unfolds over the, I think, the coming months and coming years. And, I think Kathy said it well.
We ultimately want a better caution structure so that as we grow, we're happy with how the top line falls to the bottom line.
Diego: Thank you. And your next question comes from Christine Cho with Goldman Sachs. Please state your question.
Lauren Silberman: Great. Thank you for taking the question. So
Christine Cho: Brian, could you talk a little bit about your decision to expedite the rollout of the Green E Print service model? So were there any notable surprises or key metrics from your earlier tests across the 2,000 stores last quarter? That kind of gave you that confidence to proceed with the full rollout. In all of The U.S. Stores by the end of the summer as opposed to the one third of the stores by then. Additionally, just your thoughts on how you will measure the ongoing success of the model? And how you incorporate some feedback from both customers and partners? Thank you.
Brian Niccol: Yeah. Thanks for the question. You know, look, it really boils down to how we saw the pilots be able to both hire train, deploy. It was all about getting the right partners in the right place at the right time. And then also when you layered in the technology behind it of the SmartQ, which is all about the ordering algorithm, we saw how that was effective. And then not surprising, you know, what we also saw is we saw a nice movement in transactions in the dayparts that I talked about earlier, both the morning and for the whole day. And then I also think I mentioned this in my remarks.
We've gotten clarity on what are the key metrics that ultimately drive performance, and that's our growth scorecard that we're gonna be adopting going forward. And so you'll see us continue to talk about that ongoing. And, you know, you're not gonna be surprised. It's about the customer, It's about
Andrew Charles: our
Brian Niccol: being staffed correctly. It's about ensuring that you know, we obviously get the right speed requirements hit. And so when we do those things, we see outcomes that we want, which is transaction growth, then ultimately, I think, is a key indicator of health in the business. So we loved what we saw. Mike and the team demonstrated that we had the ability to scale it And so we were like, you know what? The time is right.
Because I'd love fact that we're gonna get this Green Apron service model in place before we hit pumpkin spice latte, our big fall holiday season, you know, there's gonna be a lot of customers that come into our business because of those two marquee moments. Now they're gonna experience Green Apron service. So I just think that's a winning proposition for us that sets the table for what's to come in 2026.
Diego: And your next question comes from Jeffrey Bernstein with Barclays. Please state your question. Great.
Andrew Charles: Thank you very much. Brian, question on The U.S. Business. Investors often express concern around a few things that could limit return to outsized U.S. Comp growth whether it's U.S. Competition from above or below, your unit cap penetration maybe being already elevated and value perception. Just wondering what do you perceive as the greatest challenge among those. It does seem like based on your comments, maybe these things aren't concerns internally. So I'm just looking for your thoughts on the implications from competition penetration and value perception. Thank you.
Brian Niccol: Yeah. Look. I think one of the most important things you do with a consumer-facing company is making sure that the brand is perceived to be valuable. And one of the things I was really delighted to see is we've made tremendous progress on that value front. You know? And I think it's the highest level we've had in the last two years. And so I'm very focused on how are we driving this brand to be more valuable for our customers tomorrow because that's I think that's how you have to think. It's like, we were good today, but we need to be even better tomorrow.
And think the Green Apron service model is a foundational element because if we become the great customer service company that I know we can be consistently, there's tremendous value in that. Nobody else does it. And it's uniquely something Starbucks has always stood for in the past. I think it's uniquely something we can own going forward. And look. The best way I know to compete is to be the best form of yourself. And that best form of Starbucks is without a doubt world-class customer service, driven by the connection between our barista and our customer with the craft of our drinks, in a special third place.
And so that makes this brand super valuable to every customer and every partner that's a part of this company. So, what I'm focused on. You know, I love playing offense. In a very competitive environment. And, you know, we're in competitive environments all around the world, and you're gonna continue to see Starbucks be on the offensive as it relates to great connection, great community, and great craft.
Diego: Your next question comes from Chris Sokol with Stifel. Please state your question. Yes, thanks. Brian, I was hoping you could
Andrew Charles: expand on your thinking around the China business just for a moment. I mean, the
Diego: company has been clear it's looking for a partner, but I was hoping you could elaborate on exactly what you believe you would gain from a strategic relationship. I mean, it doesn't look like capital is really an issue when you consider the investments that need to be made in that market. But so I'm just wondering is the primary goal to bring in maybe better expertise in operations or marketing in China? Or what would you consider a win for Starbucks, I guess?
Brian Niccol: Yeah. Look. I think the good news is our brand is well respected, held in high regard with the Chinese customer. And our team has been doing a really nice job think, figuring out how to compete in a new environment. As I mentioned in my earlier remarks. You know? And as we look at, the partners that have come forward, what we hoping we can have is a partner, first of all, that shares our mission and value. You know, it's gotta be a consistent approach to our mission and values. And then I think be a great partner to figure out how we can operate more effectively in that local market.
And, you know because it's not about capital What this is about is how do we ensure that the Starbucks brand is in a much better place in the future because I do believe there's going to be thousands of more Starbucks in China I think there's no reason why this can't be one of the best businesses in China. And so we're looking for a partner that shares that passion and shares that belief that there's this opportunity to grow one of the special brands in China. We think having somebody that's a local partner sets us up to ensure that is the case for Starbucks brand long term. Thank you.
Your next question comes from Jon Tower with Citi. Please state your question.
Lauren Silberman: Great.
David Tarantino: For taking the question. Maybe, Brian, circling back to topic you kind of hit on a little bit earlier on value and specifically, I know in previous calls, you talked about the idea of looking at the menu architecture and the price
Diego: pricing architecture. And I'm just curious with a lot of the innovation that you outlined
David Tarantino: earlier in the call, I'm just curious how you're thinking about maybe how value fits into the new products that are coming out next year? Are you thinking about different cup sizes that are coming through specifically and price points around that? And then on top of that, how are you thinking about incremental pricing beyond this fourth quarter and into 2026 in aggregate?
Diego: Yeah. Yeah. I
Brian Niccol: as we bring out the innovation, we want the innovation to be relevant for the daypart that we're going after and the occasion that we're going after. So in some cases, that may mean you know, a smaller size. Know, in some cases, it may mean we think differently about where that price falls within our menu architecture. So, obviously, it's important know, we all remember the old marketing class we took. Right? I can't remember if it's four p's or five p's, but know, one of the p's is definitely price. And we gotta make sure that for the customer, experience and here's the one thing I think it's really important to remember.
We are everything we do will be valuable. We are a premium brand that give people access to premium experiences. And so know, this is not about changing that trajectory of our business. With that said, there are different ways to execute both the size, and, the package, that you experience whether it's an afternoon snack or an afternoon pick me up, or customizing your energy, customizing your protein, Like, there are a lot of different ways for us to think about how we bring value to the customer. In a premium way. And so that's very much top of mind for us. I think it's critical for us to continue to be positioned correctly for every occasion.
And what was the second part of your question?
Katherine Park: I see. It had to do a.
Brian Niccol: Pricing in the future. Yeah. Look. You know, I think heard me say this all the time, and I still fundamentally believe this is pricing is always the last lever I like to pull. With that said, know, pricing will be a part of our business model. You know, there are times where it makes sense to take some price, And when those situations present itself, gonna do it in the least amount of pricing necessary. Know, I prefer to always hold back on that one as much as possible. So, will we have to use it in the future? Absolutely. It's gonna be the last lever I'd like to pull.
And when we pull that lever, I probably wanna do as little as possible.
David Palmer: Thank you.
Diego: The last question comes from Danilo Gargiulo with Bernstein. You may ask your question.
Danilo Gargiulo: Great. Thank you. Brian, I'd like to go back to a couple of topics that you were hinting before, specifically like competition. And at some point, Kathy was also talking about the potential macro pressures in the fourth quarter. And with great progress, on a sequential basis on traffic, sequential improvement on traffic, but it still remains negative on a, you know, one year basis. So how do you assess that the contraction was actually driven by the lapping of promotions rather than perhaps consumer finding alternatives? Could be either you know, potentially evolving competitive landscape or consumers switching to a coffee consumption at home?
And then given your assessment, out of all the initiatives that you have been launching, which one do you think is going to be the most critical one be driving consumers back to store? Thank you.
Brian Niccol: Yeah. Well, look, I think it's a combination of things that's going to ultimately bring customers consistently back to our stores. But I do believe getting the foundation right with the Green Apron service model is mission critical in step one. And then, obviously, having relevant innovation that puts us in front of culture and in culture is hugely important. And you've heard me outline it. That innovation is gonna go from menu across beverage and food to digital to rewards. So, I think that's our that's our success platform that we're gonna continue to drive towards. And we'll talk more about it at our investor day.
In regards to the macros and know, what we see in the business, you know, look, one of I was delighted to see is that we continue to see sequential improvements in transactions. And, you know, as we exited the quarter, we continue to see that. And so, you know, we just right now, obviously, are still figuring our way through these initiatives that are in flight until everything's in place, know, you have some ups and downs as you move through the quarter. So know, I think the good news for us is I think a lot of the opportunity of growth is in our control.
And you know, I think that's what I've asked our team to stay focused on is what are the things we can control We do that to the best of our ability. We will continue to grow share. We will build a brand that's beloved. And that's what we're after. You know, I can't control you know, some of the other forces that are out there, but I can bring the best Starbucks in whatever environment we have to compete in. And that's where we're gonna stay focused on, Daniella. You know, And, you know, it served me well over my last, you know, twenty years working in this industry.
And, know, I've seen a lot, and the good news is what I see always working is make sure that you value every customer You set your partners up for success. And then you stay on the offensive for your brand. And then that's how you come out on the other side. You know, a stronger, better business. And that's that's what we're focused on right now. Obviously, we're still turning this business around. And when you're in a turnaround, there are some unexpected things that happen. And think we're we're smart to make sure that we're honest about that. And, you know, the reality is I believe we're working on the right things, whatever comes our way.
We'll handle accordingly. Thank you. That was our last question.
Diego: I will now turn the call over to Brian Niccol for closing remarks.
Brian Niccol: All right. Well, thank you everybody for joining the call. Thank you for the questions. And, thanks for all the time. You know, obviously, you heard in my remarks and hopefully through this Q and A, how genuinely proud I am of this team, both our partners in our stores as well as our partners here in the office with me. On working through this turnaround. And, you know, as we kinda close out this conversation, this quarter was really all about laying the operational foundation for Starbucks. And, you know, our point is we want a Starbucks that's not only stronger and more resilient now, but we're ready to start innovating and innovating at scale in 2026.
So, obviously, we're making some significant investments in our Green Apron partners. And in the operational foundations that support them. And the rollout of our Green Apron service model is really our most ambitious operational transformation to date, but I'm really excited about the early signs of success that we're seeing. And, you know, we're also, I think, going to continue to reset our coffee house portfolio strategy. You know, we're prioritizing warmth. Connection, community, and I'm really excited about what I'm seeing in the uplifts we've started to do and how we're creating the coffee house of the future with the new building that we're gonna be building going forward.
You know, it's really energizing frankly, to partner, with this new leadership team. I'm confident in the strength and vision of this group of leaders. I'm really excited for what we're going to accomplish together. So all of this work, every investment, all the operational change is all about helping us build the best Starbucks And, one that is ultimately grounded in purpose, you know, powered by our partners, and positioned to lead with innovation in the years ahead. So I'm proud of the progress we've made. I'm really confident in our path forward. Obviously, I'm excited for the fall program. You know, I, like many customers, love the pumpkin spice latte, and, you know, that comes out August 26.
So, and quickly thereafter, you'll see us innovating with our protein cold foam. Our protein platform. So couldn't be prouder of where we are. As I mentioned in my comments, I do feel like you know, as I've been a part of a lot of these turnarounds, we're ahead of schedule where I would have thought we would have been. And I think that's evidenced by the fact of rather than rolling out Green Apron service model to a couple thousand stores, we're gonna be putting it in all our stores. So excited about what's to come and excited to be able to share even more of these in our next quarterly call and then obviously at our Investor Day.
So thank you, everybody. Take care.
Diego: This concludes Starbucks third quarter fiscal year 2025 conference call. You may now disconnect.