Starbucks Corp
NASDAQ:SBUX
Starbucks Corp
In the bustling heart of Seattle in 1971, Starbucks Corp. brewed its first cup, initially focusing on selling high-quality coffee beans and equipment. The seeds of its transformation were sown with the entry of Howard Schultz in 1982, who saw the potential to recreate the coffee culture he experienced in Italy. Under Schultz’s visionary leadership, the company shifted its business model to become a haven for social interaction, transforming the typical American café experience. Starbucks established itself as a purveyor of premium coffee beverages, continuously refining its menu to include an array of offerings such as espresso-based drinks, teas, and recently, innovative cold brews that attract a diverse clientele. As the company's footprint expanded globally, it maintained a consistent brand aura—offering not just coffee but a community experience, a 'third place' between home and work.
Starbucks meticulously crafts its revenue model through a combination of in-store sales, a robust loyalty program, and strategic partnerships, ensuring profitability. The core engine driving its revenues is its chain of company-operated stores, which generate the lion's share of income by engaging customers with both the ambiance of its cafés and the quality of its products. Complementing in-store sales are licensed stores, merchandise sales, and the ever-popular Starbucks Card, which encourages frequent visits and cultivates customer loyalty. The company also leverages strategic alliances, such as with Nestlé, allowing for broader distribution of Starbucks-branded products in grocery aisles worldwide. By balancing its traditional café culture with a shrewd approach to market expansion and product diversification, Starbucks ensures its place as a dominant force in the global coffee industry.
Earnings Calls
Starbucks is committed to regaining its identity by refocusing on its core values: quality coffee and a welcoming atmosphere. The new leadership acknowledges customer concerns regarding service and menu complexity, promising to simplify offerings and enhance barista support. Management aims to revitalize growth in the U.S., where it plans to improve customer experience with faster, high-quality service. Additionally, the company is focusing on re-engaging all customers through improved marketing strategies while seeking to regain momentum in international markets like China. Starbucks aims to strengthen its operations with disciplined innovation and better-staffed stores to ensure attractive, community-centric locations.
Management
Bradley E. Lerman has been a prominent figure in the legal and corporate governance sphere. Before his tenure at Starbucks, he held significant roles at major corporations, showcasing a strong background in legal affairs, compliance, and corporate strategy. At Starbucks, Lerman served as the General Counsel, where he was responsible for overseeing the company's global legal operations, including matters related to compliance, labor relations, litigation, and regulatory affairs. His experience includes leadership positions that highlight his expertise in navigating complex legal landscapes, supporting business objectives, and ensuring adherence to international laws and regulations. Prior to his role at Starbucks, Lerman has held executive positions in other multinational companies, contributing to their legal and business strategies.
Michael A. Conway is a prominent figure in the coffee industry, currently serving as an executive leader at Starbucks Corporation. As of his latest roles, he has held the position of Group President of International and Channel Development at Starbucks. In this capacity, Conway is responsible for overseeing Starbucks’ operations and growth strategies in international markets outside of the United States, as well as leading the channel development segment, which includes various business channels such as retail products and ready-to-drink beverages available in grocery and convenience stores globally. Conway brings a wealth of experience in brand expansion and operational management to Starbucks. His strategic acumen has been pivotal in driving international market penetration and establishing partnerships that further the company's global footprint. Under his leadership, Starbucks has been able to expand its presence into new markets and enhance its offerings through innovative retail channels. Before joining Starbucks, Michael Conway held leadership roles at other major companies, which contributed to his expertise in navigating complex market dynamics and developing effective growth strategies. His leadership style is characterized by a strong focus on team development, customer engagement, and sustainable business practices, aligning with Starbucks' corporate values. Conway's contributions to Starbucks are notable for enhancing the brand's penetration in competitive international landscapes, fostering cross-cultural business relationships, and driving sustainable growth initiatives, thus playing a crucial role in Starbucks' continued worldwide expansion and success.
Sara Kelly is the Executive Vice President and Chief Partner Officer at Starbucks Corporation. In her role, she oversees the company's global partner resources (human resources) operations, championing initiatives related to talent management, organizational development, and employee engagement. Since joining Starbucks, Kelly has been instrumental in shaping the company's culture and fostering an inclusive environment that prioritizes partner experience and development. Her leadership focuses on supporting Starbucks’ mission and values, ensuring a diverse and equitable workplace, and enhancing the growth and success of the company's global workforce.
Bao Giang Val Bauduin is an accomplished executive currently serving as the Senior Vice President and Chief Accounting Officer at Starbucks Corporation. In this key role, he is responsible for overseeing the company's accounting functions, ensuring financial integrity, and contributing to strategic financial planning. Before joining Starbucks, Bauduin accumulated significant experience in the financial sector. He held a leadership role at William Sonoma, where he was responsible for various financial operations. His expertise spans financial reporting, internal controls, and process improvements, skills he has utilized to drive efficiency and accuracy in accounting practices. Bauduin's educational background includes a strong emphasis on finance and accounting, with relevant degrees that have positioned him well for his roles in financial leadership. His career is marked by a commitment to excellence, operational improvement, and strategic financial management. His contributions to Starbucks are part of the company's broader efforts to maintain financial transparency and uphold its reputation as a leader in the global coffee industry. Under his financial stewardship, Starbucks continues to emphasize growth, innovation, and sustainable financial practices.
Deborah L. Hall Lefevre is a distinguished executive known for her role at Starbucks Corporation. Serving as the Chief Technology Officer, she is responsible for leading the company's technology strategy and overseeing initiatives that enhance the digital customer experience. Her leadership focuses on leveraging technology to drive innovation and improve operational efficiency across Starbucks' global operations. Before joining Starbucks, Hall Lefevre accumulated extensive experience in the technology sector, having held key positions at major companies. She was the Senior Vice President and Chief Information Officer at International Dairy Queen, where she led technology transformation efforts. Her career also includes significant roles at American Express, where she managed technology strategy and development, showcasing her expertise in harnessing technology for business growth. Hall Lefevre is recognized for her strategic vision and ability to integrate cutting-edge technologies in customer-oriented businesses. Her leadership style emphasizes collaboration, innovation, and the adoption of technologies that align with business goals. Through her work at Starbucks, she continues to play a vital role in shaping the company’s digital landscape, ensuring that technology serves as a pivotal catalyst for enhancing customer experiences and expanding the company’s global presence.
Tiffany Willis serves as the Executive Vice President and Chief Accounting Officer (CAO) at Starbucks Corporation. In her role, she is responsible for overseeing the company's accounting functions, ensuring financial integrity, and maintaining compliance with financial regulations. Tiffany brings a wealth of experience in finance and accounting to Starbucks, having held various leadership positions in the industry. Under her leadership, the accounting team supports Starbucks' financial objectives and contributes to its strategic goals by providing accurate and timely financial reporting. As a CPA, she exemplifies professionalism and expertise in her field, which is instrumental in driving the company's fiscal health and stability.
Dominic Carr is a prominent executive at Starbucks Corp, serving as the Senior Vice President of Global Communications. In this role, he is responsible for overseeing the company’s global communications strategy, including media relations, public affairs, and corporate communications. Carr's leadership is instrumental in shaping the brand's public image and managing its communication efforts worldwide. Before joining Starbucks, Carr held several senior positions in communications and public relations at major companies, bringing with him a wealth of experience in strategic communications. His expertise spans various sectors, lending depth and insight to Starbucks’ communication strategies. Carr is known for his ability to effectively navigate complex communication challenges and craft messages that resonate with diverse global audiences. His career reflects a commitment to transparency, innovation, and a keen understanding of the media landscape, helping to strengthen Starbucks' brand identity across the globe.
I think as you know, last month, I made a commitment that we would get back to Starbucks. That means focusing on what has always set Starbucks apart: a welcoming coffee house where people gather and where we serve the finest coffee, handcrafted by our skilled baristas. It's our enduring identity, and it's why millions of customers around the world visit Starbucks every single day.
People love Starbucks. But I've heard from some customers that we've drifted from our core, that we've made it harder to be a customer than it should be and that we've stopped communicating with them. As a result, some are visiting less often. And I think today's results tell that same story.
To welcome all our customers back and return to growth, we need to fundamentally change our recent strategy. Back to Starbucks is that fundamental change. I believe that our problems are very fixable and that we have significant strengths to build on. I've spent my career understanding, stewarding and building brands, and it's clear the Starbucks brand is strong and enduring. When we stay true to our core identity and focus on delivering a great partner and customer experience, our customers come, and importantly, they come back.
Since taking this role, I've been digging in to understand our business. I've spent most of my time in stores talking with our partners and customers. I've also met with support center teams. I already have some learnings, and we're applying those learnings to stabilize the business in the near term and to shape our go-forward strategy. We have a clear plan, and we are already taking quick action.
Regardless of any challenges in the consumer environment, we know we must operate at our best every time we serve our customers. I look forward to sharing more and taking questions on next week's earnings call. But today, I want to share some of what I've seen and where we need to focus.
At Starbucks, coffee comes first. No one matches our expertise. Our deep engagement with coffee farmers, our skilled roasters, the premium equipment we use in our coffee houses and the skill of our baristas are all unmatched. We offer something for everyone: fresh brewed coffee from our Clover Vertica, high-quality espresso for everything from Americanos to flat whites, innovations in cold coffee with our reformulated iced coffee and the popular Iced Shaken Espresso platform.
Through product development, marketing and in-store experience, we need to remind everyone that we are and always have been Starbucks Coffee Company. From the very beginning, Starbucks has always been about our green apron partners. Everything we do starts and ends with them. We must ensure our baristas have the time and tools they need to provide exceptional customer service and that they are supported by strong leaders and managers across every store.
Every person at Starbucks must work harder to support our retail teams, moving faster to respond to their feedback and get them what they need. Our green apron partners want to provide exceptional service to our customers. And as leaders, we need to remove those things that might stop them from doing that. We will also build on our legacy by making Starbucks the best job in retail, offering our baristas meaningful career growth and industry-leading benefits like the opportunity for U.S. partners to earn a free 4-year college degree.
We need to offer a great experience to our customers every single time, especially during the morning peak. We are reorienting all our work to ensure we deliver a high-quality handcrafted beverage, prepared quickly and with care and handed directly to the customer by our barista.
This is the moment of truth. This commitment will drive every decision we make. To succeed, we need to address staffing in our stores, remove bottlenecks and simplify things for our baristas. We need to refine Mobile Order & Pay so it doesn't overwhelm the café experience. We know how to make these improvements. And when we do, we know customers will visit more often. We must reestablish ourselves as the community coffee house.
Starbucks has always been a place where people come together. We are revisiting our stores to make sure we're offering the amenities you'd expect in a community coffee house. Even if customers don't want to stay in the café each time they visit, we know they expect our stores to look and feel like the community coffee house they remember. We have to reintroduce Starbucks to the world. We're fundamentally changing our marketing. We've been focusing on Starbucks Rewards customers rather than talking to all our customers, and we're changing that quickly, as you likely have already seen. We're prioritizing our brand, highlighting the handcrafted products customers expect and showcasing the coffee innovation that sets Starbucks apart.
We will simplify our overly complex menu, fix our pricing architecture and ensure that every customer feels Starbucks is worth it every single time they visit. As we do all this, we're committed to innovating with discipline and prioritizing investments that will improve the experience for both our partners and customers.
As I said last month, my near-term focus is the U.S. It's our biggest business, and we need to return it to growth. But we also have significant opportunities around the world. Our team is focused on how we return Starbucks China to growth and getting all our international businesses performing again.
Throughout my career, I've learned and applied some powerful lessons. If you stay true to your core identity, take care of customers and your team, simplify the business, deliver consistently high-quality products and experiences and tell your story effectively, you will be successful. So we have a lot of work ahead of us, but I am confident we can get all these things right at Starbucks.
I'm convinced that if we get back to Starbucks with a focus on coffee and customers, combined with a welcoming coffee house experience created by our green apron partners, we will remind people of why they love Starbucks. They will visit more often, and we will return this company to strong growth.
Getting back to Starbucks is our plan, and we'll share our progress as we go. Thank you for listening, and I look forward to sharing the progress with you in the future.