Bloomberg Audio Studios podcasts, radio, news. Chipotle and Starbucks, both of them raised their guidance after stronger than expected quarters thanks to trendy new menu items and revamp loyalty programs. All those stocks up across the board, but let's dive deeper into Starbucks. Roma Bostic, co-host of The Close, is joining us this morning alongside the CEO of Starbucks, Brian Niccol. Roma,
That's right, Brian Niccol joining us right now. Fresh off of last night's earnings report, 7.9% comp growth. Brian, obviously the street likes what they hear. But I do need to get a little bit more color as to exactly where that is coming from. Transactions 4.2%. That's foot traffic. Brian, is that just favorable comps? Are you truly getting more people into the store?
Yeah, no, great to be here. And look, the reality is what's terrific to see is the growth is coming from more customers coming into Starbucks more often. And that's just a foundational strength and the good news is we're seeing it across all income groups and really all age groups. So just really terrific strength moving through our stores.
With regards to the tickets as well, that was also up about 3 and a half percent in the most recent quarter. So it's a function of both foot traffic coming into the store but also people spending more. Are they buying more? Are these add-ons? What gets that ticket price up to that 3 and a half percent jump?
Yeah. So, what you're referring there is, we're seeing people add more food, so a higher attach rate, and then what we're also seeing is people modifying more of their drinks with things like our cold foam, adding an espresso shot. So, it really is terrific to see people using our menu to get them the customized experience that they want out of their drink, and then also attaching what is really some terrific food to go along with their beverage.
Do you have any concerns about maintaining this momentum? And I don't necessarily mean that from an operational perspective. We just got a GDP report for the second quarter, backwards looking, much lighter than what folks had been looking for. Consumer spending holding up right now, but you've referenced in the past that you had seen some strain at least among the lower income consumers. Are you concerned that some of that weakness might be spreading beyond just the lower income folks?
Actually, we're seeing strength across all income groups at Starbucks. And what we continue to see is when we give people a great experience, they come back more often and when we do it consistently, they really reward us with their business. And so we've not seen the customer move back as it relates to Starbucks. They've been really resilient. We're very optimistic about where we're headed. We exited the quarter with really strong performance and we're excited about how we're heading into our fourth quarter and we're really optimistic about the plans we have for 2027. So look, we're just getting started. It's great to see the strength across all of these customer demographics and we're confident we're going to continue to have success with them.
Well, let's talk about 2027. Obviously, we've seen the revenue numbers, at least I say the sales numbers start to come up a little bit. There's still some concerns about whether we could see more meaningful profitability. How much of the lag between those two is tied to the revamp of the stores? I mean, you've done a thousand so far for this fiscal year. I think you're still guiding towards 1,500 for the next fiscal year. There's a huge cost attached to that, right?
Well, look, I think the thing that we've done here is we were really smart about what we spent on these uplifts and the implications on the store. So, we can do these things for roughly $150,000. We do not close the store at all. So operations continue to perform and then the experience that our partners have because now they've got a new really great-looking coffee house and that what our customers have results in, frankly, more transactions. So it's been a great program. We'll continue to push the program forward. We're going to accelerate into 2027 because we know when we create a great coffee house and we have that great partner/barista to customer experience, we're rewarded with more business. And it's not a big investment but it's a meaningful investment and then it gives us great results.
Is there any way you can share with me what the difference in comp sales is for a revamped store relative to the stores that haven't been uplifted?
You know, we haven't shared that publicly, but what I can tell you is we see a move in a positive direction as it relates to transactions and because of what we're seeing, we are accelerating the program.
I think the last time we talked with regards to transactions, you talked a lot about improving the in-store experience by also improving the speed at which those orders get out the door, whether it's in the cafe or in the drive-thru. I know there was some color on the conference call about some of the time that you shaved off of that. We're talking seconds here, but it seems like those seconds matter to you. How much progress have you made?
Yeah, look, this is one where I'm really excited because we set out right from the go that we wanted to improve the speed that our customers experience and then do it consistently. And behind that is really this drive towards more throughput. And we've seen just that. So we've got better throughput in the mornings. We also have better throughput in the afternoons and frankly as a result all day long our transactions are up throughout the day. And when you kind of pull that back, yes, customers are loving the experience, but our partners are doing a great job of being staffed as a team, deployed correctly, and then consistently executing the Green Apron service model, which then results in better speed at the drive-thru, better speed in the cafe, more on time and mobile order pickup, and frankly, pretty good speed in the delivery channel as well. Though it is having the effect that we would want where in totality the Starbucks business now I think is providing people the great experience that they want at the speed that people need based on the occasion where they're visiting us.
Is there any conflict though with getting that number down in terms of the time down and this idea of these add-ons and other things that I would assume would complicate the process for the baristas just a bit.
