00:00:02 · Romaine Bostick, Brian Niccol
[00:00:02] S0: Bloomberg Audio Studios Podcasts Radio News Bloomberg's The Close anchor, Romaine Bostick, joins us now with Brian Niccol, the CEO of Starbucks. [00:00:13] S1: Romaine. [00:00:13] S0: Brian, thanks for joining us here on Bloomberg Television this morning, fresh, of course, off your most recent earnings report. And I do kind of want to start off with closing out 2026, fiscal 2026 for you. Real evidence here that the turnaround is taking foot. But let's push forward into the new fiscal year, Brian. Where is that growth coming from? Because we've seen a little bit of a step down in terms of actual transaction growth. though ticket growth does seem to be accelerating.
00:00:41 · Brian Niccol
[00:00:41] S1: Yeah, I think, look, first of all, what I would say is we've kind of moved through the turnaround and now we're really focused on our growth plan. And that's what you're going to see us do in fiscal year 27 and beyond. And, you know, what I love that's happening in our business is our growth is being driven by the fundamentals of our Green Apron service. And also the fundamentals being executed around great coffee, great craft through customization, and then obviously getting customers those experiences with our baristas in store. So as you look at fiscal year 27, one of the things I love about this is We're ahead of schedule, right? If you look at what we guided for fiscal year 28, we were already touching the low end of that guidance a year earlier. And so the fact that, you know, we've told people instead of just three or better, we're going to be doing at least 4% this year. Our margins have expanded where we're going to be in that 13.5% to 14% range. And then obviously earnings growth that comes with it in that 315 to 325 range. So, you know, I think it's growth and we're a growth company and it's driven by transactions and the fundamentals of our green apron service model combined with, you know, great merchandising, great marketing, great menu innovation. It's the way you want a business to grow.
00:01:57 · Romaine Bostick, Brian Niccol
[00:01:57] S0: Yeah, certainly. But I'm curious about that push ahead, though, into fiscal 2028 and getting to those targets earlier than planned. I mean, you're obviously focused a little bit more on getting to the low end of that target. You still have the high end that you have that gap between the two. Is there some sense here that that low end of the target is what you think investors should focus on or more on the high end side that they had already modeled in? [00:02:20] S1: Yeah, look, all my point is, is we're already achieving what we said we were going to do in 28 and 27. So, you know, that I think should give people really great confidence in our ability to not just hit the guidance that we put out there in 28. But also, I said this even at our investor day when we put that out there, it's just a point in time. It's going to be part of our journey and it's really a growth journey. So, you know, our intention is when you get into the years beyond, you know, obviously we'll continue to grow this business beyond what we've even guided in fiscal year 28. So, We've talked about this in the past, which is this business has plenty of opportunity, plenty of growth in front of it, whether it's new units in the U.S. or around the world, or growing transactions and customers within our existing four walls. to get ourselves back to 17% or better margins in the long run. So, you know, I just think we're a great growth story and the business is back on its front foot.
00:02:20 · Brian Niccol, Romaine Bostick
[00:02:20] S1: Yeah, look, all my point is, is we're already achieving what we said we were going to do in 28 and 27. So, you know, that I think should give people really great confidence in our ability to not just hit the guidance that we put out there in 28. But also, I said this even at our investor day when we put that out there, it's just a point in time. It's going to be part of our journey and it's really a growth journey. So, you know, our intention is when you get into the years beyond, you know, obviously we'll continue to grow this business beyond what we've even guided in fiscal year 28. So, We've talked about this in the past, which is this business has plenty of opportunity, plenty of growth in front of it, whether it's new units in the U.S. or around the world, or growing transactions and customers within our existing four walls. to get ourselves back to 17% or better margins in the long run. So, you know, I just think we're a great growth story and the business is back on its front foot. [00:03:15] S0: With regards to expanding the footprint, I mean, you still had something like 250 store closures in North America, yet now you're guiding towards an opening of 300. So what's changed now? Is that just sort of getting rid of the weaker stores or have the economics of store openings changed that gives you confidence on opening 300? Yeah.
00:03:15 · Romaine Bostick, Brian Niccol
[00:03:15] S0: With regards to expanding the footprint, I mean, you still had something like 250 store closures in North America, yet now you're guiding towards an opening of 300. So what's changed now? Is that just sort of getting rid of the weaker stores or have the economics of store openings changed that gives you confidence on opening 300? Yeah. [00:03:34] S1: Yeah, look, we changed the strategy on what we wanted to build and where we wanted to build it in the U.S. And so we had to reset the pipeline. And then we also had to do some, you know, I think cleaning up of our estate. And that's exactly what we've done. Now I think we're in a great situation to continue the growth going forward. You're going to see us in fiscal year 28, you know, open roughly 300 new stores. That'll take us on our journey to hopefully 5,000 and more. And then when you talk about outside the United States, Romaine, it's pretty impressive, right? We've got 22,000 stores outside the United States. There's no reason why we can't double that to 40,000 plus just outside the United States. So, you know, there is just so much opportunity for this Starbucks brand around the world because the Starbucks promise is exactly the experience that customers want. Great coffee, great customization through great craft, and then obviously in a great place where they can build community.
00:03:34 · Brian Niccol, Romaine Bostick
[00:03:34] S1: Yeah, look, we changed the strategy on what we wanted to build and where we wanted to build it in the U.S. And so we had to reset the pipeline. And then we also had to do some, you know, I think cleaning up of our estate. And that's exactly what we've done. Now I think we're in a great situation to continue the growth going forward. You're going to see us in fiscal year 28, you know, open roughly 300 new stores. That'll take us on our journey to hopefully 5,000 and more. And then when you talk about outside the United States, Romaine, it's pretty impressive, right? We've got 22,000 stores outside the United States. There's no reason why we can't double that to 40,000 plus just outside the United States. So, you know, there is just so much opportunity for this Starbucks brand around the world because the Starbucks promise is exactly the experience that customers want. Great coffee, great customization through great craft, and then obviously in a great place where they can build community. [00:04:29] S0: Are the economics of the international business going to be enough to satisfy investors? I mean, your net new store growth is heavily weighted on the international side, yet we're still seeing softness in sales there. And some of the partnerships that you have struck, particularly in China, obviously are a little bit less impactful on both revenue and profitability.