The conference call discussed the financial performance of Starbucks in the third quarter of the fiscal year 2025, including non-GAAP results, revenue, operating profit margin, and growth indicators for earnings per share. Participants were also reminded to pay attention to the risks and uncertainties of forward-looking statements, and were provided with ways to access relevant SEC documents. The conference also mentioned reconciliation information between non-GAAP measures and GAAP measures, as well as arrangements for webcasting and archiving.

Starbucks is rapidly advancing the transformation of its business and culture based on feedback from customers and partners. Although global comparable store sales decreased this quarter, comparable sales growth was achieved in the Chinese market. Customer satisfaction in the North American region has improved, with reduced complaints, particularly increasing transaction volumes and perceived value among younger customer groups. In addition, Starbucks has emphasized its strengths in technology, drive-thru, digital, and delivery services, and plans to further consolidate its market position and customer experience through a series of operational changes, adjustments to its store portfolio, and innovative strategies.

Starbucks is currently promoting its green service model on a full scale, marking the company's largest investment in operational standards and customer service to date. The green service model focuses on five key moments, including building customer connections and enhancing experiences, as well as adjusting employee schedules, working hours, and peak hour coverage, aiming to provide consistent and scalable service standards. In addition, Starbucks has introduced intelligent queueing technology and advanced order sorting algorithms to ensure consistency and timeliness in service across all points of contact. In the pilot phase, this service model has shown significant results, including cost and service quality improvements, sales growth, and increased customer satisfaction. Meanwhile, Starbucks plans to introduce new growth tools in the next fiscal quarter to further drive same-store sales growth, and improve inventory management to meet existing demand and reduce stockouts.

Starbucks plans to undergo a major transformation of its coffee shops in North America, aiming to create a more cozy and highly connected customer experience. The company plans to invest approximately $150,000 in each store for a quick renovation, introducing more textures, warmth, and layered designs while maintaining the continuity of store operations. In addition, Starbucks is developing a prototype for "future coffee shops," with the first prototype set to open in 2026, featuring 32 seats and convenient drive-thru service at a cost about 30% lower than traditional store fronts. The company also plans to complete an evaluation of its coffee shops in North America by the end of the 2026 fiscal year to ensure the rationality and profitability of store locations, and will discontinue operating store models that only offer mobile orders and pick-up. Meanwhile, Starbucks will enhance customer experience and economic benefits through menu innovation, digital loyalty programs, and reducing reliance on promotions, driving the transformation and growth of its North American business.

Starbucks' international business achieved over $2 billion in revenue for the first time in a single quarter. In China, the company has seen revenue growth for three consecutive quarters through short-term strategy adjustments, with overall comparable sales turning positive. Beverage innovations, customized options, and adjustments to non-product pricing strategies have helped expand customer base and drive sales in the afternoon and evening. Starbucks has also shown strong performance in other global markets, such as the UK and Latin America, demonstrating sustained sales growth and profitability. The company plans to further accelerate international market growth through strategic partnerships and will hold an Investor Day in the second quarter of fiscal year 2026 to showcase its long-term plans and ambitions.

Starbucks achieved revenue of $9.5 billion in the third quarter, a 3% year-on-year increase, mainly driven by a 6% growth in net new company-operated stores, but partially offset by a 2% decline in comparable store sales. In terms of global comparable store sales performance, the US market saw a 2% decrease, with transaction costs falling by less than 4%. Despite the impact of the lack of private discount promotions last year, the operating transaction volume of the US company improved for two consecutive quarters, while the proportion of stores with positive transaction volume has also increased for three consecutive quarters.

Starbucks showed significant signs of recovery in the third quarter performance, especially with growth in revenue in central business districts and non-Starbucks Rewards members, as well as achieving the first year-over-year transaction growth since the pandemic recovery. Transaction volume for Starbucks Rewards customers also continues to increase each quarter, and the company plans to further drive growth and loyalty among this customer segment through a redesigned loyalty program. In the U.S., ticket growth reached 2%, primarily driven by product innovations, especially in food. While revenue from licensed stores decreased in the retail segment, sales in airports and university campuses saw growth. In international markets, 7 major markets achieved positive comparable store sales growth, with a 2% increase in comparable sales in the Chinese market thanks to successful pricing innovations and strong marketing activities. In Japan, although same-store sales were negative this quarter, the brand remains strong. Revenue from the Channel Development department increased by 10%, mainly due to increased revenue from the Global Coffee Alliance. Starbucks opened a total of 2008 new stores globally this quarter, primarily in the U.S. and China. The company is conducting a comprehensive evaluation of its store portfolio to ensure that each store represents the brand and customer commitment, with plans to complete this evaluation by the end of the year. In terms of capital deployment, Starbucks is committed to reducing costs for new store openings and renovations while maintaining a welcoming environment and high profit margins. Despite a decrease in earnings per share this quarter, the company remains committed to its capital allocation strategy, maintaining a strong financial position and credit rating, while returning cash to shareholders through dividends.

Starbucks executives detailed the company's long-term strategies and investment plans, emphasizing ongoing efforts in existing innovation plans and brand building, as well as anticipation for the upcoming pumpkin spice latte sales season. At the same time, the company is actively addressing uncertain consumer environments and cost pressures, laying the groundwork early through key projects like 'Green for Service'. It is expected that performance will continue to improve with the implementation of the 'Back to Starbucks' strategy in 2026. Additionally, Starbucks plans to invest over $500 million in additional labor hours for its company-operated stores in the US in the next year to optimize cost structures, improve efficiency, and enhance customer experience. Despite facing challenges of increased costs in the short term, these investments are expected to drive higher profit margins and financial performance in the long run.

Starbucks emphasized in the discussion its efforts to optimize cost structure in the short and long term, as well as to achieve long-term profitability goals through establishing a sustainable operating model. The discussion mentioned 2019 as a reference point, with the aim of reaching or even surpassing the profitability level of that year in the future. Additionally, Starbucks plans to detail its profit path and long-term goals at an investor day in early 2026, demonstrating confidence in cost control, innovation, and sustained growth.

In the conversation, Starbucks discussed the promotion plan of the green service model, expecting the model to gradually start implementation at all stores by mid-month. It was also mentioned that time is needed for employees to adapt to the new labor model and for customers to experience the improvement in service. In addition, the role of system managers and their importance in the internal promotion mechanism of the company was mentioned, emphasizing the mission of cultivating talents from within and planning the training and promotion path for middle management personnel.

Starbucks has achieved a continuous improvement in customer experience by implementing operational improvement platforms and green service models. At the same time, its marketing strategy has also shown positive effects, especially in increasing the number of non-discount reward and non-reward transaction customers. In addition, Starbucks is drawing on the experience of food innovation in places like Canada and London, planning to promote successful food options to global markets, including the United States.

During the discussion, the company elaborated on the improvements to its service model, particularly the progress made through the implementation of a green service model in its 24/7 operations, as well as the rethinking of its loyalty rewards program aimed at better recognizing and rewarding customers with different spending frequencies. Additionally, the challenges of maintaining speed, accuracy, and consistency in the innovation process were emphasized, along with the importance of innovating existing production processes while ensuring these standards are met.

Starbucks emphasizes the importance of innovation and close collaboration with customers and partners in order to meet customer needs. They work together with store employees (called 'baristas') to develop new products and services, ensuring that innovation can be effectively implemented and meet customer expectations. In addition, through menu simplification and optimizing mobile payments, Starbucks aims to reduce non-productive labor for employees and improve work efficiency. At the same time, the company sets up incentive mechanisms based on cost reduction to encourage all employees to work hard to lower operational costs, achieving better financial performance and business growth.

In the test, the green APRO service model was successfully implemented in 2000 stores, demonstrating effective personnel allocation and technology application, especially in the intelligent order system. This prompted the company to decide to fully promote this service in all stores across the United States before the end of summer. Key indicators for measuring the success of the model include customer satisfaction, correct staffing, meeting speed requirements, and ultimately transaction growth, all of which will be reflected through a growth scorecard. In addition, the new service model will be fully launched before the busy season in autumn, expected to provide a better customer experience for upcoming holiday sales peaks such as Pumpkin Spice Latte.

When facing competition pressure from various aspects in the American market, Starbucks focuses mainly on enhancing brand value, strengthening customer service, and solidifying its unique position in consumers' hearts. When discussing its operations in China, Starbucks expressed its willingness to seek strategic partners, emphasizing the need to find a partner who shares its mission and values to operate more effectively in the local market. It also hopes that through collaboration with local partners, it can ensure the continuous growth and success of the Starbucks brand in the future Chinese market.

During the discussion, the company emphasized the importance of product innovation in different time periods and occasions, including considering different cup sizes and price points to meet consumer demands. At the same time, the company reiterated its positioning as a high-end brand committed to providing a premium experience, with pricing being the last consideration in its business model. Although future price adjustments are inevitable, the company will try to minimize the extent of price changes.

In the performance discussion in the third quarter of the 2025 fiscal year, Starbucks top management detailed the market challenges currently facing the company, including changes in the competitive environment, adjustments in consumer behavior, and macroeconomic pressures. They emphasized the importance of attracting customers back through strengthening the "green service" model and continuous innovation, believing this to be key to driving business growth. Additionally, Starbucks plans to lay a solid foundation for future development through large-scale investments and operational reforms. They also mentioned a repositioning of the cafe strategy to focus more on community connections and innovation, demonstrating the company's confidence and strategic planning for future development.