00:00 Speaker A

Here with more on Starbucks’s latest quarterly results. Let’s get to Bernstein senior analyst, Denillo Gargulo. Um, thank you so much, Denillo for being here. Um, and as we look at these numbers, how concerned are you about the US sales number just still seeing declines there?

00:23 Denillo Gargulo

I’m not overly concerned. Um, I would say that the transformation that Ryan Nichol and his new management team are trying to be putting in place is going to take some time. Change management doesn’t come easy and also you need to be training the consumers onto the new Starbucks, or I should say the back to Starbucks plan. So, it’s going to take a bit of time for that to happen. Um, at the same time, as you pointed out a few minutes ago, uh, the tone seems to be quite optimistic, which might be indicating that some of the transformation initiatives are already working out. And so, it’s a matter of scaling those into the United States.

01:46 Speaker A

You know, the plan that Brian Nichols has in place here, you know, speed up the service, tailor the menu, does he have the right plan, the right strategy in place?

02:01 Denillo Gargulo

I I I I’m very confident. This is the right strategy in place. I think, uh, Starbucks was trying to be everything for everybody and not necessarily owning a specific space within the product, as well as within the channels of distribution, where you can really uh, enlighten the consumers. Uh, today, Brian Nichol is basically saying, look, we need to be owning one space really well and execute at the best of our capability. And this is within our stores and coffee. So, forget about all the other distractions that can come in. Let’s focus our strategy on what we do and where we are at our best, and then start to be reconquering the rest of this placement. So, I think focus is the number one uh, priority for the company, but I would think that starting to be increasing the speed of operations to enable that is also paramount to uh, allow consumers to have a little bit of a easier morning when they come in and they see um, that a lot of other people are just in front of them in the line.

04:13 Speaker A

Um, when do you think all of this is going to start to bear some fruit?

04:21 Denillo Gargulo

Um, I would say we um, we might be seeing some pockets of opportunity already starting to be unlocked. Um, I wouldn’t be expecting this one already in the next uh uh, couple of months, but for these ones to be at scale, it’s probably going to take some time. I mean, we’re probably talking about at least six months to a year until we get a real turnaround from an experience standpoint. And once again, there is a change management within the store, so training the baristas, but there is also a setting the right expectations with consumers. Delight them enough, invite them back to the stores, and give them the right experience so that they will want to come back. So, in the numbers, we’re probably going to start to see that, you know, at least six months from now.