Brian Niccol
Chairman and Chief Executive Officer at Starbucks
Thank you, Rachel, our financial results were very disappointing, and it is clear we need to fundamentally change our strategy to win back customers and return to growth. Back to Starbucks, is that fundamental change.We have to get back to 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. Regardless of the consumer environment, we must be at our best to succeed. And right now, despite the hard work of our Green Apron partners we aren't always at our best.
I've heard that while people love Starbucks, some feel like we have drifted from our core. We've made it harder to be a customer than it should be, and we focused our marketing too narrowly on Starbucks Rewards members.I've spent my career understanding, building and stewarding brands, and it's clear the Starbucks brand is iconic and loved. My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back.
Our problems are fixable. Most of what we need to do is in our control. So our path forward is clear. And with our US business being our priority, work is already underway. Some things will take some time as we test and learn, but we're moving quickly on the things we can. I want to share a few examples.We have to make it easier for our customers to get a cup of coffee. We are prioritizing work across the US business to support a clear throughput with quality goal. We want to hand deliver a high-quality handcrafted beverage to our cafe customers in four minutes or less and deliver orders on time for our mobile order & pay customers every time.
We have work to do to achieve this consistently, but we've learned lessons from our success improving the drive-through experience and reducing out the window times. Our throughput with quality aspiration and getting the core cafe experience right will drive everything we do and every decision we make. The moment our barista hands a cup of coffee directly to the customer is our brand moment of truth.So let's talk about some of the changes we're making to do this. First, we're working get staffing right in our stores. As Rachel shared, we've made significant progress to improve average hours per partner and partner turnover is at another low.
Our efforts to get partners, the hours and schedules they want are working. Now we need to make sure we have the right number of partners on the floor, particularly during our morning peak and shoulder hours. We are moving quickly to test and learn.We're also making a commitment to grow from within by identifying internal hires for 90% of retail leadership roles and to rally our team behind our back to Starbucks plan and help support strong leadership in every store we're planning to host a store manager conference in 2025.
Second, we're making it easier for customers to enjoy brewed coffee their way. We plan to bring back condiment coffee bars in all our cafes by early 2025. It's a great customer experience and will help with speed of service.We also plan to complete the rollout of our Clover Vertica brewers in all our company-operated locations by the end of fiscal year 2025, providing customers more on-demand choice and high-quality brewed coffee. And we're evolving store routines to hand deliver brewed coffee to customers faster upon order.
Third, to improve throughput, quality and consistency we will cut down our overly complex menu to align with our core identity as a coffee company. We will still offer customers great choice, but we'll be focused on fewer, better offerings consistently crafted.Fourth, we will continue to scale our investment in Siren Equipment and Siren Craft processes to improve the in-store experience for our partners and customers. This work is a critical enabler in helping to achieve our four-minute wait time aspiration.
And finally, we'll bring order to mobile order and pay, so it doesn't overwhelm our cafes. Today, more than 30% of transactions are driven by mobile orders. At peak, it can drive an influx of orders that can be difficult to sequence and quickly deliver to our customers. When it works well, it's great, but sometimes it can be a challenge for both customers and partners. So we're working to improve sequencing with a new algorithm that enables on-time mobile order handoffs and supports our four-minute throughput with quality with quality being our goal for cafe customers.
We're also placing common sense guardrails on mobile ordering that we think will improve the experience for all customers. And over the coming months, we plan to take steps to better separate mobile order pickup from the cafe experience. There are also some additional steps we're taking beyond a throughput with quality focus that we believe will resonate with our customers and partners. First, we are reimagining our pricing architecture, starting with non-dairy milk customizations. We know customization is an important part of the Starbucks experience, and we want to make it easier for customers to order their beverage just the way they want while still feeling like it's worth it.
So beginning with holiday launch on November 7 we're eliminating the upcharge for non-dairy milk at North American cafes owned and operated by Starbucks. It's the most popular customization after an extra shot of espresso. And once implemented, nearly half of customers that pay for a modifier could see a price reduction of 10% or more when they choose a non-dairy milk.We're also investing in our customers with an intent not to increase menu prices at company-owned and operated stores in North America through fiscal year 2025. It's a great start, but we have more work to do to make our pricing architecture straightforward and logical.
Next, we're reclaiming the third place. So our cafes feel like the welcoming coffee house our customers remember. In the coming months, we intend to reintroduce more personal touches to elevate the cafe experience. For instance, we'll begin to prioritize serving coffee and ceramic mugs for customers who choose to enjoy their coffee in our cafes. We're also beginning to review and revise our cafe designs to bring back more comfortable seating and amenities and to ensure our stores are a place where customers want to sit, work and meet. We're beginning to revisit certain policies with our partners and customers being top of mind.
Lastly, we're getting back to marketing Starbucks to all customers. We've already made some changes. So first, we're focusing on coffee. Starbucks sources, roasts and crafts some of the finest quality coffee. I have always loved Starbucks Coffee, but I haven't always fully appreciated the quality and care that goes into every cup. From the work of our agronomists to support tens of thousands of independent coffee farmers to our master roasters, our high-quality equipment and our skilled baristas. Our marketing needs to tell our coffee story and showcase our premium coffee beverages.
Second, we're reducing the frequency of discount-driven offers that are proven ineffective, diluted our premium positioning, overburdened or baristas and detracted from a consistent customer experience. We're working to make every visit worth it for our customers with straightforward pricing, timely service and a more consistent enjoyable cafe experience.
Third, we need to broaden our marketing beyond our Starbucks Rewards customers. Our newly launched campaign focuses on talking to all customers and elevates the Starbucks brand in a much more visible way through broad reach media like linear TV. It reminds customers across age groups that Starbucks serves the best coffee. You've likely seen our new approach in practice already, and you will see more of it throughout the holidays and into January. Our customers find worth through quality, consistency and a sense of value. I'm confident that even these early steps will begin to remind customers, the Starbucks experience is all of these things.
US is my near-term priority, but our international business presents significant opportunities. Before discussing China in detail, I need to spend time there to better understand our operations and the market. All indications show me the competitive environment is extreme, the macro environment is tough, and we need to figure out how we grow in the market now and into the future. In meantime, we continue to explore strategic partnerships that could help us grow in the long-term.
Looking elsewhere, I've been pleasantly surprised to learn about significant international growth opportunities for the business beyond China. We'll spend more time and effort to capitalize on growth across other international markets in the coming years. As I mentioned last week, success comes from staying true to your identity, taking care of customers and your team, simplifying the business, delivering consistently high-quality products and experiences and telling your story. I'm confident we'll make it easier to be a customer, and we'll encourage customers to visit more often.
And I'm confident set our partners up for success, so they can deliver the great customer experience I know they want to provide. In doing so, we'll reinvigorate our brand, drive stronger financial returns and return Starbucks to growth. Thank you for your time. And as we get back to Starbucks, we'll regularly share results driven by our work and as we begin to see results from pilot projects and early initiatives, we'll share more about our long-term plan.
With that, we will open the call for questions. Operator?
