Morning. My name is Daryl, and I will be your conference operator today. I would like to welcome everyone to Starbucks First Quarter Fiscal Year 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. If you would like to withdraw your question, please press star, then the number two. I will now turn the call over to Catherine Park, Vice President of Investor Relations. Ms. Park, you may now begin your conference.

Good morning, and thank you for joining us today to discuss Starbucks first quarter fiscal year 2026 results. Today's discussion will be led by Brian R. Niccol, Chairman and Chief Executive Officer, and Catherine R. Smith, Executive Vice President and Chief Financial Officer. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factors discussed in our filings with the SEC, including our latest annual report on Form 10-K and quarterly report on Form 10-Q. Starbucks Corporation assumes no obligation to update any of these forward-looking statements or information. GAAP results in the first quarter fiscal year 2026 include restructuring and impairments, and transaction costs that are excluded from our non-GAAP results. Revenue, operating income, operating margin, EPS, and EPS growth metrics on today's call represent non-GAAP measures and are measured in constant currency. G&A and effective tax rate metrics also represent non-GAAP measures. Please refer to the earnings release and our website at investor.starbucks.com to find reconciliations of these non-GAAP measures to the corresponding GAAP measures and supplemental financial information. This conference call is being webcast, and an archive of the webcast will be available through Friday, March 13, 2026. Also, for your calendar planning purposes, please note that our second quarter fiscal year 2026 earnings conference call has been tentatively scheduled for Tuesday, April 28, 2026. I'll now turn the call over to Brian.

Good morning, and thank you for joining. I look forward to seeing many of you tomorrow for Investor Day, where we will lay out our future vision for the company, our path to sustained growth and profitability, and how we plan to deliver the best of Starbucks Corporation for our customers, partners, and shareholders. Today, though, I want to focus on the continued progress we've made on our Back to Starbucks plan and the momentum we've built across the business through Q1 fiscal 2026. I'm most excited that our turnaround plan is coming to life in the way we envision. First, turnaround the top line, and then earnings growth will follow. And I am delighted to say we are now achieving top line growth driven by transactions, and we have clear plans on how we expect to turn top line growth into margin and earnings growth. We started the fiscal year strong with a focus on disciplined execution at scale. As a result, in Q1, global revenue grew by 5% to $9.9 billion, and global comparable store sales accelerated to 4% growth. We delivered 128 net new coffee houses globally, and we delivered operating margins of 10.1% and EPS of $0.56. Our North America revenue grew 3% in the first quarter to $7.3 billion. Across North America as a whole, and our U.S. business, company-operated sales comps were both 4%, led by three percentage points of comp transaction growth. And across our international business, sales comps grew by a healthy 5%, led by strong performance across our company-operated markets in China, Japan, and the UK. In the U.S., where much of our turnaround work has been focused, company-operated transaction comps grew year over year for the first time in eight quarters, and we grew transactions across all dayparts in the…

Thank you, Brian, and thank you all for joining us this morning. We made meaningful progress in the first quarter as we executed our growth priorities to build long-term strength in the business. I'm incredibly proud of how our partners showed up for our customers throughout the holiday season. And I want to thank them for their dedication and hard work. I'll now share our Q1 results and then provide additional insight into how we're setting up for the months ahead. Our Q1 consolidated revenue was $9.9 billion, up 5% from the prior year, reflecting one net new company-operated store growth and a 4% increase in global comparable store sales, driven by strong performance across both our North America and International segments. Our North America segment revenue grew 3% in the first quarter to $7.3 billion, with comparable store sales growing 4%. In the U.S., our comparable store sales growth also accelerated to 4%, with transactions up 3%, fueled by the first full quarter of Green Apron service embedded in the daily operations of our company-operated coffee houses. Average ticket grew 1%, driven by a growing mix of espresso and tea-based beverages alongside the continued rise in the popularity of our cold foam platform. Our U.S. comp performance is a compelling proof point for our Green Apron service standard, menu innovation, and marketing efforts. This combination drove broader reach and deeper engagement with customers, as evidenced by our ninety-day active Starbucks Rewards member base growing 3% year over year to an all-time high of 35.5 million members. And as Brian mentioned, our Starbucks Rewards member transactions grew year over year in Q1 for the first time in eight quarters, and non-Starbucks Rewards customer transactions grew even faster. Our U.S. licensed store portfolio revenue declined in Q1, primarily due to ongoing…

Thank you. And we will come back for follow-up questions as time allows. Our first question has come from the line of David E. Tarantino with Baird. Please proceed with your questions.

And congratulations on the progress you're seeing. I had a question about the North America traffic performance. And maybe first, if you could perhaps clarify how much benefit you might have seen from the transfer of the sales from the stores that you closed during, I guess, September. And then, to just kind of give us some sense of kind of what the underlying improvement was in the business? And then secondly, I guess, Brian, could you maybe frame up what you're seeing in some of the earliest stores that got the Green Apron service model and whether those are continuing to ramp in terms of the traffic benefit from that service model? Thanks.

Yeah. Good morning. Thanks, David. And so to answer your first question, what we're really delighted about is the North American comp result is driven by transactions. And specifically, the fact that both non-rewards customers grew transactions and rewards customers grew transactions. So two things happen. People came back to the brand. And we also drove engagement or more frequency with our existing customers. So that's a really strong foundation. To answer your specific question, about a half a point was driven by, call it, the sales transfer. In the comp is what we are seeing. So you know, the strength really is broad-based. Other thing that I love is we said from the beginning we wanted to win the morning. And that is exactly what we're seeing. You know, our partners have done a terrific job of staffing and executing the Green Apron service experience in the morning and, frankly, the balance of the day because we're growing transactions throughout the entire day. But the place where we saw the biggest move was in the morning. And then in regard to your question about the pilot stores, this is actually something that we're really excited about. Our 650 pilot stores continue to outperform the fleet by about 200 basis points in comp. We're seeing most of that is well, it is all pretty much driven by transactions. So what we continue to see is a great customer service experience in a great place with our partners doing their craft continually resonates with customers. And then I think you heard me talk about this too. I think we're just getting the brand back on its front foot both in its marketing communication and also the innovation that we're bringing forward. So I'm really delighted by where we are in this phase of the turnaround.

Great. Thank you.

Thank you. Our next question comes from the line of Brian James Harbour with Morgan Stanley. Please proceed with your question.

Yes, thanks. Good morning, guys. I think sort of inherent in what you talked about was some additional cost opportunities, and it sounded like that's this year, but also over the next couple. Could you elaborate on some of those will be and what you expect the timing to be?

Yeah. So I'm sure you guys probably saw this in some of our materials that have been released of late. We've got a clear plan in place to basically track down about $2 billion of cost. You know, we really started that work in 2025. I think it's gonna unfold over the next two years in front of us. And so, you know, it really is across the entire P&L. You know? So, obviously, we've made some progress on G&A. We're gonna continue to make progress in procurement efforts. We think there's tremendous opportunity with using technology to drive efficiency in the work that we're doing. And the thing that I love is this is really to Kathy's credit and the team, is it's not just one project that we're counting on. Okay? We've got a list of projects with people's names next to it, clear deliverables, and the thing I love about the power of our organization is when one idea doesn't work, we get another idea that's up. And so that's what gives us confidence to be able to deliver on the cost side of things while we continue to drive the top line. So it's gonna be an ongoing program. We've identified the $2 billion over the next couple of years here. But I will tell you, it's something that we're gonna be unrelenting, and it's gonna be a consistent piece of our program going forward.

Our next question comes from the line of David Sterling Palmer with Evercore ISI. Please proceed with your question.

Thanks. Good morning. I wanted to ask a little bit about the earnings guidance for fiscal 2026. Perhaps if you think there's some elements that you would like us to appreciate that might not be so obvious, love to hear about that. And relatedly, the earnings guidance seems just a little wide, a little wider than I would have thought. What scenarios do you think would get you to the high end and the low end? Are those two scenarios look like? And thanks.

Yeah, sure. Thanks, David. So the thing that gets us to the higher end is maintaining the performance on comp. First and foremost. And, you know, that's why we're really excited about the underlying strength that we're seeing that's driving the comp. And then, obviously, we're gonna continue to do the work on the cost side of things. But, really, here in the near term, it is going to be driven by comp, is gonna be supported by terrific execution on the Green Apron service model, the marketing menu innovation. And I think you'll hear it at our Investor Day, all the comp drivers that, frankly, we have, across digital, rewards, menu, I'm really optimistic about our future. But that's gonna be the key piece is we gotta continue to drive the top line. And we need to do it in a healthy way so that we maintain the integrity of the experience and we give our customers access to the food and beverage that they want to experience in a Starbucks Corporation.

Our next question comes from the line of Lauren Danielle Silberman with Deutsche Bank. Please proceed with your question.

Congrats on the quarter. I wanted to unpack some of the same-store sales momentum. The non-rewards member growth outpacing rewards member growth, I think over the last several quarters. Great to see the rewards member back to positive. What's driving the differential between the two? And what do you see as the biggest opportunities to narrow the gap? That's how you think about it?

Yeah. Yeah. So thanks for the question. This is something that when I first came into Starbucks Corporation, I wanted to address because I had seen non-rewards customers declining for a consistent trend, and that's never healthy in a business. You have to win both with your rewards customers and call it the light or infrequent customer. And so when Tresi and I set out to discuss how we get back on our front foot, we knew we had to make sure that we had the marketing that was broad, we had to have the message about Starbucks Corporation that was broadly appealing. And I think that's what we're seeing happen with customers. And then, look, the innovation, I think, has been on trend. We're getting back into culture, leading culture. You know, most recently, the barista mug was a I would call it, a lucky strike extra. You know, Tresi would say that was intentional. But, you know, it is one of those things where you have to be relevant leading culture so that you get the infrequent customer to hopefully grow with your brand. And the thing that is exciting to see is our rewards customer user base is getting bigger. So, you know, we surpassed 35 million, and what is great about what's happening in a rewards customer is it's through better engagement that we're getting people to be active, not through discounting and couponing, but rather giving people the Starbucks Corporation experience, the thing that really makes Starbucks Corporation unique, which is our personalization. So when we do that personalization through the rewards program, we get rewarded with more visits from those customers. Then I think you're gonna hear really exciting things about the rewards program at our Investor Day on how Tresi and the team are going to make that program feel like it is made for you. And I think you'll see us have a step up in performance with our rewards program as a result without letting up on driving our non-rewards customer as well. I almost hate calling it non-rewards customer because they're just as valuable. Every customer matters and every transaction matters. We're gonna give that type of experience to everybody so that they know they matter.

Thank you. Our next question comes from the line of John William Ivankoe with JPMorgan Chase. Please proceed with your question.

The question and really this is observation-based. Certain coffee chains have kind of separated both in the U.S. and around the world, their morning execution from the afternoon execution. And I'm really wondering what kind of opportunity that might mean for Starbucks Corporation, morning that might be faster and more consistent, but afternoon, that might be more innovative, specifically around, you know, for example, you know, handcrafted blended energy is just, you know, one idea. So if you could kind of address that theme of AM versus PM daypart execution? And secondly, and I think this is related, there's a lot of competition in this space that's accelerating, in fact, some markets, almost all of it is drive-thru and takeout focused. I'm wondering if that's something that that's really on your competitive radar at this point and if there's anything specific that Starbucks Corporation should do or could do to perhaps blunt some of the sales momentum that some of these chains are seeing? Thank you so much.

Thanks, John. So first to answer your question on the afternoon day versus the morning daypart, you know, I think the way we think about it and the customer thinks about it is the morning is very much a ritual. There are a lot of habits that people have versus the afternoon is really a reset. And depending on where you are in that reset, you sometimes want a blended drink. You sometimes want an energy drink. You sometimes want a sparkling drink. Okay? And you sometimes want protein. And what you're gonna see us do, and this is why I'm really excited, we're gonna finally be done rolling out digital menu boards. It'll be across our entire system. It will allow us to daypart the menu. And drive against these two key insights. Right? The afternoon is a reset. The morning is a ritual. And in the afternoon, you're gonna see us, and Tressie's gonna be talking about this, we will have customized energy. We will have sparkling energy. We will have those indulgent drinks that people want. Right? The frappuccinos that we've made famous. And we will also have food that complements it. That's very much on trend. So the good news is we've got a strong base already in the afternoon. I just think there is tremendous opportunity to unlock that afternoon daypart further. Having more relevant beverages, for how people wanna reset in their day and then also complement it with food then we're gonna use, I think, the traditional tactics you would do in order to market and merchandise that we are the right solution for that afternoon. And, frankly, some of these places we've been slow to develop. And so it presents a tremendous opportunity for innovation pipeline to address it. Your question on…

That's great. Thank you so much, Brian. See you tomorrow.

Yeah.

Thank you. Our next question comes from the line of Sara Harkavy Senatore with Bank of America. Please proceed with your question.

Thank you. A question on another question on same-store sales and then a clarification, I think, on Kathy. One of your comments. So just on same-store sales, you mentioned kind of service. I think that it sounds like service, you know, Green Apron maybe a couple of hundred basis points if you could disaggregate it. Maybe you could just talk a little bit about as you think about the comp, how much was maybe the service versus innovation, you know, versus marketing? I know that's a hard thing to do, but just as I think about sort of the sustainability of the comp going forward. And then Kathy, you mentioned guidance embeds flexibility to, I guess, to identify projects. I interpret that as perhaps investments as well as savings. So just wanted to make sure I understood. Is it, you know, plausible that you might find additional investments that you want to make this year in addition to the kind of annualizing the $500 million in the labor model? Thanks.

So I'll take the first part of that, and then I can hand it over to Kathy. On the second part. So the first part is, you know, you kind of ended your question. It's hard to separate these out. But what I can tell you is a strong operating foundation makes all the other initiatives that much more effective. Right? So, you know, we would not have had the holiday experience that we had with the innovation that we had if we did not have our partners executing the Green Apron service model. And we heard it in the customer feedback. Right? The customer feedback was, hey. Something's different, and it's different in a good way. You know? I love how Mike says this. Like, you're gonna see our partners with eyes up. You're gonna see our partners moving towards customers. You're gonna see our partners wanting to make sure that their craft is, you know, being experienced the way it's intended to be experienced. And so, you know, we heard it over and over again. We had the lowest level of customer complaints we've seen over the last couple of years. We've also seen that customers felt the speed or the convenience. So I think these are all service things. And then we also heard things like, hey. Your menu is much more relevant. It seems more health relevant. It seems more flavor relevant. And so, you know, that's a sign that the marketing is working, connecting. And then also, you know, I don't want to walk past the fact we've put seats back into our cafes. We've not put uplifts everywhere, but we've tried everything we can to get at least seats back in our cafes. And you know what? Every cafe I walk into, guess what? People are sitting in those seats. Enjoying a cup of coffee, or a beverage, and dwelling. And that's what we want to have happen because when you walk into a cafe and grab a mobile order to go, and it's full of seats, you feel better about your purchase decision. Just do. And if you're driving through the drive-thru and you see through the window a thriving cafe, you know, I think we all have had these experiences where it's like, well, on Saturday when I'm walking the dog, I'll probably stop by the Starbucks Corporation and linger. So, you know, it really is working in harmony. It was why it was so important that we get the operating foundation strong, and that then we ultimately dial up the marketing and the menu innovation. So it's hard to distill it, What I can tell you, though, is the fact that they're both working together is why we're seeing the transaction performance that we're seeing. And then on your question about the cost side, I'll hand it over to Kathy.

Yeah. Good morning, Sara, and look forward to seeing you tomorrow. When we talked about having flexibility, it's really about our first objective is to make sure we're supporting the business. And so we're gonna continue to do that in our Back to Starbucks strategy and our plan. And so we want to make sure we've got the right flexibility to do that. You'll hear this again tomorrow, but this is not about broad-based cost-cutting. We are making sure we invest in what matters most. And so we want to make sure that we've got that flexibility inside the P&L and our guidance. Obviously, we've talked about the Green Apron service investment we're doing. We'll continue to evolve our supply chain, which will have little bits of investment here and there, but we equally see the opportunities for reduction or savings there as well. And all of that's embedded inside of our guidance.

Thank you. Our next question comes from the line of Jeffrey Andrew Bernstein with Barclays. Please proceed with your question.

Great. Thank you very much. As I think about the U.S. portfolio, comp growth is often volatile, but the unit growth is more stable in terms of a revenue driver over time. Brian, I think you just mentioned putting more restaurants on corners across the U.S. and being able to still win versus the competition. Just wondering if you could talk conceptually about one, the rate of reacceleration in the U.S. and two, kind of how you think about the opportunity over time? I think last year, you mentioned talking about doubling the long-term store counts. I'm just wondering how you think about that whether there's some sort of penetration analysis that you've done to give you that level of confidence and kind of the cost versus return analysis? Any color at least conceptually in terms of the glide path to reacceleration and where you could ultimately get to would be great. Thank you.

Yeah. Yeah. Yeah. Thanks for the question. And, you know, obviously, we'll get into a lot more of the details on the new unit growth opportunity both in the U.S. and around the world tomorrow. What I will say right now, though, is, like, there are thousands of sites that we've looked at, and I've identified right now. So there's no barrier on unit growth. Frankly, the issues we needed to address was making sure that we're building the right unit, and we had the people capability to open up those new units successfully. And so we put both things in place. Right? We're gonna have, what we're calling now coffee house coaches, which are assistant store managers. That's gonna be a pipeline to enable new store openings from a people standpoint. Right? Because it also creates, I think, a great career path for our partners on their path to becoming a coffee house leader. And then it also allows us to have more stability in the system while we add new units versus what I saw when I first got here is new units were very disruptive on our people. And we can't have that happen. The other thing that we're addressing is the build cost and the actual, I would say, flow that we're going to build. And so I love the new building. We've called it the Ristretto. Right? We've got the tall and grande executions on that Ristretto, and then we also have a PICO Version Of The Ristretto. And so I love the fact that we got flexibility in the size and we can execute all of our access modes. And then we've got the people capability system set up to also then support the people that you need to open these stores. But we'll get into a lot more of these details tomorrow. I just leave you with there's thousands of opportunities in the U.S., and there are thousands outside the U.S. And, you know, our growth opportunity on new units is exciting.

Thank you. Our next question comes from the line of Gregory Francfort with Guggenheim Partners. Please proceed with your question.

Hey, thanks for the question. Brian, there were some comments, I guess, in the proxy about adding a couple of platforms as part of the turnaround efforts. And I guess I'm wondering where does the menu stand today versus when you got there in terms of either SKU or products? And how much have you cleaned up? And then as you look at holes in the menu, where are you looking to identify opportunities to kind of maybe add back some excitement and some marketing to the customer? Thanks.

Yeah. Sure. Thanks for the question. Yeah. I believe we've reduced the menu by, like, 25%. And then if you even go back further, we've reduced it even further than that. But based on my time just here, it's probably been a reduction of, like, 25-30%. And then the platforms that we're after are, like, a health and wellness platform, which we started with protein. You'll continue to see us push against the health and wellness platform going forward. I think there's an afternoon platform both in beverage and in food. And not surprising in beverage, I think it is going to be this personalized energy that can be executed as still sparkling and blended. So there's a pipeline for that platform. And then also, just to give you an example, on food, I think there's a real opportunity, not surprising, to make sure we have food for how people want to eat. Snackable, protein, fiber. Right? These are the things for how people want to eat and reset in their afternoon. So, you know, most recently, you probably saw us talking about another platform area, which is making the bake case more artisanal. So you're gonna see us have pastries that I think you're gonna wanna eat with your eyes. Okay? And that's that is really the heritage of Starbucks Corporation. Like, it is about craft. It's about artisanal. And I think we can do this in bakery. We can do this in what I would call snackable food. Obviously, we're already doing it in breakfast. Right? Our egg bites, I think, are iconic, and I think we have the opportunity with these platforms to create more iconic food and beverage. And I think you guys are gonna be really excited when you see the customized personalized energy platform, that really leverages strength, which is our refreshers platform. So, that's what we mean by we wanna be building platforms into the business. It's things that we can then innovate against without having to introduce at the same time.

Thank you. Our next question comes from the line of Peter Saleh with BTIG. Please proceed with your question.

Great. Thanks for taking the question and congrats on the quarter. I did want to ask about the throughput initiatives. Brian, I think you mentioned you're now below the four-minute promise. Is that where you want to be for Starbucks Corporation at this point? Or do you feel like there's more opportunities to improve throughput? And if so, where do you think we can get to over the next year or so? Thanks.

Yeah. Thanks for the question. Look. We've made great progress on throughput at peak. We still have opportunity on the tails, though. There are still too many occasions throughout the day where we aren't hitting our metric. So there still is opportunity, frankly, to get the entire business every transaction to be under four minutes. We've not achieved that. But what we have achieved is, I think, great performance during peaks, which is really, in my opinion, my experience in this industry. You have excellence at the peaks. You can then win with the shoulders and then ultimately balance a day. That really is kind of what I mean by fine-tuning the model. And, you know, I think one of the things that is crystal clear to us is there is demand when we can get the speed and convenience right, as evidenced by, you know, getting more standard opening hours. You know? All our stores now are pretty much opening at 5 AM. And you know what? I wouldn't be surprised if 5 AM becomes 4:30 AM because of the throughput and the experience that we provide. It's just a matter of time. And we'll earn our way into that. And then the other thing I will tell you too is our teams are just getting more reps. The more reps they get, the better they perform. And then, you see that in, I think, the 650 stores that are part of the lead pilot. And then you also see that, frankly, in our Grow program. And, you know, having our teams really focus in on just a couple of key metrics that are in their control really is a big unlock. It eliminates a lot of the complexity, eliminates a lot of the noise, and allows them to focus on great craft, great speed, and ultimately great experiences. So there's still lots of upside in our mobile order pickup business, our cafe business, our drive-thru business. And, you know, I didn't really talk about much, but we've also got a really nice emerging delivery business. So you know, we just gotta get our Green Apron service labor model dialed in. Get our teams the reps that they need with stability, and then keep with consistent metrics so they know when they perform. They're recognized for their performance accordingly. So I think Mike and the team and you'll hear more about this tomorrow at Investor Day. Have a great plan for how we unlock the demand that Starbucks Corporation has.

Thank you.

Thank you. Our next question comes from the line of Zach Fadem with Wells Fargo. Please proceed with your question.

Hey, good morning. Brian and Kathy, is there any color you can offer on the magnitude of operating margin performance in the first half of the year versus the second half? And you mentioned about a third of the pressure today related to product and distribution inflation. Is there a glide path in your mind in terms of these pressures rolling off?

Yeah. I'll start, and maybe I can let Kathy fill in. You know, I think you heard Kathy say some of the inflation, specifically coffee, and the tariff headwinds start to peak here in Q2, and we start rolling off of it into the back half. As well as we start to roll over the initial big investment in our Green Apron service model. And then compound that with a very conscious effort on cost, which is, you know, this $2 billion program over the next two or three years. So, you know, I obviously envision that earnings will continue to pick up as we maintain the top line momentum that we have. But Kathy, I don't know if you wanna add anything.

Brian hit really the it's kind of the four big ones. We've got the anniversary of the investment in Green Apron service, which you talked about. That'll we get anniversarying it by the fourth quarter. The savings program that we got in place while we've been working hard and at speed, a lot of that starts to come to fruition beyond some of the restructuring we already did come to fruition toward the back half of the year. And then, the tariff in coffee, we do expect to abate in Q3 and Q4. And then the most important one is the sales leverage. Just make sure that we continue to drive the top line like we expect. So all of that will weight it a little bit more to the back half of the year.

Appreciate the time. See you tomorrow.

Yes. Thanks.

Thank you. Our next question comes from the line of Danilo Gargiulo with Bernstein. Please proceed with your question.

Thank you. Excited to see that you're focusing even more on the health and wellness platform. And I was wondering if you can maybe, Brian, start to dimensionalize a little bit how much of the shift in menu and expansion of your menu could be contributing to your comps going forward? Specifically, if you can comment on how much the protein beverages lineup is mixing today and what's your expectations as it grows over time and potentially how other platforms will complement that? Thank you.

Yeah. Thanks for the question. So we launched the protein platform, and what I'm happy to say is, you know, back in early Q1, here in Q2, as we've not surprising, revisited the platform in January, we saw a nice, you know, recommitment to the platform from customers. So, you know, it is one of those examples of being very much on trend with how people want to eat and drink. And, you know, this is a platform that I think is gonna continue to build for us. As a matter of fact, I might've started my day with a vanilla protein latte. But, you know, look. The thing that is most exciting is customers, when they experience it, they really like it. Awareness is still pretty surprisingly low. But the trial and the repeat rates are really, really great. So meaning when someone tries it, we see a high level of repeat, and it is proven to be highly incremental. So it is one we wouldn't keep doing. And as I said, the thing I always love is you don't wanna launch and leave things. You wanna launch and leverage things. And that's exactly what we saw with our protein platform in January.

Maybe I'd add just two more things really quickly that we're excited about for protein. Is it's we have seen it's a traffic driver, meaning the intention of why the customer is coming in. So that's getting us to access new customers or at least new occasions. And then the other thing is that maybe has been a little surprising is the popularity of the cold foam and protein in the cold foam. It's a great way to get that extra 15 grams or so of protein for our customers, and you can put it pretty much on every single drink. And so I think those have been maybe two of the positives or highlights we found out of the protein launch.

Great. Thank you.

Thank you. Our last question will come from the line of Christopher Thomas O'Cull with Stifel. Please proceed with your question.

Good morning. Thanks, guys, for taking the question. Brian, I know you mentioned you aren't taking your foot off the gas in terms of broad-based marketing. Could you just elaborate on how instrumental that's been in turning the tide for non-reward customers? And then Kathy, as you look at the 420 basis points margin contraction in North America, how much of this marketing step-up should we kind of model as a permanent rebasing of G&A OpEx line versus maybe temporary marketing turnaround costs?

Yes. So I'll start, and then I'll hand it over to Kathy. You know, the marketing, I think, has done a great job of getting the brand back in front of all of our customers. And, you know, the metrics that we track, right, are brand affinity, the trust, and we're seeing all those metrics move up. We're also seeing our brand value scores move up. And what I ultimately say is, like, it's one thing to see what are claiming. It's another thing to see it in their behavior. And what I'm seeing in their behavior is every age cohort has increased their visitation with Starbucks Corporation over the last couple of months. And so that just demonstrates to me that we're doing a great job of making the brand relevant. Making the brand a leader and making the brand one that innovates on the right things at the right time that people want to engage with Starbucks Corporation. And so I really have to give Tresi and the team a lot of credit both our digital efforts, our personalization efforts, our menu innovation efforts, I think just you know I don't know if you've seen the most recent ad, the Together ad that we have running. Personally, it's one of my favorites. You know? It makes you feel good about the brand. It makes you start to see the soul of the brand. And I think that's what we're bringing back, and that's what I mean by the shine of Starbucks Corporation's back. The soul, the feeling, the emotion that you get when you get to have a moment to connect with humanity. And, you know, I think people want it. And when we get it right, people love it. And we're seeing that happen that that's relevant with every age group. And every income group.

How we think about our investment in marketing is we look at our total spend looking at discounts as well, and those were not quite as effective. So we've taken some money and repurposed it into marketing. What I can tell you is this, we believe that that's an ongoing We think it's important an important investment in the brand. So that is something you should continue, but it's all included in our guidance. But we really have just reallocated some of the less effective discounts into far more effective marketing dollars.

Great. Thanks, guys.

Thank you. That was our last question. So I'll now turn the call back over to Brian R. Niccol for closing remarks.

Yeah, thank you. And thanks, everybody, for the questions. And I really do look forward to seeing hopefully everybody at our Investor Day tomorrow. You know, the long-term plan that we have in place is one that I am really excited about. And I think you'll see our executive team, our leadership team share the growth story that we have in front of us. I do want to just leave you with a few things. You know, obviously, we are very delighted with where we are on the top line. And we believe we're gonna continue to drive that momentum. Then the earnings will obviously come behind it. And I also want to emphasize, you know, in any turnaround, the path is never linear. But I do believe we've got the right plans, the right team, and the right focus going forward. And, you know, our Back to Starbucks plan really is the strategic currency of our turnaround. And I really do want to thank our partners both in the stores and in our support centers because they really are the foundation of the progress and the performance that we're achieving. So I couldn't be more excited for them and the Starbucks Corporation to be able to have the shine back, and I couldn't be more excited to share our story with everyone tomorrow at Investor Day on our long-term plans for continued growth and just how much opportunity there is for Starbucks Corporation not just in the U.S., but around the world. So thank you, and look forward to seeing everybody tomorrow.

Thank you. This does conclude Starbucks Corporation's first quarter fiscal year 2026 conference call. You may now disconnect.