“Our margins in the near term are impacted by critical investments in our stores, partners and customers. However, the early signs of progress we're seeing in partner engagement, transactions in our critical dayparts and customer feedback give us confidence that these investments will yield the returns to drive much healthier margins over time.”

In context

“ving. Just where they will net out is unclear. We are pleased to be ahead of schedule with key foundational programs like Green Apron Service, and we are confident that 2026 will continue to improve as we see the effects of our Back to Starbucks strategy begin to scale. Both the tariff environment and coffee prices continue to be dynamic. We continue to mitigate expected tariff exposure outside of green coffee and are pleased to see green coffee prices moderate. We have also increased our coffee coverage relative to last quarter as prices have declined. Due to our coffee buying and hedging practices, you should expect to see both moving average coffee costs and coffee tariff impacts lag the market with year-over-year coffee cost increases expected to peak in the first half of fiscal 2026. Our margins in the near term are impacted by critical investments in our stores, partners and customers. However, the early signs of progress we're seeing in partner engagement, transactions in our critical dayparts and customer feedback give us confidence that these investments will yield the returns to drive much healthier margins over time. As we progress on our Back to Starbucks strategy, we will invest over $0.5 billion of additional labor hours into our U.S. company-operated portfolio over the next year, beginning with our Green Apron service rollout in mid-August. To offset these investments, we are focusing on driving a healthier and more efficient cost structure that allows us to weather macro headwinds, drive strong sales flow-through and simultaneously fund our Back to Starbucks strategy. We are working on resetting and improving our cost structure across the entire P&L with disciplined prioritization, driving more efficiency, accountability and agility into the organization. In closing, I am impressed with how far we've come and know we have more work to do. We know this turnaround is a multiyear effort. We are rebu”