Good afternoon. My name is Diego, and I will be your conference operator today. I would like to welcome everyone to Starbucks' Fourth Quarter and Fiscal Year End 2022 Conference Call. [Operator Instructions] I would now turn the call over to Tiffany Willis, Vice President of Investor Relations. Ms. Willis, you may now begin your conference.

Thank you, Diego, and good afternoon, everyone. And thank you for joining us today to discuss Starbucks' fourth quarter and fiscal year 2022 results. Today's discussion will be led by Howard Schultz, Interim Chief Executive Officer; Frank Britt, Executive Vice President, Chief Strategy and Transformation Officer; Sara Trilling, Executive Vice President and President of Starbucks North America; and Rachel Ruggeri, Executive Vice President and CFO. And for Q&A, we will be joined by Laxman Narasimhan, Incoming Chief Executive Officer; Michael Conway, Group President of International and Channel Development; and Belinda Wong, Chairwoman of Starbucks China. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially 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 assumes no obligation to update any of these forward-looking statements or information. GAAP results in fourth quarter fiscal year 2022 include several items related to strategic actions, including restructuring and impairment charges, transaction and integration costs and other items. These items are excluded from our non-GAAP results. All numbers referenced on today's call are on a non-GAAP basis, unless otherwise noted, or there is no non-GAAP adjustment related to the metrics. Further, year-on-year comparative metrics on today's call are based on a 13-week or 52-week basis, to exclude the impact of an extra fiscal week in fiscal 2021. For non-GAAP financial measures and year-on-year metrics mentioned in today's call, please refer to the earnings release and our website at investor.starbucks.com to find reconciliations of those non-GAAP measures to their corresponding GAAP measures and 53-week and 52-week metrics. This conference call is being webcast, and an archive of the webcast will be available on our website through Friday, December 2, 2022. And for your calendar planning purposes, please note that our first quarter fiscal year 2023 earnings conference call has been tentatively scheduled for Thursday, February 2, 2023. And with that, allow me to turn the call over to Howard.

Thank you, Tiffany. Well, hello from Milan. Today has been a very special day for me and a powerful emotional reminder of the intersection of my life and years with Starbucks. It was 40 years ago, walking the beautiful streets of Milan, that the inspiration for the possibilities of what Starbucks could one day be and mean around the world first struck me. And here I am, back in Milan, celebrating the early days of our beautiful, thriving business in Italy, a country in which no one expected Starbucks to succeed, on the very day of our global launch of holiday, an event that has become a phenomenon all over the world. So much of Starbucks' inspiration has come from Italy. And in Italy, our partner's dedication to the art of coffee, to the elegance and passion of coffee craft and to the delivery of a premium coffee experience to our customers, is being executed at the highest level. Italians have embraced Starbucks. Our top-selling beverage is actually a solo espresso, validating the quality of our coffee and the relevance of Starbucks customer experience that has defined us since Starbucks' founding in 1971. We recently opened our 20th store in Verona to record crowds, with Rome and Naples fast following in 2023. Milan and Italy are reflections of the premium coffee experience Starbucks is delivering to customers in cities and countries everywhere as demonstrated by the very strong Q4 and fiscal 2022 financial and operating performance Starbucks reported this afternoon. In Q4, Starbucks grew global revenues 11% over prior year to a quarterly record of $8.4 billion driven by 7% comp growth globally and 11% comp growth in North America. For the fiscal year, we grew global revenues 13% over prior year to a record $32.3 billion driven by 8%…

Thank you, Howard, and good afternoon, everyone. It was just 50 days ago that we laid out our reinvention agenda that involve five major strategic shifts. First, creating a truly unified global company; second, radically improving our in-store partner experience; thirdly, reimagining our store operating model; fourth, reinvention around what customer connection means; and perhaps, most importantly, redesign the construct of what it means to be a partner at Starbucks. While still early days, we are seeing progress with several key proxy measures. For example, retention has increased with turnover scores at the hourly Barista level, lower by 1 point versus prior year and 4 points versus prior quarter. Additionally, customer connection scores show a 5-points improvement to pre-pandemic levels. All of these are early but encouraging signs. We fully embrace that our partners are the most critical component to our longer-term performance, and we need to be even better at addressing their needs. Partners who proudly wear the Green Apron have bravely shared their stories and their ideas in our co-creation sessions, and we have concentrated our efforts to jointly create solutions with our partners and for our partners. In the fourth quarter, we continue to improve our already industry-leading benefits to a deeper position of strength with several new programs for partners. Representative examples of improvements include: a new incentivized savings program in partnership with Fidelity, designed to help partners in case of unplanned financial challenges; a new student loan debt program to empower partners looking to find the best ways to address their college debt management obligations; an increase in sick time accrual ratios for our partners; an updated family expansion reimbursement program, aimed to assist partners with the cost of growing their families through adoption and the like. We have remained committed to the critical development…

Thank you, Frank, and good afternoon, everyone. I'm Sara Trilling. I'm pleased to join you today for my first earnings call in my new role, leading the North America business. While I'm relatively new to this particular role, I'm a 20-year partner and most recently served as Senior Vice President of Asia Pacific. Over my Starbucks career, I've touched nearly every aspect of the business and have served many leadership positions across a variety of functions, including store development, retail operations, product and marketing. And I'm looking forward to applying the relevant breadth and depth of my experiences to this next phase of growth in North America. To build on some of the comments from Frank and Howard, we continue to see very healthy growth in our North America business. As we highlighted at Investor Day, we saw the highest net sales week of all time with the launch of our fall promo. And I'm pleased to share this subsequently led to an incredibly strong September, with the three high sales weeks in our history. Our strong quarter, comparable sales of 11% and revenue growth of 15% were largely driven by a record-breaking fall launch, coupled with continued strategic pricing actions and increased food attach as well as the shift to more premium beverages and a growing demand for personalization in both company-operated as well as licensed businesses. Elevated from pre-pandemic levels, we maintained ticket comp strength in our U.S. company-operated business at 10%, representing our fifth consecutive quarter of increased ticket comp. These results reflect the continued strength in demand for Starbucks as our customers fell into their new normal routine and behaviors. We fully expect the momentum from our record fall launch to continue as our highly anticipated holiday at Starbucks launched just today and include some great…

Thank you, Sara, and welcome to your first Starbucks earnings call. And good afternoon, everyone. As you heard throughout this call, starting with Howard, we had record-breaking performance this quarter, and I'm incredibly proud of what we achieved together. We finished fiscal year 2022 with consistently strong demand in the U.S. and in nearly all major markets across the globe, with that demand sustaining as we exited the year. Our Q4 consolidated revenue reached another historical high, $8.4 billion, up 11% from the prior year or 14% when excluding a 3% impact of foreign currency translation. The revenue growth was primarily driven by 7% comparable store sales growth and 6% net-new store growth over the past 12 months, further strengthened by the remarkable momentum in our global licensed store businesses. In addition, this outstanding performance reflects double-digit revenue growth in all three of our reporting segments in constant currencies, showcasing the resiliency of our brand, power of customer loyalty and depth of our diverse portfolio. Q4 consolidated operating margin contracted 380 basis points from the prior year to 15.1%, primarily driven by investments in growth in labor, including enhanced store partner wages and new partner training, part of which were investments under our reinvention plan. In addition, operating margin was impacted by inflationary headwinds and deleverage related to COVID restrictions in China. The overall contraction was partially offset by pricing in North America and sales leverage across markets outside of China. Q4 EPS was $0.81, declining 9% from the prior year, but better than expectations, including $0.05 of nonrecurring benefits primarily related to discrete tax benefits. For full year fiscal 2022, our consolidated revenue reached a record $32.3 billion, up 13% from the prior year or 15% when excluding a 2% impact of foreign currency translation driven by 8% comparable…

[Operator Instructions] Your first question comes from Andrew Charles with Cowen. Please state your question.

Great, thanks. I had two questions on the Rewards Together program. First, can you talk about what differs about this program versus the Stars Everywhere program that Starbucks ran about six or seven years ago, when you partnered with New York Times, Lyft and Spotify, that was ultimately discontinued? And then my other question is just on the data sharing. Can you talk about the new capabilities this program is going to afford you and how the data sharing will work between you, Delta and any other new partners that you guys bring on? Thanks.

Thank you for the question. This is Howard. I'm sitting with Brady Brewer, Chief Marketing Officer of Starbucks, and he'll take your question. Brady?

Yes. Thanks for the question. Really, the Reward Together program is about taking like-minded leading loyalty programs and linking them directly to Starbucks Rewards. And the intent is that whether or not you are with an airline like Delta, you can earn miles faster at Starbucks, and you can get additional Starbucks benefits when you fly with Delta. And we're looking at a number of leading brands. And so this is creating direct tech-to-tech connection to link our loyalty programs and make the experiences better for both brands and both sets of customers. In terms of the data, we're really sticking with our continued focus on using data to make the experience better but being very thoughtful and disciplined about the data that we capture, but using it to make the experience better and inform our business. So we're excited about the early stages of Reward Together. What we've seen, as you heard on the call, is extraordinary demand to link accounts in a way that was overwhelming relative to our expectations. So we're excited to see this build in the future.

Thank you. Your next question comes from Jeffrey Bernstein with Barclays.

Thank you very much. Howard, since the Analyst Day, the top question we've heard on Starbucks is related to the new long-term comp guidance of 7% to 9%. And it does seem like you're quite confident on that in fiscal '23. It seems like you have a pretty good line of sight, and these quarterly results support that. And I get the feeling fiscal '23 is driven by menu pricing and the China bounce-back. But with that said, the focus, I guess, we're hearing is more looking six to 12 months out, with an even larger system. And in the face of a slowing macro and potential recession, it seems like your product will be more discretionary. So just wondering your confidence or maybe if you could prioritize the drivers to support that 7% to 9% comp, just because yourselves and even your peers, it's just been very difficult to be able to sustain that level without it being driven by price. So especially going into a potential recession, you're confident six to 12 months out that we could still be talking about 7% to 9% for the next couple of years. Any color or prioritization would be great. Thank you.

Thanks, Jeff. Well, let's try and kind of go through the question based on our history, what we've seen in the near term and why we're so confident. If you go back many years, although this is an unprecedented time, we have demonstrated, time and time again, that there is an affordable luxury to Starbucks that our customer base has been willing to support and the loyalty to Starbucks continues. Now in the past, we did not have the inherent benefit of the Rewards program, which as you heard in our prepared remarks, is generating significant revenue for Starbucks, which is highly predictable, and a relationship with that customer base is extremely loyal. The other thing that's different from the years past and which gives us so much confidence is that we've always monitored whether or not our customer base was getting younger every year. We've never wanted to see our customer base get generationally older. We wanted to see it get younger. Not only has it gotten younger, but that young customer, that Gen Z customer, tends to have significantly more discretionary money at their disposal. And their loyalty to Starbucks has been quite significant and predictable. Then you have the pricing power of Starbucks, which we're certainly not going to try and raise prices during this time. But certainly, we've demonstrated, over the last 12 months or so, that we've got almost 6% price increases and we haven't seen the loyalty and the transactions abate. I think customization, which we spoke a lot about in our prepared remarks, is obviously giving us -- and the ticket is becoming more accretive as a result of the modifiers, and those modifiers seem to be more consistent and greater with cold beverages, which is now over 75% of the U.S. business.…

Your next question comes from Sara Senatore with Bank of America.

Hi, thank you so much. I have a question and then a follow-up, please. So the question is really about, you just mentioned the premiumization and customization and how that seems to be more common with cold beverages. I guess that feels like it's been a tailwind for a little while now. How much further can you push this, if you will? So cold accounts for 76% in total. How much higher can that be? And as you think about customization, you could share sort of what percentage of orders are customized or something that could give us a sense of how far along you might be in that penetration throughout.

Sure. Yes. I'll start -- sure, go ahead...

I'm sorry. And just a question about China. I just wanted to clarify, as you talk about the restrictions, it's really about mobility, not about challenges in opening new stores. Thanks.

Yes. In terms of China, that's 100% correct. There's no issue with regard to opening stores. In fact, we're opening stores at record numbers. And Belinda is on the phone, and if you have a follow-up question about China, she certainly can answer it. In terms of your question about the -- our ability to extend cold and modifiers, a few things. One, cold has certainly surprised us all at Starbucks. But our ability to customize beverages is a significant competitive advantage. There is no other coffee company anywhere in the world that has our ability to respond instantaneously to a customer's request about customization, nor there isn't a coffee company that has our ability behind the counter in terms of flavors, syrups, modifiers, foam, et cetera, to provide the customer what they want. I think cold is in its early stages in terms of what's coming. And the innovation we have around cold through the year will continue to drive awareness and I think, attachment. However, no one should kind of walk away and think about the fact that our coffee -- our hot coffee business is not growing. In fact, it's growing nicely, but cold has kind of taken over. But we have significant innovation plans for hot. So I think the percentage of revenue cold versus hot, I think you'll see hot go up as a result of the innovation we have around the hot platform. And I'll give it to Brady, just to follow up on your question as well.

Yes. I think the -- as Howard said, hot coffee is growing, but cold beverage, over the last few years, has just accelerated, and that added an entire stack of sales volume into the stores. What we're seeing, and Sara mentioned, is that the cold-customized plant-based beverage platform is particularly appealing. The younger you go, the colder the beverage. We've seen significant year-over-year growth in Iced Espresso, which is our biggest product category. We're continuing to now see growth in hot espresso. Refreshers, Nitro, Cold Brew are all growing significantly. But as Howard said, modifiers have grown in double digits year-over-year. Now over 60% of our beverages are customized. And why is that important? It's important because what our customers have discovered is that their favorite beverage is not possible to buy anywhere else. I think that links to the earlier question about navigating rough times too, is this is a beverage you can only get at Starbucks and you can't make it home. And increasingly, customization has enabled that in our stores. So we're just getting started. Lots of growth opportunity ahead.

Thank you. Your next question comes from Lauren Silberman with Credit Suisse.

Thank you for the question. I wanted to ask about China. Can you talk about your composition of locations in China across Tier 1, Tier 2 and lower-tier cities and just in terms of unit growth, where you're growing across those tiers? And then any color you can provide on trends you're seeing in Tier 1 versus other cities would be helpful. Thank you.

Sure. Belinda Wong, who runs Starbucks China, is on the phone from China, and I think obviously the best person to answer the question. So Belinda, please?

Thank you, Howard. Thank you for the question. Starbucks continues to lead the market in brand share and preference, fueled by our premium positioning, a competitive advantage founded on the exceptional coffee experience delivered by our partners and the deep connections cultivated with our customers. We're very delighted to see the robust growth of the -- of China's coffee market in recent years with the entry of new brands and players. Different brands offer different value propositions, targeting different segments and locations, but together, we'll accelerate coffee culture and overall category adoption. In terms of our new store development strategy, as I have shared during Investor Day, we will build -- we will follow our purpose-built store strategy. And we will go deeper into optimizing our store portfolio, increasing the density in key trade areas in our top 20 cities, in the existing cities that we're in. And we'll also go wider into entering -- continue entering into new cities that we're not in yet. There are plenty of opportunities to grow in those two areas. And thirdly, we will go smarter. We have a very strong store development system that's built by our incredible team in the local market. Powered by data, we have more accurate data to understand where we should be opening the format and the size, and not just the third place experience, but we're able to accurately project where is best placed in terms of our new stores to fulfill omnichannel customer needs in all the cities, be it new or existing cities that we operate in. And lastly, we're going to go greener. As I've shared before during Investor Day, we're going to open 2,500 greener stores by 2025 as part of the portfolio. So we're very confident in the way we're going to grow our new stores and comprehending the increase in the China market. Thank you.

Thank you. Your next question comes from John Ivankoe with JPMorgan.

Thank you. For several calls now, we've been talking about the record number of discrete customers that Starbucks has. And obviously, that's very admirable to be able to talk about that, just having the breadth of the customer base. And I would like to put that in context, 55% on MSR. Presumably, that's a customer that you could get to come to your brand a lot, in other words, to actually have increased frequency relative to the brand of the past. So can you talk about the frequency opportunity that you have, I mean, I guess, in two parts? I mean, one, you're kind of bringing back that 2019 customer to come back as often today as they used to three years ago, kind of the first part of the question. And then, secondly, what are the frequency-driving opportunities that you have for some of the new customers? I mean talk about that as both part of the MSR program as well as other initiatives that you may have.

Brady?

Sure. Thank you, John. While transactions are still lower than FY '19 or pre-COVID levels, what we are seeing is transactions continue to grow. And what is -- a part of this is that products sold, as measured by units per store per day, have been consistently higher than FY '19. So what we're seeing is more group orders. Starbucks Rewards frequency is a function both of our SR members visiting frequently, but we're also adding so many new members. And what we're doing is acquiring customers who are lower frequency and bringing them into the program, which helps increase their frequency. The SR program tends to see a very significant increase in frequency in the first year of membership. And so SR is a strong driver of that for us.

Thank you. Your next question comes from Jon Tower with Citi.

Great. I just want to follow up on the China recovery. And curious to understand what's embedded in your expectations for the year for the China outlook. Specifically, it sounds like, obviously, you're betting in your guidance the idea that there's a reopening in the back half of the year. So what's the risk to the numbers, particularly the comp and the earnings recovery in the back half of this year should COVID -- zero-COVID policy stay in place?

Rachel, do you want to start that? And if Belinda wants to add anything. Rachel?

Yes. Thank you for the question. The way we've considered the recovery in China is really, as we said in the beginning, based on mobility. And so when we talk about an outsized performance in the back half of the year, it's as we lap the severity of the lockdowns. So even though there may still be challenges, if you recall, we have, towards the end of Q2, started to see the severity of the lockdowns with a negative 23% comp in that quarter, followed by a negative 44% comp in the following quarter. So we're basing our expectations of recovery based on the laps and the increased mobility. Certainly, there's -- as we've indicated today, it's nonlinear, but that's how our actual assumptions for recovery are based, which is part of our guidance.

Belinda, do you have any -- sorry. Go ahead, Belinda.

Yes, yes. Let me just add to the fact that how pleased we are to see a solid sequential improvement in Q4 in terms of our revenue and comp sales growth. It's humbling to see what a strong positive correlation we're seeing between easing restrictions and our business recovery. I mean the incredible sequential improvement on our 90-day active members enthusiastically coming back to our stores as soon as the mobility restrictions eases, it really gives us a lot of confidence on our ability to rebound as soon as the mobility restrictions are lifted. So I just wanted to add that. Thank you.

Belinda, can you just add one more thing, if you don't mind, the -- what you've been -- what you and the team have been able to do given the restrictions on digital and delivery, please?

Yes. Despite the short-term COVID disruptions, as we shared at Investor Day, we remain laser-focused on executing our China growth agenda with great discipline and confidence, right? As you heard, we achieved record high-quality new store growth. And now, we have 6,021 new stores across 230 cities, and those new stores continue to achieve best-in-class returns and profitability. We also focused on our fast-growing omnichannel business, and that continued to gain great momentum. As Howard shared, Starbucks Delivers, sales grew 35% year-on-year to a record 24% of our sales mix. That's pretty incredible. And total mobile ordering sales mix now reached 44%. That's something we're very pleased to see, and it's going to be here to stay as we unfold more occasions from our customers. Customers' engagement, as I said before, Rewards active members coming back, we're very pleased to see that. And that's really close to our historic high as well. And we are achieving the highest customer connection score. Our partners are really on the ground, serving our customers. We're learning every day as to how to operate our stores better. We're increasing our muscle and our operational capability. We're getting smarter in our supply chain and our store development. So I'm very pleased to see. And also, one more thing. In terms of our partner engagement, we have achieved record-low full-time retail partner turnover in FY '22. That really demonstrates the partner investments that we have made over the past years are really paying off. So we're very humbled and -- but well positioned and excited to capture the future growth opportunities. Thank you.

Your next question comes from John Glass with Morgan Stanley.

Thanks very much. On the reinvention plan, inside of '23, can you help us prioritize what you think drive sales the most? You talked about retention improving. You've talked about some equipment upgrades. If there's a way to sort of rank order what you think sort of benefits the business, or if there's a cadence, should we think about certain of these initiatives benefiting one part of the year versus the other? And inside of that, can you just talk about speed of service and where you are, where you want to be? It would seem to me, just based on personal experience, that that's still an issue and maybe a gating factor to unlocking greater traffic growth over the next couple of quarters. Thanks.

Frank, can you take the reinvention question, please, and then Sara could talk about speed of service?

Sure. The partner experience as the core of the operating model of Starbucks is designed to drive retention, improve connection scores, both to the partner and customer. And the secondary effect, to answer your question about top line growth, is it creates more capacity that allows us to capture that incremental demand that sometimes is challenged in the current operating environment. And so the core of the reinvention agenda, of course, is the combining of innovation around store, customer and partner. But at the end of the day, it's designed to give us the capacity to engage the customers how they want to be engaged, in service of supporting their needs and ultimately, the performance.

Thank you. Thank you, Frank. Thank you, John. I just want to start out with just an acknowledgment. We certainly don't have a demand issue in our stores. As we've talked about, we've got total weekly active customers that continue to grow. We're benefiting from incredibly high average weekly sales. And so your call-out about the opportunities, with speed, with service, is top of mind with all of us. I mean notably, over the last quarter, we did see some improvement during peak in our drive-through business in those window times, which is a metric that we continually keep an eye on and really orient our focus in our retail stores, with leaders observing and coaching during that daypart specifically. All I can say is that I acknowledge the opportunity ahead. And what we hope to see with the reduction in turnover, the increase with more tenured partners and overall stability in our stores, that you'll continue to see improvement with speed, with service, whether that's in those peak hours in cafe and drive-through or over the full dayparts.

Thank you. Your next question comes from David Tarantino with Baird.

Hi, good afternoon. Howard, I think you mentioned that you're willing to support some of the license partners outside the U.S., if I heard that correctly. And I just wanted to see if you could elaborate on what you mean by that statement and whether you're seeing pockets of issues outside the U.S. with all the pressures in the macro environment. Any elaboration on that would be helpful. Thanks.

Sure. I'll start and respond, and then I'll give it to Michael Conway, who runs International. I think Starbucks has some very unique long-term relationships that go back, in some cases, in terms of the Middle East, Mexico and Latin South America, Korea, some of these relationships go back 25, 30 years. And there's others. And so there is a tremendous level of loyalty, friendship that we have well beyond the business relationship. So we're in constant contact side-by-side with our partners to ensure the fact that they know that if something did come up, we would be a backstop and be there for them. That has not, in any way, been the case, and they have not indicated anything. But we certainly want to be the kind of partner that we can look back on with great pride that we were there for them. I'll give it to Michael Conway, who is working side-by-side with them every day.

Thank you, Howard. That's right. We're keeping a close eye on the headwinds that we know are here, both from foreign exchange perspective and inflation perspective. But what I can say is that, so far, we're not seeing any negative impacts. Our business outside of China internationally grew over 30%. We're having double-digit comps in all of our company-operated markets and across all the regions. And so we're staying very close to them. But at the same time, we feel confident that between the strength of our brand, the convenience that we're bringing, the fact that, certainly over this last quarter, we saw travel start to pick up, it was a strong summer and mobility is continuing to open up, we see a lot of tailwind in our business. And we'll stay close to our business partners should they see challenges.

Your next question comes from Nicole Miller with Piper Sandler.

Good afternoon, and thank you for taking the question. I wanted to ask about the -- you gave some commentary earlier about the employees. And it sounds like they would have been surveyed in terms of working conditions and benefits. And clearly, you've done the same for consumers. So the two part question, number one, thinking about how you talk to survey the employees and customers, has the process changed for either? And then the second part, part B, where do they overlap? Where is the intersection really of shared ideas between the employees and the customer relationship? Thank you very much.

Why don't Frank and Sara take a shot at that? Thank you for the question, Nicole.

Yes. So thank you. So we have a very advanced, what we call, listening capability, where we are constantly sensing how our partners are doing, those who proudly wear the Green Aprons in the store. There is a process that happens on a sort of short-term basis, just to sort of monitor. And then we have a more comprehensive process which we do quarterly. We then deconstruct that. We do a tremendous amount of correlation analysis using some very advanced capabilities we have in the analytics and data science arena. And we try to be very precise about the things we're responding to base on the first principle that we've espoused now for quite a while, which is this idea that we should be creating the new Starbucks with partners and for partners. And so I think we have come a long way in that arena. And yet, as we often say, we're pleased but not satisfied. As it relates to the connection to the customer side, which I'll let Sara further elaborate on, we know, as we've talked about before, there is a direct correlation between partner engagement, which is the sum total of the surveying you've mentioned, and customer engagement. And we know that correlation is real, and it's amplified and you can see it every day in action. And so we try to spend a lot of time understanding that connection between the 2. In the context of the brand, which Brady speaks to quite a bit, we know that care is the number one factor in the brand equity equation of Starbucks. And we know the partner is the epicenter of that care. And so that is the fabric that binds the lens of brand experience as measured by the customer and realized experience as measured by the partner in the store.

Thanks, Frank. And Sara?

Thank you, Howard. I would just kind of pull up and offer kind of a broad range perspective, going back to the reinvention overall. And that is that the investments that we're making are directly designed to make it easier for our partners to do their job and to enable them to meet the growing demand in our stores and create new ways with that additional capacity to engage with our customers. We do track partner engagement on a regular basis. And we also mapped that engagement to the activity that we're launching in our stores, so that we can understand the connections, if there are pain points or if there are opportunities, and continue to check and adjust and to design around those learnings looking forward. The other thing I think we're quite excited about is launching some new listening mechanisms related to partner engagement. Our partner app is an example of that, which we're currently piloting and testing. And as we look to the future, we acknowledge that it is an era of co-creation. And those who are closest to the frontline, serving our customers, have a deep and rich understanding of what's needed, and we need to enable them to be able to serve.

Thank you. The last question comes from Danilo Gargiulo with Bernstein. You may ask your question.

Thank you. And first of all, Howard, thank you very much for the kind words on Italy and its coffee culture. I wanted to ask a question on the differences that you're seeing in terms of customer behavior or demographic about incremental unique customers that you're seeing across your stores. And in particular, what is attracting them to the brand compared to your existing base?

Brady?

Yes, can I ask a clarifying question? Was that about Italy specifically?

No. That was about the Starbucks system as a whole, so the 9% -- 7% to 9% unique customers that you've seen this quarter.

Oh, great. Yes, I think the relevance of the brand, really, I think as Sara outlined a bit, is not only are we seeing in the U.S., for example, a larger population of 7-day active customers than we've seen ever before. When we get deeper into that, what we see is that our customer base is becoming younger. In the U.S., 51% of our customer base is now Gen Z and Millennial. And in fact now, our customer base is quite diverse. And I think around the world, we continue to attract both young customers and diverse customers. And when you go into our stores, you see that the relevance of Starbucks is not the coffee your parents drink, but the coffee that young people are choosing every single day. Our brand position right now, we have the strongest brand affinity of any away-from-home coffee brand around the world, and it's seen as the first choice for coffee away from home. So the younger you go, the stronger the brand affinity gets. And the more diverse you go, the stronger the brand affinity gets. And so for all of those reasons, we continue to cater to a very diverse and increasingly young customer base with those cold-customized plant-based beverages and the strategy is working, and we'll continue to do so. Thank you.

On behalf of all of us at Starbucks, I wish you and your families a wonderful Thanksgiving vacation, and we look forward to speaking with you at the end of Q1. Have a great holiday season. Thank you very much.

Thank you. And with that, we conclude Starbucks' fourth quarter and fiscal year end 2022 conference call. You may now disconnect.