Brady Brewer: Sure. So in terms of beverage platforms specifically, I’ll start there. We put every product we offer through a very rigorous set of tests and measures to make sure that it’s conducive to operations, that it’s easier for our partners to deliver in the stores, and make sure that it’s a creative to the business. A lot of times what we’ll do is we’ll bring in a new product and we’ll take a lower volume product out just to maintain the total complexity of the system rather than just add, add, add. We have a very disciplined approach about how we do that. And so the three beverage platforms, which we won’t reveal yet, have gone through that. And so It’s really about how to do these products in a way that’s accretive to the business and specifically targeted.
And so in these cases, this is about looking at that occasional customer and frequent customer, but particularly appealing for the afternoon where we want to continue to build our business. We’ve really laser targeted these products for those occasions and so we’re excited to bring those to customers. And then with regards to the demographics, Starbucks attracts a very wide range of customers around the world, and particularly in the US, again, a very wide range of customers. So the way that I would characterize it is occasional, and I know we’ve spoken about the very occasional. That’s really what we would say is the audience with whom we saw that impact in November and started rebounding in December. So that’s where I would leave it and say we’ve got plans to bring them back.
Operator: Your next question comes from Andrew Strelzik with BMO Capital Markets.
Andrew Strelzik: Hey, thanks for taking the question. I wanted to just make sure that we understand the bridge from the revised or lowered revenue growth guidance to the maintained EPS growth guidance. Obviously the first quarter operating margin was very strong, particularly in North America. So is something changing there in your expectations for the year? The cost saves coming through faster or greater? Is there a change in how you’re thinking about buyback contribution? Just any more texture on that bridge would be helpful. Thanks.
Rachel Ruggeri: Sure. Thank you for the question. As it relates to our guidance and how we’re thinking about maintaining the earnings growth range of 15% to 20%. Though our revenue has been revised, I think what’s important to think about that is what we’re pointing to is that Q2 will be below our full year guidance ranges on all of our metrics. And then we’ll expect to see a rebound and a stabilization in the back half of the year. And that rebound and stabilization will come to from the revenue growth that we’re guiding to, so the 7% to 10%. And in that revenue growth range, there is an assumption, even though we’ve got these plans in place and we expect it will take some time to materialize, there is the impact we have from a strong and growing loyal customer base as well as what we’ve talked to around the strength in digital and some of the success we’re seeing in reinvention.
So that’s factored in there to give us the confidence to be able to expect that we’ll see the flow through from the revenue growth in the back half of the year. But in addition to that, what we’re expecting is that we’ll continue to see the strength in our in-store and out-of-store operational efficiencies. So we had good success this quarter. We’ll expect some of that to continue into Q2 and it’ll further into Q3 and Q4. That’s how we’ll be able to drive to the 15% to 20% on a full year basis.
Operator: Thank you. The last question comes from John Ivankoe with JPMorgan. You may ask your question.
John Ivankoe: Hi, thank you. It’s maybe a related one to the previous, but normally operating companies, when they do reduce revenue, it’s pretty customary for earnings to come down along with that. Now, you guys have communicated, I think, $3 billion of cost savings on a three-year basis. I think that’s $1 billion on a gross basis on a one-year basis. Can you talk about if there were any cost savings that were pulled forward into fiscal ‘24? Were there any meaningful expenses, maybe discretionary expenses in ‘24 that were perhaps pushed out into ‘25 and ‘26. And maybe I’m getting a little bit ahead of myself at this point or getting ahead of you at this point. As we kind of think about you getting more margin on that lower revenue than maybe we would have thought earlier, does it actually lead to a more difficult comparison that you’ll have to face ‘25 over ‘24 as there are just some shifts in expenses between the two years?
Rachel Ruggeri: The way I would look at it, John, is as we showed in the first quarter, we were able to demonstrate that margin expansion of 130 basis points at the total company level, given a combination of sales leverage. So we still had strong sales growth, right? That sales leverage, as well as the flow through from that sales leverage and the in-store operational efficiencies that we spoke to. And when we think about the back half of the year, we’ll expect to continue to see benefit from the revenue growth and the sales leverage that comes from that. But we’ll also see benefit from the in-store and out-of-store operational efficiencies, which we do have ability to increase our focus on some of those areas, which will help to ensure our 15% to 20% earnings growth commitment on a full-year basis.
Outside of that, we also have investments as it relates to G&A, as it relates to our reinvention. And we’ll continue to make the investments because those investments drive a meaningful impact and they’re a driver of our competitive advantage. But we do have an ability to also dial up and dial down some of those investments to help support the commitments we’re making. As it relates to the years ahead, I don’t think it’s probably best to just focus on the year we’re in right now. But that’s how I would expect the guidance to come together and how I’d think about Q2 relative to the balance of the year.
