Luke Vargas (3:16)

The White House is warning lawmakers about more disruptions at airports, with funding for DHS workers set to run out by May. To avoid that, its Office of Management and Budget is calling on House lawmakers to pass a DHS funding bill that was approved by the Senate last week, though that may not be so easy. Republican House Majority Leader Mike Johnson has pointed to problematic language within the DHS bill and has thus far declined to put it up for a vote. Meanwhile, other divisions have broken out among his caucus over reauthorizing a controversial overseas spying program and the latest five year farm bill, effectively paralyzing the chamber. Jimmy Kimmel is doubling down on his criticism of President Trump after the president called for his firing over a joke last week in which the late night host said that Melania Trump appeared like an expectant widow. And in yesterday's monologue, Kimmel played a clip of Trump apologizing to the first lady for likely not being able to match his parents 63 year marriage.

Brian Niccol (4:15)

Only Donald Trump would demand I be

Luke Vargas (4:17)

fired for making a joke about his

Brian Niccol (4:19)

old age and then a day later

Luke Vargas (4:21)

go out and make a joke about his own old age. The clash coincides with FCC Chairman Brendan Carr's early review of Disney's broadcast licenses, which include Jimmy Kimmel live broadcaster abc. The Fed is set to announce its next rate decision later today, its last meeting before Chair Jerome Powell's term ends next month. With it all but certain to hold rates steady, investors will be focused on whether it sticks with language dating back to late last year, implying that its next move was most likely to be a rate cut. A few hours later, earnings season will reach a fever pitch with a quadruple header of big tech results this afternoon from Alphabet, Amazon, Microsoft and Meta. They're reporting as AI jitters return to Wall street, raising investor eyebrows about the wisdom of massive investments. Later today, Ford's earnings are expected to show the carmaker swinging to a loss as high gas prices raise affordability concerns for consumers. According to AAA, US pump prices are up a further 5 cents on average this morning. Affordability concerns cropped up in a number of earnings updates over the last day, with Adidas flagging that retail was broadly contending with high volatility and heavy discounts in many markets. And the CEO of automaker Mandalys, Dirk Vandeput said that while buying patterns hadn't worsened yet, that could change if the Middle east conflict drags on and leads to higher inflation.

Dirk Vandeput (5:47)

We can look at the basket, the shopping basket, which has not increased in dollar value for three years now. But at the same time, the items in that basket have gone quite up in price and so consumers need to take more conscious decisions. We see shift where higher income consumers, yes, buy premium products as the K shape economy. But then we also see lower income consumers really focused on lower unit prices and being very selective when and what exactly they buy.

Luke Vargas (6:16)

Coming up, we'll ask the CEO of Starbucks if the brand is seeing that K shaped trend as well. And could the biggest U.S. soccer home game in decades fail to sell out? We'll take a look. A mere six weeks out from the World cup kickoff after the break at

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Luke Vargas (7:08)

What can a coffee purchase reveal about the state of the consumer? In the case of Starbucks, the answer may be that some purchases are just worth it. Even when consumer sentiment is as gloomy as it's been in years. The world's biggest coffee company just reported earnings, posting a 7.1% jump in U.S. same store sales for the quarter ending March 29, with revenue also topping estimates up 9% to $9.5 billion. Brian Niccol is the CEO of Starbucks. Brian, thanks for being with us. Could you just begin by painting a picture for us of the Starbucks customer? Who are they? How much do they spend, let's say when they visit a U.S. store?

Brian Niccol (7:46)

Yeah. So I mean one of the things that's great about Starbucks is it really is one of these brands that resonates with just about everybody, you know, from the 15 year olds all the way up to the 80 year olds. We do definitely over index with the kind of the teenage crowd. And also right now we're doing really well with Gen Z and Millennials and then really had strong performance across all income Cohorts, you know, and then the average spend is a little less than $10. So you're kind of in the nine to $10 range. And that really depends on whether or not you're attaching food to your drink purchase or how much you're modifying your drink purchase. But it can start with as little as, you know, $3 for a traditional cup of coffee. And then obviously you can build your way into all sorts of customized drinks that people love that move that ticket up.

Luke Vargas (8:35)

You mentioned strength across income cohorts. We've heard so much this year about the K shaped economy fortunes for some Americans very different than for others. Is that not really something that's coming up in your sales?

Brian Niccol (8:46)

We're not seeing that in our business. What we're seeing is people, they want to have a special experience regardless of what your income level is. In some cases, a $9 experience does feel like you're splurging. And then what that means is we have to make it worthwhile. Right. And then in other cases, people believe, well, this is a really affordable premium experience because they're saying, like, well, it's less than $10 and I get a really premium experience.

Luke Vargas (9:14)

We just saw on Friday. I'm sure you've seen the US Consumer confidence reading perceptions of the economy are worse than they've been since the 70s, since.08, since the pandemic. These are some pretty bad reference points here. Just how do you market to that consumer?

Brian Niccol (9:28)

Yeah, you know, look, when we've spent the time talking to customers, you know, what is it that you're looking for in your experience? They do talk about how they use their Starbucks experience as a moment of escapism. And, you know, my hope is we get more than our fair share of all those occasions we can focus on. When you walk into our stores, you feel warm, you feel welcomed, you feel like this is your place. We can control our ability to get you that exact drink at the speed at which you need it, at the speed of what you want it. And then we also can open up a great seat where if you want to stay and dwell with us, we got that for you, too.

Luke Vargas (10:02)

Part of that is you're not playing the value game.

Brian Niccol (10:04)

Well, I think we're just playing in a different way, which is the way we're going to play the value game is you're going to feel like it was worth it and it's not going to be a game of discounting or one off promotions. I think people actually really do appreciate knowing, hey, if this is a $3 cup of coffee or a $5 latte. I know I'm going to get a great experience for that $5 experience I'm in. And I think if you have to try and compensate for not delivering on the experience, then that's where I think you may have to lean into other promotions or discounting opportunities. But that's really not what is in the DNA of Starbucks. What's in the DNA of Starbucks is this idea of humanity happening in a third place and getting you the customized experience that you want. And if you can count on that, then I think you feel good about handing over your hard earned dollar.

Luke Vargas (10:58)

You seem quite committed to the humanity aspect of it at a time when, at least in Silicon Valley, the whole theme this year is trim headcounts, embrace AI. I bet you've been pitched that AI could take an order pretty quickly and wouldn't need a 401. How do you respond to that?

Brian Niccol (11:14)

Don't get me wrong, we're going to be leveraging technology behind the scenes, but I want AI and technology to enable our barista to provide a better moments of connection or free them up to spend more time on their craft and the ability to present that human to human experience. And I'll give you a great example. Even in our drive thru we've experimented with hey, do you use like an AI tool to take the order? And what we found is you're still better off having a person interact with our customer through the order experience. And then behind the scenes we're using AI to listen to what that order is so that it gets inputted into the point of sale machine correctly, accurately, and then also can track where the order is so that by the time you get to the window, the drink is made and ready to go. But we've protected that human to human experience even through the order board.

Luke Vargas (12:06)

Brian Nicol is the CEO of Starbucks. Brian, thank you so much for the time and for being with us on what's news.

Brian Niccol (12:12)

Hey, thanks Luke. Great being with you.

Luke Vargas (12:15)

And finally, soccer fans are gearing up for the World Cup. But with just six weeks to go, senior sportswriter Rachel Bachman says that tickets for the first US Match in Los Angeles are still available as sky high prices keep many away.

Rachel Bachman (12:29)

Fans have responded to ticket prices with shock. FIFA is using what they call dynamic ticket pricing, which means the prices are set to respond to the demand. And what this has meant is enormously high prices, shockingly so. Generally for that US opener, tickets are priced at $1,940 to over $4,000. It's yet to be seen whether this game will sell out. My sense is it probably will, but the fact that there are still tickets on sale is pretty remarkable given that we are now weeks away from kickoff.

Luke Vargas (13:07)

According to Rachel, Official prices on FIFA's website for the July finals range from $4,000 to $10,000. While FIFA didn't comment on the US opener, the organization has confirmed it's using demand driven dynamic pricing in order to maximize World cup revenue. And that's it for what's news for this Wednesday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Kilhoff and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show.

Margarita Stancati (13:35)

Until then, thanks for listening.

Vanguard Marketing Representative (13:44)

Truestage Companies simplify the complex with 90 years of delivering accessible insurance and innovative financial solutions, let's work together and build a better tomorrow today. Learn more at truestage.com WSJ TrueStage is the marketing name for Truestage Financial Group bank, its subsidiaries and affiliates. Corporate headquarters is located in Madison, Wisconsin.