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CNBC Exclusive: CNBC Transcript: Starbucks President & CEO Kevin Johnson Speaks with CNBC's David Faber on "Squawk on the Street" Today

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WHEN: Today, Wednesday, June 20, 2018

WHERE: CNBC's "Squawk on the Street"

The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Starbucks President & CEO Kevin Johnson and CNBC's David Faber on CNBC's "Squawk on the Street" (M-F 9AM – 11AM) today, Wednesday, June 20th. The following are links to video of the interview on CNBC.com: https://www.cnbc.com/video/2018/06/20/starbucks-ceo-kevin-johnson-were-going-to-create-shareholder-value.html?play=1 and https://www.cnbc.com/video/2018/06/20/starbucks-ceo-kevin-johnson-on-growth-plans.html.

All references must be sourced to CNBC.

DAVID FABER: WELCOME BACK TO "SQUAWK ON THE STREET." IM DAVID FABER. AT A STARBUCKS IN BOSTON A CITY CHOSEN BECAUSE CEO KEVIN JOHNSON PRESENTED YESTERDAY AT AN OPPENHEIMER CONFERENCE AND HAD NEWS THAT, WELL, NOT BEING NECESSARILY WELL RECEIVED BY THE MARKET THIS MORNING, BUT WERE HERE WITH MR. JOHNSON TO TALK ABOUT IT. THE STOCK ABOUT TO OPEN 4% LOWER THIS MORNING YOU DECREASED EXPECTATIONS FOR SAME-STORE SALES IN THE U.S. TO 1% IN THE THIRD QUARTER YOU ARE GOING TO CLOSE MORE STORES OPEN, OBVIOUSLY, CONTINUE TO OPEN OTHERS. BUT LOOK FOR UNPENETRATED MARKETS. I GUESS MY FIRST QUESTION IN LISTENING TO YOU YESTERDAY, SEEING YOUR DECISION INCREASE THE DIVIDEND AND THE BUY BACK AND READING ANALYST REPORTS THIS MORNING IS STARBUCKS A MATURE COMPANY?

KEVIN JOHNSON: WELL, FIRST OF ALL, WELCOME TO STARBUCKS ITS GREAT TO HAVE YOU HERE THIS MORNING. WHAT WE TALKED ABOUT YESTERDAY WAS SOMETHING THAT WE HAVE BEEN WORKING ON OVER THE LAST YEAR. WHICH IS FUNDAMENTALLY STREAMLINING THE COMPANY OVER THIS LAST YEAR SO WE CAN FOCUS ON THE MOST IMPORTANT PRIORITIES. AND THOSE PRIORITIES ARE GOING TO ALLOW US TO REALLY TRANSITION INTO A PHASE THAT I CALL GROWTH AT SCALE AND WE LOOK AT STARBUCKS WAS FOUNDED IN 1971, AND SO OVER THE LAST 47 YEARS, YOU KNOW, WE HAVE BUILT AN ICONIC GLOBAL BRAND 77 COUNTRIES, 28,000 STORES AROUND THE WORLD SERVING NEARLY 100 MILLION CUSTOMERS A WEEK SO NOW, AT OUR SCALE, I THINK WEVE GOT TO BE MUCH MORE DISCIPLINED IN SETTING OUR PRIORITIES, WEVE GOT TO BE MORE DATA DRIVEN IN TERMS OF HOW WERE ALLOCATING RESOURCES AND TUNING THE MODEL, WE HAVE TO BE MUCH MORE AGILE AS INNOVATORS WE SET THE STAGE FOR THAT TRANSITION TO A COMPANY THAT IS FOCUSSED ON GROWTH AND SCALE AND A SET OF INITIATIVES THAT ARE GOING TO HELP US GET THERE.

FABER: GROWTH AND SCALE MEAN NOT THE GROWTH THAT STARBUCKS AND STARBUCKS INVESTORS HAVE COME TO EXPECT PREVIOUSLY.

JOHNSON: OUR GROWTH HAS SLOWED IN THE LAST TWO OR THREE YEARS.

FABER: THERE ARE MORE STARBUCKS THAN McDONALDS IN THIS COUNTRY. HOW CAN IT NOT SLOW

JOHNSON: WELL, 28,000 STORES AROUND THE WORLD. CERTAINLY IN THE U.S. WELL CONTINUE TO BUILD 400 NEW COMPANY-OPERATED STORES A YEAR WHAT WE TALKED ABOUT YESTERDAY WAS THE FACT THAT TYPICALLY WE CLOSE ABOUT 50 STORES A YEAR IN THE U.S. ITS JUST PART OF OUR NORMAL PRUNING OF STORES. THIS YEAR WELL PRUNE 150. WERE GOING TO BUILD 400 NEW STORES IN THE U.S. BUT IF YOU LOOK AT A GLOBAL BASIS, THE THREE PRIORITIES THAT WE SET, NUMBER ONE, GROWING OUR RETAIL BUSINESS IN THE U.S. AND CHINA. NOW THE U.S. AND CHINA ARE IN TWO VERY DIFFERENT STAGES. CHINA IS IN A BUILD STAGE. WE JUST INCREASED THE NUMBER OF NEW STORES WERE BUILDING IN CHINA TO 600 NEW STORES A YEAR.

FABER: 3300 STORES YOU BUILD ONE EVERY 15 HOURS A NEW STARBUCKS OPEN THERE ALTHOUGH TO THE POINT ON CHINA AND WHAT IS GIVING PEOPLE PAUSE THIS MORNING. SAME-STORE SALES COMP WENT FROM 8% TO 0 IN CHINA. ITS ONLY 10% OF YOUR INCOME, AT THIS POINT. TO YOUR POINT ITS A GROWTH AREA FOR YOU. SHOULD THAT BE A CONCERN

JOHNSON: YOU KNOW, WE FOCUS ON GROWING THE NUMBER OF TRANSACTIONS IN CHINA. WITH ALL THE NEW STORES WERE BUILDING PLUS EXISTING STORES, THIS QUARTER WILL GROWTH, CUSTOMER TRANSACTION SOMETHING LIKE 15% WE CONTINUED TO GROW SAME-STORE SALES IN CHINA THIS PARTICULAR QUARTER WITH THE ACCELERATION OF NEW STORE BUILDS IN THE CITIES WERE BUILDING IN THERES SOME CANNIBALZATION OF EXISTING STORES.

FABER: YOU TALKED ABOUT CANNABELIZATION AND THIRD PARTY DELIVERIES. THERE WAS SOME DISLOCATION THERE.

JOHNSON: YEAH. WHAT HAPPENED THERES BEEN SOME NEW ENTRANTS IN THE MARKET COMPETITORS THAT ARE FOCUSSED ON DELIVERY AND THEYRE SUBSIDIZING THE DELIVERY WE HAVE A VERY, VERY STRONG MOBILE ECO SYSTEM IN CHINA WE HAVENT LIT UP MOBILE ORDER AND PAY AND DELIVERY WE HAVE MOBILE PAYMENT IN CHINA. THE TEAM IN CHINA IS WORKING WITH ONE OF THE LARGEST TECH COMPANIES IN THE WORLD TO PUT TOGETHER THE PROCESS WHERE WE CAN LIGHT UP MOBILE ORDER AND DELIVERY IN CHINA. YOU KNOW, THE KEY THING IN CHINA IS WERE PLAYING THE LONG GAME WEVE BEEN THERE FOR 20 YEARS. WE CONTINUE TO POST GREAT GROWTH IN CHINA WE ACQUIRED EAST JOINT VENTURE CHINA UNIFIED MAIN LAND CHINA. WELL LIGHT UP MOBILE ORDER AND DELIVERY IN CHINA. AND THE FACT IS, IN THE NEXT THREE YEARS, WERE GOING TO BUILD STORES AND ENTER 100 NEW CITIES IN CHINA. EACH OF THOSE CITIES THE SIZE OF LOS ANGELES OR GREATER.

FABER: I READ YOUR PRESENTATION YOU MADE FOR INVESTOR DAY, WHICH YOU HAD IN CHINA FOR AN OBVIOUS REASON TO FOCUS PEOPLE IN THE INVESTMENT COMMUNITY ON IT AND WHAT YOUVE DONE THERE IN TERMS OF BEING ABLE TO GROW EVERYTHING THERE TO THE EXTENT YOU WANTED THE SUPPLY CHAIN AND SO MANY OTHER THINGS BUT I WANT TO COME BACK TO YESTERDAY FOR A MOMENT AND I WONDER WHETHER WOULD YOU HAVE BEEN ABLE TO MAKE THE ANNOUNCEMENT YOU DID YESTERDAY WITHOUT HOWARD SCHULTZ PLANNING TO LEAVE THE COMPANY IN 10 DAYS? IS IT DRAWING A LINE IS IT SAYING EVEN THOUGH YOU'VE BEEN CEO FOR OVER A YEAR I KNOW THAT. THIS IS THE KEVIN JOHNSON.

JOHNSON: THIS IS WHERE IM TAKING THE COMPANY. AND, YOU KNOW, WHETHER HOWARD IS HERE OR NOT, IM THE CEO AND IM ACCOUNTABLE FOR THAT.

FABER: HOWARD IS NOT HERE ANYMORE. YOU ARE IN CHARGE. HE IS NOT GOING TO BE SITTING NEXT TO YOU ANYMORE DOING THESE INTERVIEWS HE'S GONE I DON'T KNOW WHAT HE IS GOING TO DO. DOES IT CHANGE THE WAY YOU OPERATE

JOHNSON: WELL, NOT NECESSARILY IM ACCOUNTABLE FOR MAKING THE DECISIONS IN THE BEST INTEREST OF STARBUCKS IVE BEEN DOING IT SINCE DAY ONE. BUT THIS IS AN INFLECTION POINT. YOU THINK ABOUT MANY HAVE WRITTEN ABOUT FOUNDER TRANSITIONS. WHAT I CALL FOUNDER-LED TO FOUNDER-INSPIRED COMPANIES I HAVE EXPERIENCED AND LIVED IT. THE LAST 25 YEARS OF MY CAREER I WORKED WITH FOUNDERS MICROSOFT AND JUNIPER AND THE LAST DECADE WORKING WITH HOWARD. WERE AT AN INFLECTION POINT WHAT WE DID YESTERDAY WAS PUT A STAKE IN THE GROUND THAT SAID, LOOK, WE ARE STREAMLINING THE COMPANY OVER THE LAST YEAR WE FREED UP $8 BILLION IN CAPITAL. WE REDEPLOYED $1.3 MILLION IN CHINA. WE CALLED OUT STRATEGIC PRIORITIES WELL GET FOCUSSED ON THOSE STRAGEIC PRIORITIES AND EXECUTE WITH DISCIPLINE AND CREATE SHAREHOLDER VALUE. WE HAVE ONE OF THE STRONGEST CONSUMER BRANDS IN THE WORLD WE HAVE MANY GREAT ASSETS AT OUR DISPOSAL THE OPPORTUNITY IS BE VEY THOUGHTFUL AND SMART HOW WERE DEPLOYING CAPITAL AND GROW THE BUSINESS.

FABER: I WANT TO HAVE JIM ASK A COUPLE OF QUESTIONS, AS WELL JIM?

JIM CRAMER: GOOD TO SEE YOU, KEVIN.

JOHNSON: JIM, GOOD MORNING.

CRAMER: GOOD MORNING. STOCK IS DOWN $2 TAKE A LITTLE BIT OF DIFFERENT NARRATIVE HERE YOU CAME IN IN APRIL OF 2017 THERE HAVE BEEN FOUR QUARTERS THAT YOU HAVE BEEN PRESIDING OVER ON THREE OF THOSE FOUR QUARTERS, YOU HAVE CUT YOUR FORECAST YOURE FROM JUNIPER YOU UNDERSTAND TECHNOLOGY. YOU KNOW THIS ISNT RIGHT. HOW COULD YO BE THREE OUT OF FOUR CUTTING YOUR FORECAST KEVIN, YOU WOULD BE FURIOUS AT YOURSELF I DONT HEAR YOU EVEN BEING UPSET

JOHNSON: JIM, I SAID YESTERDAY, YOU KNOW, CLEARLY THE PERFORMANCE WEVE DELIVERED HAS NOT MET MY EXPECTATIONS IT HASNT MET OUR SHAREHOLDER EXPECTATIONS IM ACCOUNTABLE TO FIX IT. NOW I SAID THAT YESTERDAY AND I BELIEVE IN THAT. I BELIEVE THE PLAN WE PUT OUT YESTERDAY AND SHARED WITH OURINVESTORS IS THE RIGHT PLAN FOR THE COMPANY. NOW STARBUCKS HAS BEEN THROUGH THESE EBBS AND FLOWS BEFORE AND WE ALWAYS GET THROUGH THEM WERE GOING TO GET THROUGH THIS ONE, AS WELL THE LAST IN THE CURRENT QUARTER, CERTAINLY WE HAD AN UNPLANNED INITIATIVE DRIVEN OUT OF THE PHILADELPHIA INCIDENT. CLOSED ALL OF OUR STORES FOR TRAINING WE HAD TO DELAY SOME MARKETING BUT NONE OF THAT IS AN EXCUSE. THE FACT IS, THE WAY I THINK ABOUT A GROWTH COMPANY AT SCALE IS WEVE GOT TO DELIVER CONSISTENT GROWTH MONTH AFTER MONTH, QUARTER AFTER QUARTER, AND YEAR AFTER YEAR. AND WE HAVE NOT DONE THAT BUT THAT IS WHAT WERE LAYING THE FOUNDATION AND THATS WHAT WERE THE LEADERSHIP TEAM AND I ARE FOCUSED TO DO.

FABER: I KNOW JIM WILL WANT TO GET BACK LET ME FOLLOW UP OKAY WERE LOOKING AT 1% SAME-STORE SALES GROWTH THERE ARE THOSE WHO ARGUE YOURE STARTING TO LOSE OUT TO A CERTAIN EXTENT TO THE SMALLER, HIGH-END COFFEE SHOPS WHETHER IT BE BLUE BOTTLE 52 LOCATIONS BUT WITHIN A MILE OF 1,100 STARBUCKS. YOU SAY YOU WANT TO GET BACK TO THAT CONSISTENT GROWTH, BUT DO YOU REALLY SEE THE PATH AND WHERE IS IT WHEN YOU SAY ITS NOT ACCEPTABLE AND YOURE NOT RESPONDING FAST ENOUGH TO THE CHANGING PREFERENCES OF CUSTOMERS. WHAT DO YOU DO, THEN, TO DO THAT

JOHNSON: WELL, THE BIGGEST THING THAT WE DO, DAVID, IS DIGITAL YOU KNOW, WEVE GOT A HUGE DIGITAL ASSET IN OUR REWARDS PROGRAM AND ACTIVE REWARDS MEMBERS. 15 MILLION CUSTOMERS IN THAT PROGRAM WE OPENED UP A WIDE RANGE OF THINGS WERE DOING TO CAPTURE NONREWARDS CUSTOMERS IN A DIGITAL RELATIONSHIP WE ADDED 5 MILLION NONREWARDS CUSTOMERS.

FABER: NOT NECESSARILY REWARDS CUSTOMERS BUT YOUVE GOT THEIR E-MAIL ADDRESS NOW.

JOHNSON: THAT'S RIGHT, AND SO NOW, WHAT WE'RE DOING IS WE'RE USING THOSE RELATIONSHIPS AND OUR PERSONALIZATION ENGINE TO REALLY DRIVE THE KINDS OF OFFERS AND PROMOTIONS TO THOSE CUSTOMERS. THAT'S A BIG ON LOT. NOW, WE'VE ALWAYS HAD COMPETITORS. WE HAVE COMPETITORS THAT WILL FOCUS MORE ON A VALUE PROPOSITION. A LOT OF TIMES THESE ARE COMPETITORS THAT ARE FOOD FORWARD THAT THEN TRY AND OFFER BEVERAGE. AND WE HAVE COMPETITORS THE THIRD WAY OF INDEPENDENCE THAT YOU MENTIONED, LIKE A BLUE BOTTLE. YOU KNOW, WE'RE TAKING THE BRAND UP. WE'RE IN THE BUSINESS OF PREMIUM COFFEE, PREMIUM TEAS, AND A PREMIUM EXPERIENCE. SO WE'RE FOCUSED ON ELEVATING THE BRAND AND ELEVATING THE CUSTOMER EXPERIENCE.

FABER: JIM, I KNOW YOU'VE GOT ANOTHER QUESTION AS KEVIN TAKES A QUICK SIP OF COFFEE.

CRAMER: YES. AND I KNOW THERE'S A NEW DIRECTOR TO THE PROGRAM AMONG THE THREE TITANS IN HEALTH CARE. KEVIN, ONE OF THE THINGS I WANT TO SEE MORE THAN ALMOST ANYBODY IN THE WORLD, OTHER THAN MAYBE YOU AND HOWARD, IS A BOTTOM IN THE STOCK. YOU CANNOT—I'M NOT ASKING A QUESTION. I'M GIVING YOU A STATEMENT, YOU CAN REFUTE IT. HOW CAN YOU REACH A BOTTOM IN THE STOCK WHEN YOU MAINTAIN THE LONG-TERM GROWTH RATE OF 3 TO 5% WHICH NOW SEEMS UNREALISTIC. BOTH BECAUSE OF CANNIBALISM AND BECAUSE OF A SLOW DOWN IN CHINA. WHY NOT JUST SAY, YOU KNOW WHAT, WE'RE SCRAPPING THAT LONG-TERM? YOU CAN'T GET A BOTTOM, KEVIN, UNTIL YOU DO THAT. YOU AND I GO WAY BACK. THAT'S WHAT WE KNOW ABOUT STOCKS.

JOHNSON: WELL, JIM, LOOK. WE ADJUSTED OUR LONG RANGE GUIDANCE LAST YEAR AND WE ADJUSTED IT FOR HIGH SINGLE DIGIT REVENUE GROWTH. AND WE WILL BE IN THAT HIGH SINGLE DIGIT REVENUE GROWTH THIS QUARTER. EVEN THOUGH COMPS ARE A BIT DEPRESSED. AND SO, YOU KNOW, WE'RE FOCUSED – THE FACT IS, IN THIS CURRENT QUARTER FOLLOWING MAY 29th, THE U.S. HAS NOW REBOUNDED TO POST A 3% COMP, WE'RE TRENDING TO THAT FOR THE MONTH OF JUNE. BUT THE FACT IS, WE HAVE NOT BEEN CONSISTENT IN DELIVERING THAT. AND SO THE FOCUS HAS GOT TO BE ON CONSISTENT EXECUTION AGAINST DISCIPLINED PRIORITIES, AND THAT IS GOING TO TAKE US INTO THAT LONG RANGE GUIDANCE. AND THAT'S WHAT WE'VE GOT TO DO.

CRAMER: OKAY. I NEED TO TALK ABOUT EXPENSES FOR A SECOND, DAVID. I RUN A RESTAURANT, OKAY, THAT'S ANECDOTAL, THAT IS NOT EMPIRICAL. BUT I KNOW THAT WHEN WE HAVE BATHROOMS THAT ARE NOT CLEAN. WHEN WE HAVE PEOPLE WHO WANT TO USE A BATHROOM, AND YES, THEY'RE NOT GOING TO PAY. I TOTALLY GET THAT. BUT WE HAVE TO ADD A SHIFT MEMBER AND IT HURTS OUR PROFITABILITY. I CANNOT BELIEVE THAT THE LICENSEES DIDNT SEE THAT, TOO. NO ONE WANTS TO ADD A SHIFT MEMBER BECAUSE THEY COST TOO DARN MUCH. KJ, HOW ARE YOU GOING TO KEEP COSTS DOWN IF YOU HAVE TO HAVE A SHIFT MEMBER?

JOHNSON: WELL JIM, YOU KNOW, WE'VE WORKED ON MANY WAYS TO HELP INCREASE PRODUCTIVITY. PART OF THAT IS BUSINESS SIMPLIFICATION. IF YOU LOOK AT THE SET OF THINGS WE'VE DONE JUST OVER THE LAST SIX MONTHS, WE LAUNCHED SOME NEW OPERATING PROCESS IN THE STORE CALLED DEPLOYMENT 2.0. AND THAT SIMPLIFIED ALL OF THE BARISTAS' JOBS, ALLOWING THEM TO SPEND MORE TIME FOCUSED ON THE CUSTOMER. IN ADDITION TO THAT, YOU KNOW, WE'RE CONSTANTLY LOOKING FOR WAYS TO USE TECHNOLOGY TO HELP SIMPLIFY AND ALLOW US TO GET MORE PRODUCTIVITY IN OUR STORES.

QUINTANILLA: KEVIN, AS YOU ARE TALKING, LET'S JUST TAKE A MOMENT HERE TO GET THE OPENING BELL HERE AT THE NEW YORK STOCK EXCHANGE. BUSY MORNING AS WE WATCH NOT JUST STARBUCKS BUT THE MEDIA STORY REGARDING COMCAST AND DISNEY. ORACLE, FEDEX – THERE'S THE BELL DOWN HERE AT THE NYSE. REALLY QUICKLY HERE, BERKSHIRE, AMAZON AND JPMORGAN HAVE ANNOUNCED THE PERSON WHO IS GOING TO HEAD THEIR NEW HEALTH CARE EFFORT. IT IS ATUL GAWANDE. STAFF WRITER FOR THE NEW YORKER SINCE 1998. AUTHOR OF SEVERAL WIDELY KNOWN BOOKS REGARDING HEALTH CARE. THEY SAY THE COMPANY IS GOING TO OPERATE INDEPENDENTLY, BE BASED IN BOSTON, GUYS. AND AS THEY HAVE SAID BEFORE, WILL BE FREE FROM PROFIT MAKING INCENTIVES AND CONSTRAINTS. SO WE WILL SEE WHERE THAT LEADS.

CRAMER: LOOK, IT'S NON TRADITIONAL VERSUS GEISINGER – A GUY WHO HAS RAN A VERY SUCCESSFUL HEALTH CARE. SO I MEAN, YEAH, LET'S GO READ SOME BOOKS TONIGHT.

QUINTANILLA: YES. BETTER IS A GOOD ONE TO START WITH. DAVID, OVER TO YOU.

FABER: ALRIGHT. THANK YOU, CARL. KEVIN, WE'VE KEPT YOU AROUND UNTIL AFTER THE BELL AND WE APPRECIATE IT, CERTAINLY. AGAIN, JUST TO RESET FOR OUR VIEWERS, OF COURSE, WE ARE HERE WITH KEVIN JOHNSON, CEO OF STARBUCKS AT A VERY NICE BOSTON LOCATION. NICE TRAFFIC BEHIND YOU, TOO.

JOHNSON: YEAH. IT'S MORNING PEAK. WE ARE GOING TO GET THROUGHPUT.

FABER: BUT, YOU KNOW, TO YOUR POINT, AND TO THE POINT JIM HAS BEEN MAKING, AS WELL. 28,000 STORES. WHEN YOU TALK ABOUT A COMPANY THAT BEGAN IN 1971. I'VE BEEN IN THIS BUSINESS A LONG TIME. I'VE WATCHED COMPANIES GROW DRAMATICALLY FOR MANY YEARS. BUT THEY TYPICALLY DO REACH A POINT WHERE IT BECOMES MORE DIFFICULT TO GROW. YOU KEEP COMING BACK TO THE IDEA YOU WILL BE ABLE TO PUT THAT GROWTH NUMBER UP THERE. JIM IS SORT OF SAYING WHY NOT JUST SAY, THIS IS WHAT WE ARE AND ITS FINE TO BE THAT. WHY NOT?

JOHNSON: WELL, I THINK, YOU KNOW, WHAT WE'VE DONE IS WE'VE LOOKED AT OUR BUSINESS AND WE TRY TO BE VERY THOUGHTFUL AND DISCIPLINED IN SETTING OUT OUR TARGETS, DECLARING THE PRIORITIES, AND YOU KNOW WHAT WEVE OUTLINED IN TERMS OF OUR LONG-TERM GUIDANCE LAST YEAR IS STILL WHAT WE BELIEVE. NOW, WE HAVEN'T DELIVERED ON THAT, ESPECIALLY IN THIS PARTICULAR QUARTER. AND YOU KNOW, THERE'S NO EXCUSES. THE FACT IS THAT OVER THIS LAST YEAR, WE'VE BEEN GOING THROUGH THE PROCESS TO STREAM LINE THE COMPANY. AND THAT IS GOING TO HELP US GET MORE FOCUS AND MORE MANAGEMENT ATTENTION ON THE KEY THINGS WE NEED TO DO TO DRIVE THAT.

FABER: IN CHINA WHERE, AS YOU TALK ABOUT LONG-TERM, BEEN THERE 20 YEARS. THE GROWTH TRAJECTORY IS POTENTIALLY ENORMOUS. I MEAN, I'VE SEEN THE STATS YOU LIKE TO REPEAT. HALF A CUP OF COFFEE PER CAPITA A YEAR VERSUS 300 HERE IN THE UNITED STATES. WE CAN ALL IMAGINE WHAT THAT WOULD MEAN IF THEY WERE TO EVER MEET OUR LEVEL OF COFFEE CONSUMPTION. ARE YOU CONCERNED THOUGH AT ALL ABOUT WHAT IS GOING ON RIGHT NOW IN TERMS OF THE BACK AND FORTH AND THE TRADE DISPUTE BETWEEN OUR TWO COUNTRIES? EVEN THOUGH I KNOW YOU VIEW STARBUCKS CHINA AS A CHINESE COMPANY. DO THE CHINESE OR IS IT POSSIBLE YOU GET CAUGHT UP IN SOME SORT OF BOYCOTT OR SOMETHING LIKE THAT?

JOHNSON: WELL, YOU KNOW AS YOU MENTIONED, WE'VE BEEN IN CHINA FOR 20 YEARS. AND WE'VE BEEN VERY THOUGHTFUL ABOUT HOW WE'VE BUILT OUR BRAND AND BUILT OUR COMPANY IN CHINA. AND, YOU KNOW, ITS BUILT IN CHINA FOR CHINA. AND, YOU KNOW, THAT SAID, IVE ALSO BEEN CLEAR THAT, YOU KNOW, WERE NOT IMMUNE TO GEOPOLITICAL EVENTS THAT MIGHT UNFOLD. YET, WE ARE GOING TO STAY FOCUSED ON THE LONG-TERM. AND WE BELIEVE IN THE GROWTH POTENTIAL OF CHINA. WERE DEPLOYING CAPITAL IN CHINA. THE ACQUISITION OF EAST CHINA JOINT VENTURE. WE'RE BUILDING 600 NEW STORES A YEAR. AND THAT STRATEGY IS GOING TO REMAIN THE SAME BECAUSE WERE PLAYING THE LONG GAME.

FABER: AND FINALLY ON THAT LONG GAME. YOU'VE TALKED A LOT ABOUT YOUR DIGITAL INITIATIVES AND HOW IMPORTANT IT IS TO GET PEOPLE TO COME IN. 75 MILLION PEOPLE MAKE A VISIT ONCE A MONTH, I GUESS. BUT 60 MILLION ARE NOT MEMBERSHIP REWARDS. WHAT IS THE NUMBER THAT YOU WOULD LIKE IT TO BE? AND WHAT IS REALISTIC GOAL FOR THIS COMPANY TO HAVE IN TERMS OF ENLISTING PEOPLE IN THAT MEMBERSHIP COMMUNITY?

JOHNSON: CLEARLY, THE MORE DIGITAL RELATIONSHIPS WE HAVE, THE BETTER. I MEAN, IT IS THE NUMBER ONE MOST POWERFUL THING WE CAN DO IN THE UNITED STATES TO DRIVE SAME STORE COMP GROWTH. AND, YOU KNOW, WERE AT 15

MILLION ACTIVE REWARDS MEMBERS USING OUR MOBILE APP AND OUR MOBILE PAYMENTS IS THE NUMBER ONE MOBILE PAYMENT SCENARIO IN THE U.S. TODAY. AND JUST IN THE LAST 90 DAYS, WE ADDED ANOTHER 5 MILLION REGISTERED CUSTOMERS. SO WE ARE NOW AT 20 MILLION DIGITALLY REGISTERED CUSTOMERS. WITH THE SET OF INITIATIVES WE HAVE AROUND CUSTOMER ACQUISITION, THAT 5 MILLION WE ADDED, THAT NUMBER IS JUST GOING TO CONTINUE TO GROW QUARTER AFTER QUARTER. IF WE GET TO, YOU KNOW, IF WE GET TO 40 TO 50% OF THE CUSTOMERS THAT VISIT US, IF WE HAVE A DIGITAL RELATIONSHIP WITH 40 TO 50% OF THEM, THAT WOULD BE AN OUTSTANDING RESULT FOR US. AND THAT'S WHAT WE INTEND TO DO.

FABER: KEVIN, WE APPRECIATE YOUR TIME. HOWARD SCHULTZ LEAVES IN TEN DAYS. ARE YOU GOING TO MISS HIM OR ARE YOU GOING TO BE HAPPY TO SORT OF SEE HIM GO?

JOHNSON: WELL LOOK, HOWARD IS A GOOD FRIEND AND, YOU KNOW, I'VE BEEN FORTUNE THAT, YOU KNOW, I'VE KNOWN HIM FOR 15 YEARS OR SO. I'VE WORKED CLOSELY WITH HIM FOR THE LAST 10 YEARS AND, YOU KNOW, HE HAS, YOU KNOW, HAD THE WILLINGNESS TO TEACH ME EVERYTHING THAT HE'S LEARNED OVER THE LAST 30 OR 40 YEARS HERE AT STARBUCKS. AND I'VE HAD THE DESIRE TO LEARN FROM HIM. AND SO, HE WILL ALWAYS BE MY FRIEND. AND, YOU KNOW, HE'S ALSO GOING TO BE ONE OF OUR LARGEST INDEPENDENT SHAREHOLDERS, SO I'VE GOT A LOT OF ACCOUNTABILITY TO HOWARD.

FABER: YES YOU DO. WELL, WE APPRECIATE YOU SPENDING TIME WITH US THANK YOU. KEVIN JOHNSON, CEO OF STARBUCKS. BACK TO YOU GUYS.

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