As the United States begins to envision a road to recovery from the coronavirus pandemic in the not-so-far-off future, Starbucks plans to start reopening stores with limited service next week.
The company confirmed in an earnings call Tuesday that they anticipated reopening 90% of their U.S. stores by early June with modified service that includes drive-thru, delivery, in-store pickup, and a new outdoors handoff solution, which allows customers to pick up their Starbucks orders without entering a store. Currently 50% of U.S. stores are completely closed.
“As we begin the recovery process that requires ongoing monitoring to rapidly adapt and recover, we are well-adapted in our digital assets to expand service to customers and focus on the customer experience, beverage innovation and digital assets,” Starbucks CEO Kevin Johnson said during the call on Tuesday. “This [plan] allows us to regain the momentum we had prior to COVID. We expect to strengthen this competitive advantage through continued recovery […] and serve our community safely and with greater convenience.”
As previously reported in a preliminary financial sneak-peak earlier this month, same-store sales in the US declined 3% driven by a 7% decrease in transactions partially offset by a 5% increase in average ticket. Global same-store sales were down 10% driven by a 13% decrease in transactions and partially offset by 4% increase in average ticket. The ticket growth that helped boost the predictably depressed financial results is largely based on the increase in group orders. During Q2, same-store sales are down 25% on average in U.S. stores that are still open.
“As drive-thrus are only open, people are making family Starbucks runs or frontline responders are ordering for their whole [office or hospital],” Kevin Johnson said during the earnings call .”If you’re going to take the time to do drive-thru, you’re going to order for your whole group.”
China meanwhile is in the first stages of its recovery process, Johnson said during the earnings call. Starbucks China is expected to make a full recovery by the end of Q4 and already has 98% of its stores open. Starbucks meanwhile predicts that the U.S. markets will take longer to recover and that Q3 will be affected even more than Q2 by the global pandemic, considering the fact that Q2 had an exceptionally strong start.
But despite the grim outlook for the rest of 2020, Starbucks is moving full speed ahead with marketing strategies and will begin pushing out its new spring beverages that were delayed by the pandemic as early as next week.
Store re-openings will, much like the rest of the company’s recovery efforts, occur in carefully planned stages.
“Only 30 stores will open their cafes [at first] and in those 30 stores there will be no seating and we will monitor what happens [before we move forward],” Starbucks COO Rosalind Brewer said during the call. “Then, later in the summer we’ll add curbside access to our stores. We’re managing what we’re learning and applying what we learn accordingly.”
Starbucks revenues for the second quarter decreased 5% to $5.99 billion as compared with 6.31 billion the year prior. Net income decreased 50.5% or 28 cents per share to $328.4 billion, down from $663.2 billion a year earlier or 53 cents per share the year before.
Starbucks opened a net 255 net new stores in Q2, and as of March 29, had 32,050 stores globally.
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