Restaurants

Starbucks CEO: Our experience tracking coronavirus in China shows US on 'very similar' path

Key Points
  • Starbucks CEO Kevin Johnson said Tuesday that the coffee chain believes the COVID-19 outbreak in the U.S. is following a comparable path to what happened in China. 
  • "Right now it's tracking in a very similar way to China," Johnson told CNBC. 
  • "The recovery is unfolding in China and that is what gives us confidence that we know how to manage through this," Johnson added. 
CNBC's full interview with Starbucks CEO Kevin Johnson on coronavirus impact
VIDEO12:2312:23
CNBC's full interview with Starbucks CEO Kevin Johnson on coronavirus impact

Starbucks CEO Kevin Johnson said Tuesday that the coffee chain believes the COVID-19 outbreak in the U.S. is following a comparable path to what happened in China. 

"It may be that in the United States it's a little bit longer, a week or two longer period to see the recovery. It may be the same recovery, but right now it's tracking in a very similar way to China," Johnson said on CNBC's "Squawk on the Street."

Johnson said Starbucks built a model to follow the company's business recovery in China, where the coronavirus pandemic began in late December. "It's now like week three here in the U.S. and we look back at what happened in China and we sort of know what to expect," Johnson said. 

Starbucks temporarily closed its company-owned cafes in the U.S. and Canada last week except for drive-thru and delivery orders, a move designed to increase social distancing efforts. The coffee chain had earlier removed seating from its cafes to discourage gathering. 

Johnson said Starbucks' experience in China is very much informing its response to the global pandemic in other markets. 

"We've have been dealing with COVID-19 for nine weeks now in China and throughout that entire nine-week journey we have learned the playbook and the curve in terms of when you shut down what happens to consumer behavior and as you go through this what happens when you open stores," he said. 

Starbucks has reopened around 95% of the stores it temporarily shuttered in China in response to COVID-19′s spread, Johnson said Tuesday. It took about 45 to 60 days before stores started to reopen, Johnson said. 

On Monday, in particular, Johnson said Starbucks opened another "four or five" stores in Wuhan, the Chinese city where the coronavirus outbreak is believed to have originated. 

"Those stores are opening in safe protocols and we're going slow to make sure this is happening, but the recovery is unfolding in China," Johnson said. "And that is what gives us confidence that we know how to manage through this." 

The Chinese government on Tuesday announced it would be easing travel restrictions in portions of hard-hit Hubei province beginning at midnight, according to The Associated Press. The city of Wuhan, which is located in the province, will remain on lockdown until April 8.

Starbucks expects a revenue hit of $400 million to $430 million in the fiscal second quarter as a result of the Chinese closures. 

Shares of Starbucks surged higher Tuesday, rising more than 14% to $64.88 each. The stock remains down around 26% in 2020. As of Tuesday's close, it was off 34.9% from its all-time high of nearly $100 per share in July 2019.