Restaurants

Starbucks is preparing to reopen cafes as local coronavirus conditions allow

Key Points
  • Starbucks CEO Kevin Johnson told employees the company is transitioning to a "monitor and adapt" phase.
  • The company closed its U.S. cafes on March 21, switching to offering only drive-thru or delivery.
  • Johnson said that some locations may reopen for to-go orders, while others may continue only serving customers through the drive-thru.
A Starbucks employee wears a facial covering while working in Dallas, Texas.
Ronald Martinez | Getty Images

Starbucks is preparing to reopen cafes as some U.S. states report that the number of new coronavirus cases has plateaued or even declined. 

"As we have experienced in China, we are now transitioning to a new phase that can best be described as 'monitor and adapt,'" CEO Kevin Johnson said in a letter to employees on Thursday.

The coffee chain closed most of its U.S. and Canadian cafes on March 21, limiting service to delivery and drive-thru only. More than 60% of its U.S. cafes have a drive-thru lane. Starbucks initially said the closures would be for two weeks but later extended the measures until May 3. 

In China, Starbucks first began reopening stores in areas that were not hit as hard by the virus. Locations in the Hubei province, where the outbreak began, stayed closed longer. 

Johnson said Starbucks field leaders will use the local status of the health crisis, guidance from officials, community sentiment and operational readiness of the individual location to inform their decisions. Some cafes will continue as drive-thru only, while others may reopen for to-go orders. The company will also monitor government data about confirmed Covid-19 cases and trends.

"Only by trying to exceed local, state and national health requirements will we be ready to serve our communities," Johnson wrote.

The company is extending catastrophe paid leave for baristas until the end of May. Employees who are still working during that time will receive an extra $3 per hour.

Cafe closures, social distancing measures and shelter-in-place mandates hit Starbucks' U.S. sales in the fiscal second quarter. U.S. same-store sales declined by 3% during the quarter. During the last week of March, same-store sales in the company's home market plummeted by 60% to 70% as only less than half of its company-operated stores were still operating.

Starbucks expects its fiscal second-quarter earnings to be cut nearly in half. The company will report its full second-quarter results on April 28.

Shares of the coffee chain, which has a market value of $85.2 billion, have fallen 17% so far in 2020. 

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