Starbucks To Open 90% Of Owned U.S. Outlets By Early June As Businesses Plan Reopening In Coronavirus Era

In a potential sign of when things may gradually get back to life in the coronavirus-stricken U.S., coffee house giant Starbucks
SBUX
said Tuesday that 90% of its domestic company-operated stores will be open by early June.

Starbucks, which has temporarily shut about half of its company-run stores in the U.S., its largest market, said it will begin to reopen some of the closed stores beginning in early May. The Seattle-based chain had a total of 32,050 stores worldwide as of March 29, including nearly 15,300 stores in the U.S. 

A little over half of its global stores are company operated, but they represent about four-fifths of Starbucks’s nearly $6 billion in fiscal second-quarter revenue when the company reported quarterly earnings late Tuesday. In the U.S., company-operated stores are even more important as they account for about 90% of the market’s total sales. 

Reopening stores doesn’t meant everything is back to normal, however. Seating, if at all, will remain limited in some markets with social distancing closely followed. Contactless pickup, drive through or delivery through Uber Eats available at Starbucks that are open can be expected to be the new norm for other locations as well.

As coronavirus has driven an increase in grocery and food delivery mobile orders with many merchants banning cash transactions for now, that also looks to have given Starbucks’ industry-leading mobile app signup another boost—digital loyalty reward active members in the U.S. jumped 15% to 19.4 million during the quarter.

The number will likely only go up. For instance, at some of Starbucks’ stores in New York, signs are pasted on the windows giving consumers a step-by-step instruction on how to download, order and pay through is mobile app. Baristas  at locations that are open can be seen stationed by the doors handing out orders or assisting those who need help with the mobile signups. 

In the quarter that ended March 29, worldwide comparable store sales declined 10%, hurt by a 13% decrease in the number of transactions, even as group ordering drove up average receipt tally by 4%. In the U.S., same-store sales fell 3%, with the decline expected to steepen this quarter as New York and other states only began to implement stay-at-home orders in mid March.  

In China, where the pandemic originated, comparable store sales slumped 50% last quarter. Starbucks said “substantially” all of its locations there, its second largest market with about 4,350 stores, have reopened with “meaningful improvement” in demand. 

“We are confident the brand is well positioned,” Starbucks CEO Kevin Johnson said on a conference call late Tuesday. “These (negative business) impacts are temporary.” 

With the Commerce Department recently reporting March U.S. food service and drinking place sales slumping 27%, Starbucks reopening most of its company-run stores may potentially give it an edge over others that had traditionally counted on most of their sales through sit-in customers: even before the outbreak spreads in the U.S., four-fifths of its domestic transactions, according to executives on the call, were already for grab-and-go takeout orders.

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