CNN has obtained a recent SEC filing that shows Starbucks may be closing up to 400 company-owned stores in the Americas.
Starbucks is considering the store closures because they are focusing more on to-go orders and mobile orders rather than a sitdown environment. Although they are closing some 400 company-owned stores, the closing will work “in conjunction with the opening, over time, of a greater number of new, repositioned stores in different locations and with innovative store formats.” The new stores will be focused on mobile orders as well as orders to go. The change had already been planned prior to the coronavirus pandemic but now things are speeding up due to increased customer demands.
Some 80% of transactions at a United States Starbucks were to go, even before the coronavirus pandemic occurred. In order to adapt to the increased need for safety and for how customers are preferring to get their coffee, the change is taking place.
Starbucks is among the many companies that have struggled since the social distancing measures and the coronavirus pandemic occurred. In March, many of their stores went to drive-through only format. The loss is estimated to be between $3 and $3.2 billion in revenue in the past fiscal quarter. COVID-19 is to blame on most of the loss of revenue and sales are expected to drop by up to 45% in the quarter.
Now that some social distancing measures are slowly being lifted, things are looking better for Starbucks. Many stores are reopening and across the United States, 95% are back in business. New York City is where most of the Starbucks stores remain closed but by the end of June, they expect a positive cash flow.
“With each passing week, we are seeing clear evidence of business recovery, with sequential improvements in comparable store sales performance,” CEO Kevin Johnson and CFO Pat Grismer wrote in a letter to stakeholders in the filing: “The Starbucks brand is resilient, customer affinity is strong and we believe the most difficult period is now behind us.”SKM: below-content placeholder