Starbucks Accelerates Plans To Add Drive-Through Sites -- WSJ
By Heather Haddon
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 22, 2020).
Starbucks Corp. said it is speeding up plans to build stores
with drive-throughs and will close locations in unpopulated malls
as its dine-in service remains suspended due to the coronavirus
The Seattle-based coffee company said Thursday that U.S.
same-store sales are now down 35 to 40% from last year, after it
closed dine-in operations starting in March. Sales in its key China
market, where Starbucks had closed more than half of its stores
from January, remain 20% lower than the same period last year.
"We know that it will take time to fully recover and post
positive comparable-store sales growth," chief executive Kevin
Johnson said in a letter to employees.
The letter provided the company's first business update since it
opened more than 85% of its owned U.S. stores to drive-through,
delivery and carryout earlier this month. Less than half of its
U.S. company stores were open last month. Starbucks, which said it
expects 90% of its stores to reopen by early June, offered no
details on when cafe dining service may resume.
Big restaurant companies, including McDonald's Corp. and
Starbucks, are dealing with a long list of new costs to operate
safely during the pandemic.
McDonald's chief executive Chris Kempczinski said Thursday that
changes in customer behavior brought by the coronavirus bring
ongoing uncertainty to its business.
"We expect our performance will remain challenged," Mr.
Kempczinski said in the burger chain's annual shareholder
The Chicago-based company is opening fewer stores in most
markets in response. Its long-term growth plan will also need to
change as a result of the crisis, he says.
Starbucks and other chains are renegotiating their rent to try
to shave costs, with mixed success.
Starbucks said it is accelerating its plans to build more
drive-through stores and to-go only locations, as it had begun to
do in New York City before the crisis. It will relocate stores out
of "low-traffic malls," the company said.
Plans to build more drive-through and to-go only locations will
occur in the next 12 to 18 months rather than three to five years
due to the pandemic, it said. Starbucks said it is also rolling out
ads encouraging customers to order ahead through its app, as have
many other restaurants trying to operate with less contact between
customers and employees during the pandemic.
Shares in Starbucks rose 1% to $78 in morning trading.
Starbucks said employees' working hours won't return to
pre-pandemic levels for now, adding that demand from key groups,
including office workers, is unlikely to revert to previous levels
"It is important that we are open and honest about the current
reality," said Mr. Johnson, adding that it is extending unpaid
leave that it first rolled out after the pandemic hit.
Write to Heather Haddon at firstname.lastname@example.org
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May 22, 2020 02:47 ET (06:47 GMT)
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