By Heather Haddon 

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (September 16, 2020).

Starbucks Corp. said its sales recovery in the U.S. is at least another six months away as consumers continue to work from home and many of its stores in central business districts remain closed.

Comparable sales at Starbucks's company-owned stores in U.S. urban centers are still down from last year as many workers haven't returned to offices due to the pandemic, Chief Financial Officer Pat Grismer said Tuesday. Roughly 3% of the 8,900 stores in the U.S. that Starbucks owns remain closed, most of them in city centers, Mr. Grismer said.

"We still have a ways to go to fully recover sales in the U.S. and the overall operating environment remains somewhat uncertain," Mr. Grismer said during a J.P. Morgan investor presentation Tuesday.

Shares in Starbucks, which reports its fourth-quarter and full-year earnings next month, rose 1.3% to $87.71.

Restaurant chains with a high number of city locations, including Starbucks and the U.S. division of Le Pain Quotidien, have been recovering more slowly than businesses that don't rely as heavily on foot traffic from office workers. Big pizza chains, such as Domino's Pizza Inc., have reported sales growth in the U.S. as consumers sheltering at home ordered in more.

Shake Shack Inc. said this week that its recovery has lagged behind other fast-food chains because of its concentration in cities, particularly New York, which last week said it would lift a six-month indoor dining ban at the end of the month though with capacity capped at 25%. "Broadly, New York suffered the most," Shake Shack CEO Randy Garutti said during an investor presentation Monday.

Shake Shack is among the chains now embracing drive-throughs and other to-go options as customers continue to avoid dining rooms. It is also looking to expand more in U.S. suburbs.

Starbucks said Tuesday that same-store sales at the chain's U.S. suburban stores with drive-throughs were now up from last year, and the chain is increasingly focused on building more of those sites. The company said it is seeking more parking spots as it builds up a pickup service at hundreds of its suburban stores.

Many of the 400 stores it intends to close or move in the next 12 to 18 months are in city centers. Same-store sales at its company-owned U.S. locations were 11% lower in August compared with a year earlier, though it was an improvement from July. The company affirmed previous guidance that its same-store sales would begin to grow again by around March.

Starbucks, which asked landlords earlier in the pandemic for a year's worth of rent breaks, said it didn't receive short-term abatements for existing locations. However, it said it is gaining concessions in renewals and new locations. In addition, the chain will have early-termination rights in new leases and rent relief in the event of new pandemic-related disruptions, Mr. Grismer said.

In the company's key China market, Starbucks's sales have experienced a choppy recovery with continuing disruptions to commuting and international travel to the country. Same-store sales for company-owned Starbucks stores were flat in August year-over-year, following a 10% decline for July and an 8% drop in June.

About 1% of Starbucks's 4,500 stores in China remain closed, while those open have restored most of their seating, Mr. Grismer said. The chain still expects to add more than 500 new stores in China and recover sales there by the end of its current fiscal year.

Write to Heather Haddon at


(END) Dow Jones Newswires

September 16, 2020 02:47 ET (06:47 GMT)

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