MCD McDonalds Corp

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 (March 5, 2020).

Starbucks Corp. has instructed employees to step up cleaning at its thousands of U.S. cafes, as a domestic restaurant industry already working against stagnant demand reacts to a new threat to sales and public health.

The coffee giant and McDonald's Corp. are among restaurant chains adjusting operations and stepping up cleaning as the coronavirus epidemic gains ground in the U.S. More than 130 cases of the new coronavirus had been diagnosed across the U.S. as of Wednesday.

Sales at U.S. restaurants could fall this year as the epidemic expands domestically and more customers avoid public places, analysts say. Fitch Ratings said the epidemic poses a greater risk to restaurants than other sectors of the economy, exacerbating pressure on an industry already working to reverse stagnant traffic. Same-store traffic at U.S. restaurant chains fell 3.1% last year, according to industry firm Black Box Intelligence.

Starbucks earlier this week sent a memo to store employees instructing them to clean cafes more often and thoroughly. Employees were told to regularly sanitize door handles, chairs, tables and coffee bars, according to the memo, which was reviewed by The Wall Street Journal. Workers were told to sanitize bathrooms and ordering machines frequently, and employees were told to regularly wash their hands.

"We want to do whatever we can to support our partners and customers," the memo states.

McDonald's said it had advised its U.S. operators to sanitize door handles, order kiosks, counters, tables and restrooms more frequently. The burger giant also recommended stores provide hand sanitizer to customers and workers in lobbies and behind the front counter. Workers should use hand sanitizer to supplement frequent hand washing, the company said, adding that it created an internal group in January to assess the daily impact of the epidemic on its operations around the globe.

Starbucks said the more intensive cleaning regimen should take about 30 minutes a day and should be performed during peak times. The company recommended that managers add up to 1% to their planned employee hours to handle the work.

The company also told workers to stay home if they are ill, keep their fingernails short and limit the amount of jewelry they wear. The chain offers paid sick leave for workers, a rarity among big retail and restaurant chains.

Starbucks runs 8,870 cafes in the U.S. and licenses 6,320 more to outside operators.

The coffee giant said in a letter Wednesday it was restricting customers from bringing in their own cups for refills for now, but would continue to give 10-cent discounts to customers who do.

The company said it restricted all business-related travel through March 31, and has postponed large meetings.

The chain has been in regular contact with stores, including licensees across the globe, the company said.

"We are navigating this situation with nimbleness, learning and adapting as new information is made available," said Rossann Williams, Starbucks president for U.S. company-operated business and Canada, in the letter to be distributed to employees and customers.

The epidemic could benefit chains that have invested in delivery and mobile-pay options, analysts said, while hurting those that haven't. In China, where the new coronavirus emerged late last year, restaurant food delivery rose 20% after the epidemic hit while customer visits dropped overall, according to market-research firm NPD Group Inc.

Restaurant chains such as Yum Brands Inc. sought to curb the loss of sales in China by offering more delivery to people staying home.

Starbucks closed more than 2,000 of its stores in China, its second-biggest market, during the peak of the outbreak there. The company said last week that about 85% of those stores had reopened.

The company also said Wednesday that it was no longer holding, due to the epidemic, its annual shareholders meeting in person that was scheduled to take place March 18 at a theater in downtown Seattle, where it has its headquarters. The company said it would hold the meeting virtually instead. Target Corp. on Monday broadcast its annual investors meeting online rather than hold it in person in New York City as originally planned.

Washington state is among the places in the U.S. hardest hit by the epidemic. Ten of the 11 deaths resulting from confirmed cases of the new virus have been in Washington. An Amazon Inc. worker in Seattle tested posted for coronavirus Wednesday.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

March 05, 2020 02:47 ET (07:47 GMT)

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