By Heather Haddon 

Starbucks Corp. said it would further limit employee hours to match pared-back operations at its U.S. stores, reflecting expectations that sales won't bounce back from the coronavirus pandemic until at least this fall.

The world's largest coffee company said it is encouraging workers to take unpaid leave until September because it has decided to keep the dining rooms at most of its thousands of U.S. cafes closed for now. The latest reduction comes after the chain in May reopened stores with reduced operations and had to trim employee hours as a result, limiting sales to drive-throughs, delivery and pickup.

Starbucks has pared down its business because many restaurant owners remain concerned over how to protect workers and customers, the company said. Executives haven't said when cafe service will return.

Workers were expected to begin learning about their reduced hours and options at meetings with their managers beginning Monday, Starbucks store supervisors said. Employees will have about a week to decide whether to keep working with the reduced hours or take unpaid leave until the fall, according to the company.

Some workers have expressed concerns to Starbucks that their hours have dropped below the typical threshold to qualify for health insurance and wellness benefits, a draw for many employees to work at the chain. An executive said in an internal forum for employees last week that Starbucks was looking to reduce the number of hours needed to qualify for insurance coverage given the reductions.

Starbucks is among fast-food chains grappling with how to reopen and retain workers while they expect business to remain diminished by the pandemic. Consumer sales are down even as states allow businesses to reopen with restrictions.

"Customer routines and occasions have changed, for all retailers," said Rossann Williams, president of the U.S. company-operated business and Canada, in a letter to employees last week.

Starbucks and some other restaurants are also having to factor in worker safety and store closures as a result of protests sparked by the death of George Floyd. The coffee chain said it closed some stores over the weekend due to damage or to safeguard employees.

Starbucks is encouraging workers who take unpaid leave to apply for unemployment benefits and an extra $600 a week granted under the federal coronavirus relief bill.

Starbucks said late last month that U.S. same-store sales were down 35% to 40% from last year, even after the company restored modified service to more than 85% of its company-owned stores.

Ms. Williams said in her letter last week that hours for Starbucks employees, already reduced, would fall further as the company adjusts to sales demand. Starbucks is also having to spread hours across more workers as employees who took leave provided by the company earlier in the pandemic return to their jobs.

Some employees are leaving the company rather than work reduced hours, Ms. Williams said.


(END) Dow Jones Newswires

June 01, 2020 16:27 ET (20:27 GMT)

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