How Starbucks is getting ready to reopen more U.S. stores
Starbucks is laying the groundwork for an accelerated return to business next month, betting its technology will help it recover quickly.
The company, which operates just under 9,000 U.S. stores and licenses thousands more at other retailers, plans to “gradually expand” operations on a store-by-store basis by using a “monitor and adapt” approach, in consultation with local authorities and in line with customer sentiment, its chief executive Kevin Johnson told staff in a memo sent on Thursday.
“This will be a journey,” he wrote. “We are thoughtfully preparing for this next phase as we adapt in the U.S.”
As the coronavirus pandemic surged across the United States, the company closed many stores on March 20 and limited operations at others. It had initially planned to shutter them for two weeks, but then extended that date to May 3. As of now, Starbucks doesn’t offer any in-store seating in the U.S. But at many locations, it is offering services like drive-thru pickup, available at 58% of its stores. (The company said last week that three-quarters of stores with drive-thru are open.)
All the closings, limited operations, and the fact that tens of millions of people are working from home rather than at the office have taken a toll: The company’s U.S. comparable sales were down as much 70% in the last week of March. So the company is eager to ramp things up all the more, Johnson said, since there has been a decline in the number of new confirmed COVID-19 cases.
“We are ready for this new, dynamic period,” he wrote.
To do so, while respecting social distancing guidelines, Starbucks has been testing contactless service, such as order pickup via a specific store entryway or at curbside, as well as at-home delivery—it began working with Uber Eats this year—from 300 of its U.S. stores. Some locations will remain drive-thru only, while some will allow people to come in and place orders to go. Johnson’s letter made no mention of when in-restaurant dining might resume.
It isn’t always high-tech. As Fortune’s John Buysse observed last week, at a Starbucks in Chicago (at West Logan Blvd. and North California Ave.), employees used colored chalk on the sidewalks to set up lines.
While Starbucks is taking a hit, it could have been a lot worse without its big investments in tech in recent years. In 2019, the Starbucks app had 25.2 million users, making it second only to Apple Pay among mobile payment apps, according to eMarketer. And it has been essential to Starbucks’ loyalty program, which generates nearly half its revenue.
What’s more, Starbucks has made big strides in mobile ordering, something that is proving to be a lifeline right now. In China, where the vast majority of Starbucks stores are now open again after closing in late January and February, mobile ordering was behind 80% of sales at the peak of that country’s lockdown, when stores could only offer pickup. That has fallen back down to 27% as business has begun to normalize. That capability will serve Starbucks well in the U.S., even after stores have reopened, given the likely reluctance of customers to linger by a cash register waiting for their order.
The company has set up a market-by-market dashboard for local managers including information on regional coronavirus cases. Johnson said that as testing becomes more widely available, that data will be added to the dashboard, which aims to help local managers decide how far their store can go toward full operation.
“We are finding new, innovative ways to serve our communities safely while working hard to exceed public health requirements and adjust to new customer expectations,” Johnson wrote.
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