Here's How The Coronavirus Is Hurting Starbucks' Bottom Line
Starbucks built its brand on creating a cozy coffee shop atmosphere where customers could relax on comfy leather chairs while socializing and sipping on their favorite latte (via Spoon University). That "gathering spot model" doesn't work so well, though, when there's an increased risk for the spread of illness. As The New York Times reports, the coronavirus is really throwing a monkey wrench into the coffee shop format, and Starbucks is having to adjust.
Starbucks executive Rossann Williams called the last month "very challenging times for all of us" and that stores in the United States are "learning as we go." The company closed over 2,000 of its stores in China to cut down on the spread of the coronavirus. Thankfully, 90 percent of them have since reopened, and even though the closures were temporary, they were a gut punch to Starbucks' bottom line and it's expected that Chinese sales could dip by 50 percent — or $430 million.
While Starbucks stores in the United States haven't started going dark in mass quantities just yet, they are changing the way they operate in order to help keep customers and employees safe.
U.S. Starbucks locations might limit customer and employee interactions
Starbucks stores in the U.S. have already put in place a policy where customers are prohibited from using their own mugs, and stores are ramping up cleaning and hygiene procedures. This means that employees must wash their hands every half hour, as well as disinfect "high touch" areas like door handles and countertops on a very regular basis.
So far, only one Starbucks employee in Seattle has tested positive for the coronavirus and that store reopened again after a thorough sanitization. Any employees who do get sick can rest assured that they'll be provided with 14 days of paid sick leave.
CEO Kevin Johnson said via CNN that closing stores in the United States would be a last resort, but the company may "improve social distancing." This could mean restricting orders to the app and serving customers via only the drive-thru (via CBS).
Even with these precautions, Starbucks is feeling the sting of the coronavirus, and stock shares were down by 7 percent on March 12 (via The Motley Fool).