Starbucks to Close 400 Stores as it Moves to To-Go Orders
Starbucks plans to close up to 400 of its nearly 15,000 stores around the country as the coffee chain switches to focus on to-go orders in the wake of the coronavirus pandemic.
In a U.S. Securities and Exchange Commission filing yesterday, the Seattle-based chain said it would close the “company-operated” locations within the next 18 months while it focuses on opening “a greater number of new, repositioned stores in different locations and with innovative store formats.”
The company did not say which stores were on the chopping block, but a source told Commercial Observer some New York City outposts were expected to close.
While Starbucks was able to keep many of its stores open during the pandemic by switching to pickup options, it still impacted the chain’s business with the company expecting to lose $3.2 billion in revenue during the third quarter, which ends in June, according to the SEC filing.
The decision to axe the stores comes in large part due to the changing consumer habits amidst the coronavirus pandemic as customers largely switch to take-out orders.
To-go orders made up about 80 percent of Starbucks’ transactions before the pandemic and the company expects the number to grow in the future. To help with that, Starbucks will launch curbside pickup, expand drive-thru options and open more Starbucks Pickup locations in dense cities, the company said.
“As we navigate through the COVID-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers,” Kevin Johnson, the CEO of Starbucks, said in a statement.
Starbucks Pickup focuses solely on customers placing and paying for orders on a mobile app before coming to the spot. The first one opened in November 2019 at One Penn Plaza near Penn Station, and Starbucks is planning to open another one near Grand Central Terminal soon.
The company has now reopened 96 percent of its stores around the world and sales figures are starting to improve. Comparable store sales dropped by about 32 percent in the final week in May, the sixth week in a row the figure improved and a far cry from the low of 65 percent in mid-April, according to the filing.
Starbucks originally planned to open 600 new stores around the country, but due to impacts on its businesses from the coronavirus, it now expects to only open about 300, according to the SEC filing. It added that it usually closes about 100 stores each year.