We have accelerated our store and digital transformation to be ahead of shifting customer behaviours
Since Starbucks first began navigating COVID-19, our goal has been to lead with partner care, transparency and decision-making based on facts and science. To accomplish this, our leadership team – led by Kevin Johnson, Starbucks CEO – established three simple principles early on that have guided us since the beginning of this global pandemic:
- Prioritize the health and well-being of our partners and customers
- Support local health and government officials as they work to contain and mitigate the virus
- Show up as a responsible member of the 32,000 communities in which we are the “Third Place”
Staying true to these three principles has enabled quick and agile decision making around the world, and they guide us to this day. These guiding principles continue to serve us well as we move beyond the “mitigate and contain” phase into the “monitor and adapt” phase, enabling us to re-open the vast majority of our stores around the world while meeting public health guidelines and evolving customer behaviors and expectations.
Currently, 99% of all Starbucks stores in China are open. As local regulations have evolved in China, half of our stores are open with full seating, while the rest offer socially distanced seating. Today, more than 95% of U.S. company operated stores are operating at various levels of modified operations, and the 5% that remain closed are primarily located in the New York City metro area.
We continue to work towards recovery in the U.S. and have communicated our progress transparently through 8-K filings; we will have additional updates on our quarterly earnings call shortly. We have navigated the various phases of COVID and we are now on a solid path to recover the business. Stores have reopened and customer visits are increasing.
As we have navigated COVID-19, we have been mindful in addressing the needs of our partners and the communities we serve. This includes meaningful investments since the early days of the crisis. When we closed our stores, we continued to pay partners, whether they worked or not, through expanded Catastrophe Pay.
Additionally, partners who were able and chose to continue to come to work were eligible for Starbucks Service Pay, an additional $3 per hour for shifts worked as scheduled. We provided solutions to support our partners through our benefits: health care, mental health and wellbeing, childcare, paid sick leave, COVID specific benefits for quarantine and caring for a loved one who was ill with COVID.
We also addressed the needs of other stakeholders:
- Keeping our customers safe with store protocols developed in partnership with the CDC
- Providing free coffee to the health workers and front-line responders who were caring for others
- Supporting our supply chain partners and paid rent to our landlords on time
- We have been transparent with shareholders and paid the quarterly dividend through the downturn
Today, more than 95% of
stores are operating
We have done all of this by staying true to the mission and values of the company – and this builds trust and confidence in the brand and in our future.
We are also now laying the foundation for a more transformational phase to “restore and build resilience”, where we asked ourselves the question, how will the COVID experience alter consumer behavior going forward? We know that safe and familiar experiences, where customers order on the mobile app for either pickup or delivery, will be very relevant to customers going forward. In fact, consumers have been embracing these experiences for the past few years.
Prior to the COVID-19 outbreak, around 80% of Starbucks transactions in U.S. company-operated stores were “on-the-go” occasions.
This doesn’t mean that customers will no longer seek a warm welcoming place to sit and enjoy their beverage with friends, neighbors, family or colleagues, but it does mean that it is time for us to optimize our store experiences by blending various store formats, such as pickup, curbside and drive thru, with our traditional Starbucks stores.
This work was already well underway and, we have accelerated our store and digital transformation to be ahead of shifting customer behaviors for the long term.