Coronavirus: Starbucks to close 400 shops and promote ‘pickup’ concept for pandemic

Coffee chain estimates it will lose more than $3bn to virus outbreak

A customer enters a Starbucks Coffee store on June 10, 2020 in San Rafael, California. Starbucks announced plans to close 400 of its company owned cafes over the next 18 months as the coffee shop chain estimates losing over $3 billion due to the coronavirus pandemic. Getty Images/AFPShow less

Coffee giant Starbucks is set to close 400 of its shops in North America and will introduce its new “Pickup” concept of mobile phone ordering, as it adapts to changes brought by the coronavirus pandemic.

The company will close 200 shops in the US and 200 in Canada, it said on Wednesday.

In a typical year, Starbucks closes about 100 stores in the Americas because of leases coming to an end, changes of location and market conditions.

Starbucks opened 200 net shops in the Americas in the second financial quarter of 2020, and it intends to open 300 in the fiscal year.

But the pandemic has taken a dramatic toll on its business, and it had originally planned to open 600 this fiscal year.

The coffee shop chain estimates it will lose more than $3 billion (Dh11.01bn) because of the virus outbreak.

To adapt to a new Covid-19 economy, Starbucks intends to combine the traditional sit and stay cafe with new on-the-go experiences, and reposition its network of stores.

Pickup stores are intended for customers in busy cities looking to order and pay ahead using the Starbucks App on the way to their next destination.

There is currently only one Pickup shop operating in New York City.

The American store portfolio will include the expansion of Starbucks Pickups in New York, Chicago, Seattle and San Francisco, and convenience-led improvements such as curbside, drive-through and walk-up windows in suburban areas.

The US company is looking to implement these changes over the next 18 months.

The company said it was seeing an increase in customers using its app to order ahead and most Starbucks orders were being delivered through companies such as Uber Eats.

In response to this, Starbucks will also renovate some store layouts, including a separate counter for mobile orders at high-volume stores, which will make it easier for customers and delivery couriers to pick up.

“Starbucks stores have always been known as the ’third place', a welcoming place outside our home and work where we connect over a cup of coffee,” said Kevin Johnson, its chief executive.

“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.”