Starbucks will shutter as many as 400 stores in the U.S. and 200 in Canada over the next 18 months in response to a change in the market brought on by the COVID-19 pandemic. The company confirmed Wednesday its plans to transition numerous stores to pickup-only locations and add curbside pickup in urban areas including New York City, Chicago, Seattle and San Francisco, as well as drive-thru and walk-up windows in suburban areas. Other high-volume stores are going to be renovated to create a separate mobile order counter to ease the pickup process.
These changes come as the coffee company predicts it lost as much as $3.2 billion in revenue due to the coronavirus pandemic through its more than 32,000 stores around the world. Pre-pandemic, Starbucks reported that 80 percent of customers' orders were already made on the go, as well as through the company's app, which prompted a plan to shift their storefronts over the next three to five years. With social distancing now in place, the company has moved that timeline forward.
"Starbucks stores have always been known as the' third place,' a welcoming place outside of our home and work where we connect over a cup of coffee," Starbucks CEO Kevin Johnson said in a statement Wednesday. "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."
With these new formats in place, Starbucks said mobile ordering, contactless pickup, and greater social distancing efforts will be easier, as the storefronts will "naturally allows for greater physical distancing." The company has also shifted its plans to open new locations in North America, reducing the new number to about 300 new storefronts from its original order of around 600.
The whole plan was laid out in a letter to Starbucks stakeholders from Johnson and Patrick Grismer, Executive Vice President and Chief Financial Officer: "We have a clear vision for our 'Bridge to the Future,' and we are accelerating our plans to transform our store portfolio, elevate the customer experience for this new era, and drive long-term growth. As we navigate the global pandemic, we strive for transparency with all stakeholders, and today we share more specifics on the business recovery, new store growth and the overall strength of our financial position."