Starbucks plans to reopen 90 percent of its U.S. stores by early June, the company said this week on its Q1 2020 earnings call. As expected, stores won’t immediately reopen nationwide and with the same sit-down cafe format in which they operated before the pandemic. Instead, the Seattle-based coffee giant will open gradually, with modified service that emphasizes pickup, delivery, and drive-thru.
The company hinted at these plans a little less than two weeks ago, when company CEO Kevin Johnson sent a letter to employees explaining the chain’s recovery plan. As I wrote at the time, Starubucks is an international chain that is already navigating this recovery process in China, so it has some experience other U.S.-based chains may not. It is also ahead of the curve — a major leader, actually — in both off-premises formats and digital business.
On this week’s call, Johnson spotlighted both of those things. He noted that “continued recovery in China strengthens our belief that these impacts [from COVID-19] are temporary” and that Starbucks expects to emerge with an even stronger business. “We are well positioned to leverage our digital assets and new operating formats like contactless pickup and curbside to expand service to customers,” he said.
Only 30 stores will reopen their cafes, Starbucks COO Rosalind Brewer said during the call, and there will be no seating in those locations. “We will amplify delivery, we will have the Mobile Order & Pay channels open and then the addition of a new concept, the Entryway Handoff,” she said. Starbucks will monitor what happens in these stores before making the move to reopen other locations.
For Starubucks, this slow reopening is less detrimental than it might be for a chain with a less robust off-premises strategy. Johnson noted on the call that 80 percent of customer occasions in U.S. stores were to-go before the pandemic even hit. “And so by augmenting the in-store experience with mobile ordering and contactless pickup, we can service significant volume of customers without having the cafe seating area actually opened,” he said.
As states slowly begin to reopen their economies, bigger chains with similar store formats to Starbucks and existing digital strategies in place will likely operate with their own versions of this modified, to-go-centric format. Chipotle, which was already testing off-premises store formats pre-pandemic, has reported strong digital sales for the quarter. With more earnings calls set to happen over the next few days, we’ll get more intel into what other chains, such as McDonald’s, have in the works.
Smaller restaurants that can’t afford expensive mobile-order systems or accommodate drive-thru lanes can still look to some tech to help with the transition towards this new normal. While most independent businesses are more concerned with keeping the lights on right now, contactless customer service and digital payments will be two areas more restaurants will look to expand to in the coming months.