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Starbucks to focus on developing its 'digital ecosystem' for coronavirus recovery

Starbucks reveals $5.1bn in lost sales for its fiscal 2020 year due to coronavirus disruption, as it outlines recovery strategy focusing on seamless transactions, including pick-up, suburban drive-thru, and delivery

A Starbucks mobile order pick-up location in the US | Photo: Starbucks 



Reporting its consolidated fiscal year results to 27 September 2020, Starbucks posted an 11.3% decline in net revenues to $23.5bn. The world’s largest coffee chain said temporary store closures, modified operations, and reduced footfall contributed to lost annual sales of around $5.1bn.
 
Starbucks did, however, open 480 net new stores in its final quarter, bringing the Seattle-based coffee chain’s store count to 32,660 stores globally, of which 51% and 49% are company-operated and licensed respectively. Stores in the US and China now comprise 61% of Starbucks’ global store count, with 15,337 and 4,706 stores respectively.
 
Speaking on an investor call, Starbucks CEO Kevin Johnson said his company’s recovery in its flagship US market had been “faster than we anticipated”, with a comparable store sales decline of 4% for the month of September a “vast improvement” on the 65% decline the coffee chain experienced in May 2020.
 
Reflecting a global shift in coffee shop footfall patterns, Johnson said like-for-like sales at its US drive-thru locations and suburban stores for the fourth quarter and September 2020 were ‘solidly positive.’ Approximately 75% of US sales were made through drive-thru or mobile ordering in its final quarter, down from around 90% in the previous quarter.
 
“We will maintain our disciplined approach to investing behind our best-in-class digital ecosystem and aligning our product portfolio store base and partner-led customer experience with evolving preferences and consumption patterns,” Johnson said.
 
A delivery partnership with Uber Eats in the US, as well as its e-commerce partnership with Alibaba in China would continue to be important facets of Starbucks' growth strategy, he added.
 
Approximately 63% of Starbucks’ US stores were offering limited seating at the end of its final quarter, with approximately 3% of Starbucks’ US stores remaining temporarily closed, the Seattle-based coffee chain confirmed.

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