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Starbucks bets on convenience for US coronavirus recovery

World’s largest coffee chain expects current quarter income to drop by $2bn and forecasts further revenue losses in 2020 as it outlines plans for convenience-focused strategy in the US

Starbucks' Pickup store format aims to capture a significant rise in digitally-based trade during coronvirus



In a letter to shareholders, Starbucks said the ‘vast majority’ of its global portfolio had re-opened following coronavirus disruption. Current quarter income is, however, expected to fall by $2bn, with further revenue losses forecast during 2020.
 
Approximately 91% of Starbucks’ US stores are now operational, the coffee chain has said, with the business moving from the ‘mitigate and contain’ phase of dealing with the pandemic to the ‘monitor and adapt’ phase.
 
Starbucks said it would now focus on catering to increased consumer demand for convenience in its core US market. Company data shows over 90% of US company-operated sales were through drive-thru windows and mobile ordering in the final week of May, compared to 97% in the final week in April and roughly 60% before coronavirus struck.
 
‘Our vision is that each large city in the US will ultimately have a mix of traditional Starbucks cafés and Starbucks Pickup locations,’ a company statement reads. Starbucks Pickup has been in development for around two years, and focuses on seamless digital transactions, including app-based ordering and delivery. Around 60% of Starbucks stores in the US already operate drive-thru.
 
Starbucks will, however, close around 100 net stores in its flagship US market, with outlet growth expected to return in 2021.
 
In China, Starbucks said 99% of its 4,400 stores had now re-opened, with 90% operating pre-pandemic opening hours. Despite coronavirus disruption, the Seattle-based chain said it was on track to open ‘at least’ 500 net new stores in China by the end of its fiscal year.

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