In a bid to slow the spread of the novel coronavirus, Starbucks will temporarily close some of its North American locations and will shift to a “to-go only” model at the rest of its more than 10,000 North American stores.
The closures, which were announced and implemented Sunday afternoon, will last at least two weeks and will affect company-operated stores in high-risk areas such as Seattle and New York, with a high number of cases of COVID-19, the highly contagious illness caused by the coronavirus, Rossann Williams, executive vice president, said in a statement Sunday afternoon. In these areas, stores will either shut down or move to reduced hours, Williams said.
Starbucks will also close locations in “high-social gathering” areas, such as inside malls and universities, Williams said.
The closures reportedly include 22 locations in downtown Seattle, according to several Starbucks employees, although that number could not be immediately confirmed by a company spokesperson.
At all other company-operated locations in the United States and Canada, customers will no longer be allowed to use cafe and patio seating, but will be able buy Starbucks products and will still have access to mobile ordering, drive-thru and delivery. The company was also modifying its condiment bars and changing its cash-handling procedures.
“Over the last 24 hours, as more communities, including the federal government, have called for increased social distancing to help contain the virus, we have made the decision to move to our next level of protocols,” said Williams, who oversees North American retail operations. “Starting today, we will move to a “to go” model across the U.S. and Canada for at least two weeks to help prevent prolonged social gathering in our cafés.”
The decision is among the most extensive to date of any retailer in North America. But it parallels actions Starbucks took in January in China, where the outbreak began late last year and where Starbucks temporarily shut down more than half its stores.
The company said it would provide employees affected by the closures and other cutbacks with opportunities to work at other locations and possibly catastrophe pay. At still-open locations, employees said they were already being reassigned employees from stores that had been closed. “They don’t want to let anyone go,” said one barista, who asked not to be identified. “They are very concerned about people being able to pay rent.”
The strategy, which some employees learned about shortly after noon Sunday, represents a striking move for a public-facing company that has built much of its brand and its business around the concept of the Starbucks store as a “third place” between work and home, where customers could meet and linger for socializing. By 3 p.m. Sunday, the chairs and tables at several Seattle-area Starbucks had been neatly stacked near the walls and customers were being served to-go only.
But Sunday’s move also reflects how rapidly some companies are reacting, both as the U.S. coronavirus outbreak expands and as local governments turn to increasingly intrusive measures to slow the outbreak by restrict social interactions. In California, Illinois, Massachusetts and Ohio, for example, authorities have closed or reduced access to bars and restaurants.
Starbucks has already faced such challenges thanks to its massive operations in China, where the coffee company shuttered some 2,000 stores in January in response the outbreak.
“These are the actions we know are effective based on our experience in China,” Williams said in Sunday’s letter, in reference to the new strategy. Indeed, by late February, as Chinese officials had some success in containing the outbreak, Starbucks said it had reopened most of the shuttered stores.
Starbucks officials were hopeful they could have the same success in North America — in part because many North American customers were already using Starbucks to-go and other alternatives. “I am confident we can modify operations in all stores quickly and seamlessly,” Williams said.
How investors will react to Sunday’s move is hardly certain. The closures will almost certainly mean a hit to sales and profits for the company. Like most other companies, Starbucks has taken a beating since the outbreak began, with its shares losing roughly 25% of their value since Jan. 1. On Friday, Starbucks shares followed the rest of the market and finished sharply higher at $69.92.