As a slew of states pause dine-in service around the country in an effort to stem the spread of COVID-19, with more almost certain to follow, Starbucks said Sunday it’s “made the decision to move to our next level of protocols,” an initiative that includes the temporarily stoppage of all seating, including café and patios, throughout its U.S. and Canada restaurants.
Starbucks finished Q1 2020 with 31,795 total restaurants—18,203 in its Americas segment. The brand closed fiscal 2018 with 14,825 U.S. locations.
Calls for social distancing have picked up in the past 24 hours and appear poised to gain steam. The CDC urged late Sunday for a nationwide halt to gatherings of more than 50 people for the next eight weeks. Ohio, Illinois, New York City, Washington State, and Massachusetts all ordered restaurants to close dine-in service. California shut down bars and nightclubs. Dr. Anthony Fauci recommended a two-week shutdown of all bars and restaurants, something he shared on CNN’s “State of the Nation,” over the weekend.
For Starbucks, the company said the switch to a to-go-only model would last at least two weeks. Café, mobile order & pay, drive thru, and delivery will still be open. Starbucks’ delivery platform included 3,500 units across 49 markets last quarter, up from 115 restaurants in the year-ago period.
Additionally, the java chain said it’s modified condiment bars in all locations, as well as mobile order and pickup handoff plans on a store-by-store basis.
The company integrated a change in its cash handling producer as well, moving to a designated partner at point-of-sale and drive-thru windows, and allowing, but not requiring, gloves for employees in these roles.
“These are the actions we know are effective based on our experience in China,” EVP and U.S. president Rossann Williams wrote in a Sunday letter. “Working together, I am confident we can modify operations in all stores quickly and seamlessly, as we know the majority of our customers already get their order ‘to go’ and most of our customers who typically use our café seating are also used to visiting us at [mobile order and pay] and drive thru.”
In some spots, action will be more drastic. Starbucks said it expected to temporarily close company-operated stores in “high-social gathering locations,” such as venues inside malls or on university campuses. In high-case communities like Seattle and New York, the company said, it would reduce operating hours or temporarily shutter select units.
According to The Seattle Times, as many as 22 downtown Seattle restaurants could close. The publication added some employees learned about the plan after noon Sunday. By 3 p.m., several local restaurants had already stacked chairs and tables and were serving customers to-go.
Starbucks noted it would “take care of anyone impacted by adjusted hours of operation, modifications to operations, or a temporary closure.” This includes redeploying employees to other stores and/or providing catastrophe pay. Starbucks said last Wednesday it would expand the option to provide for COVID-19 care, with any employees diagnosed or exposed to the coronavirus, or coming into contact with someone who has, eligible for up to 14 days of catastrophe pay so they can self-quarantine. After use of catastrophe pay, workers can utilize sick pay, vacation pay, or personal time off as available. If employees are unable to return after 14 days, pay replacement may be made up to 26 weeks.
Williams said Starbucks also made the decision to invest up to $10 million in its Caring Unites Partners Fund (a financial assistance program started in 1998 where employees can donate to help each other) and other global resources to support employees’ needs beyond pay. It’s temporarily expanding the Care@Work program to provide support for employees in need of additional backup childcare options as a result of school closures.
There are two key changes:
Starbucks increased the number of back-up care days from 10 to 20.
It plans to implement the personal network service through Care@Work, which provides employees with the option to be reimbursed up to $125 per day for use of their personal network of backup caregivers and centers (caregivers who are not part of the Car@Work network, for example).
Williams said Starbucks is “working as quickly as possible,” to launch this expanded support with the CUP Fund and Care@Work and will provide updates on its hub, along with FAQs and instructions for employees to submit requests.
Starbucks already offered paid sick time, access to healthcare advocates who can support employees not eligible for the company’s health insurance, as well as an employee assistance program for free mental health counseling, which is available to all employees, their families, and household members.
“These are truly uncharted times and we’re learning right alongside you as we navigate COVID-19 together. I am proud of the swift decisions we are making—and you have my word and that of every leader that we will always do what’s best for you and your families, informed by science and facts,” Williams said.
As has been the message for Starbucks since the coronavirus began its spread across the U.S., the company said it would lean on China experience to navigate the crisis.
The company announced last week that more than half of its 4,300 locations had shuttered at one point or another, a move that impacted 58,000 employees. Sales were down 78 percent year-over-year.
In Q2, the company is bracing for a 50-percent drop in same-store sales, compared to a projected 3-percent growth before the outbreak. In addition, the chain expects to absorb a $400 million to $430 million decline in revenue compared to previous projections.
But now, more than 90 percent of stores are open, with heightened safety protocols such as limited lobby service, minimal café seating, emphasis on contactless service via pickup and delivery, and temperature checks for customers and employees. Many units are operating with reduced hours and some offer delivery only.
Starbucks said 95 percent of China stores should be open by the end of Q2. And, in the last week of February, transactions climbed 6 percent and weekly gross sales hiked 80 percent as units turned the lights back on. Mobile orders attributed to 80 percent of sales mix at month’s end, split 30 percent pickup and 50 percent delivery.
“We continue to be inspired by our partners in China, who have been through this very situation and continue to find ways to serve their communities safely and appropriately, and are now starting to go back to regular operations across the country,” Williams said.
Starbucks cautioned it “may make some more changes,” as the situation continues to evolve.
“I know we will emerge even stronger, because when we get through this, our customers will need that sense of community and belonging again, and our Third Place will be more necessary than ever before,” Williams said.
To date, Starbucks has directed employees to sanitize high-touch areas at the front and back of the store regularly—ideally every eight minutes, but no more than 30. Employees are also mandated to wash their hands every 30 minutes with soap and warm water for 20 seconds or more. The company added labor for cleaning and suspended the use customers’ personal cups in-store. Guests get a 10-cent discount for bringing in reusable cups, but are still given a new one. Starbucks extended that last Monday to include cambros (reusable coffee dispensers), as well as guidance on the use of gloves; how to order extra hand sanitizer; and how to best grind whole bean coffee that customers bring in.
Will Starbucks’ move set off a string of like-minded decisions from major restaurant companies? Halo Burger recently announced it was shutting down all of its eight dining rooms. Fifty-unit Just Salad did so as well, shifting to 100 percent digital orderings, with pick-up orders at the front door in New York City, New Jersey, Philadelphia, and Chicago locations.
“As we see more orders come in through our digital channels, these measures will help minimize impacts to their work schedules and maximize their safety,” CEO Nick Kenner said in a statement. “We are also providing an additional free meal to employees and their families, should their work schedules become impacted by the COVID-19 situation.”
McDonald’s is working on “noncontact food order pickup,” at some venues, per its Twitter account. After customers place an order on kiosk or the McDonald’s app, the meal becomes available for pick up on the front counter with a corresponding order number.
The company also said, at select restaurants, ice cream cones would no longer be served during contactless operations “for the safety of our crew and guests.”
Domino’s is implementing “contactless delivery,” stateside as well, where guest tell the brand where to put their pizzas.
Taco Bell CEO Mark King shared a letter with guests recently that said the chain was “equipping our restaurants to serve our guests via drive-thru and delivery only, where necessary.”
“Should we need to temporarily close our dining rooms,” he wrote, “we would be limiting millions of guest interactions and further enabling social distancing.”
Taco Bell amended its sick policy at corporate restaurants, too, paying employees who are required to stay at home, or work at a restaurant that is closed, for their scheduled or regularly scheduled hours during their time away from work.
“We’re actively working with our franchise partners to encourage a similar approach,” King said.