A Starbucks Corp. (NASDAQ: SBUX) statement filed with the Securities and Exchange Commission showed that it would have a third-quarter decline in revenue of between $3.0 billion and $3.2 billion. The company attributed the decline to the spread of COVID-19 and said it will close 400 stores. That means the Starbucks location many people visit now may be gone and those customers will need to find another one or stop going to Starbucks. It is too early to say if that will affect traffic.
The specific language in the Starbucks filing is that it will “blend store formats and strategically optimize our portfolio.”
The decision is appropriately justified by the performance of its locations as the COVID-19 spread. Stores that were open the last week of May suffered a 28% drop in sales from the same week a year ago. These were company-operated stores and not franchises.
One thing Starbucks learned as it was extremely battered over the course of the past three months is that people are willing to pick up orders they have made ahead of time. This model was accelerated to keep its customers and workers safe from COVID-19. It will stay in place in some locations because enough customers liked it.
The relaxed atmosphere of Starbucks and its use as a meeting place to see family and friends will go away in the 400 stores. One of the hallmarks of Starbucks will completely disappear for thousands, if not tens of thousands, of people. Or, they can find a store near the ones they visit and revert to habits they have established over a period of years or decades.
Starbucks has 18,271 locations in the Americas, as of the last count. This includes some stores outside the United States, and probably franchise locations. Starbucks could make the case that 400 locations are a tiny part of the count. It is, in fact, 2.1% of the entire store count.
What the numbers do not say is those customers who have a habit of walking into the same store, year after year, even if the never linger, may be loyal because it is “their Starbucks.” For many, their Starbucks will be gone.