insights

Starbucks to Limit Mall Locations

May 26, 2020 — In a letter to partners on Thursday, Starbucks CEO Kevin Johnson announced that over the past week the company has regained 60-65% of comparable store sales to the year prior in the U.S. He emphasized that this is a significant achievement, considering Starbucks locations have been operating with operation restrictions and reduced hours since the pandemic began. Johnson also emphasized that Starbucks will continue its phased approach to reopening, which includes three key actions.

Johnson stated that one of those actions is “accelerate the transformation of the “third place” that was already underway before COVID-19 by adapting the Starbucks experience in ways that better serve customers, both in our stores and on-the-go.” With the COVID-19 pandemic changing the way people purchase and consume their food, food businesses like Starbucks need to pivot and adapt as well. Changing how the business operates is key to survival in the post-pandemic food industry.

Before the pandemic hit, Starbucks’ on-the-go purchases accounted for 80% of its store transactions. It is clear that there was already a trend towards accelerated purchasing and convenience when it came to buying from the coffee giant. Now that consumer behavior has changed due to the pandemic, Starbucks is continuing with its quest to provide convenient service to its valued customers. Johnson stated that he plans to “relocate Starbucks stores from low-traffic malls to new, thriving Starbucks locations” and increase the amount of locations that provide drive-thru service. He added that these plans were already in motion before the pandemic started and were slated to occur over a three to five year period. Now, these plans are expected to occur much more quickly, and valued customers will see them happen over the next 12 to 18 months.