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QSR: COVID-19 Has Cost Starbucks $915 Million So Far
The chain plans to reopen 90 percent of its U.S. stores by June.
Fast-casual coffee giant Starbucks has recorded its first system-wide same-store sales slide since 2009, and the drop is dramatic.
According to an article in QSR Magazine, comp sales fell by 25 percent in April, and the chain has lost an estimated $915 million since it closed roughly half of its U.S. stores in mid-March.
CFO Patrick Grismer said COVID-19’s estimated impact on Starbucks’ revenue to date, due to temporary closures, restricted sales channels, shortened operating hours, and “severely reduced customer traffic,” has been about $915 million. That equates to 80 percent of flow-through on dropped revenue, which is materially higher than the 50 percent variable flow-through rate the company typically observes—something that reflects employee and long-term investments intended to weather the crisis.
Though the immediate future of dine-in remains uncertain, Starbucks hopes to have 90 percent of its store open for drive-thru, curb-side pickup and other off-site service options by June.
“Pre-COVID, 80 percent of our customer occasions in stores in the U.S. were for to-go, take-away,” [Starbucks CEO Kevin] Johnson said. “And so, by augmenting the in-store experience with mobile ordering and contactless pickup, we can service significant volume of customers without having the cafe seating area actually opened. I think that’s an important point.”
Next week, Starbucks will roll out a marketing campaign to increase awareness of it’s off-site options. “The acceleration of these new models that we opened, we're going to talk about them pretty broadly and loudly,” said COO Roz Brewer.
QSR cites BTIG analyst Peter Saleh, who estimates that Starbucks has roughly 18 week of liquidity and another 19 weeks through available borrowings.
