Starbucks closing hundreds of stores, as they predict a revenue decline of $3bn due to coronavirus

Coffee chain plans to shut down 400 cafes in next 18 months

An exterior of Starbucks during the coronavirus pandemic ((2020 Getty Images))

Starbucks has announced that it will be closing hundreds of stores in the US, after predicting their revenue decline attributable to Covid-19, could be up to $3.2bn (£2.5bn).

The coffee chain said that the pandemic has sped up its plans to close 400 stores, so that they can introduce more pick up cafes in densely populated areas, according to CNBC.

They will now close 400 stores over the next 18 months, instead of the already planned three to five years, in an acceleration of their store transformation strategy.

The coffee chain had also planned to open 600 new new stores in the fiscal year, in the US in 2020, but will now only open 300, due to the acceleration of their store transformation strategy.

Starbucks’ stock has fallen 10 per cent this year, and shares of the company fell by more than 3 per cent on Wednesday, as the US still eases out of lockdown.

They are predicting a net loss per share of between 64 and 79 cents, and adjusted losses per share between 55 and 70 cents, for the fiscal quarter, that ends on 28 June.

More than 60 per cent of Starbuck’s US stores have drive-throughs, and this has made it easier for them to adapt as social distancing measures have been eased.

They initially started reopening stores again in May, in a reduced capacity, and adapted many to make it easier for pick ups.

In April, Starbucks CEO Kevin Johnson, confirmed that “approximately 80 per cent of all customer orders were placed ‘on-the-go’ even prior to Covid-19.”

Starbucks expects its earnings to improve in the fourth quarter, with a net income of between 11 and 36 cents, and an adjusted earning of between 15 and 40 cents per share, according to the outlet.

In a letter to stakeholders, CEO Kevin Johnson and CFO Pat Grismer said: “With each passing week, we are seeing clear evidence of business recovery, with sequential improvements in comparable store sales performance.”

They added: “The Starbucks brand is resilient, customer affinity is strong and we believe the most difficult period is now behind us.”