Starbucks predicts 50% drop in Chinese sales due to coronavirus

In February, sales of stores open for at least 13 months in China fell 78% from the previous year due to temporary store closings, reduced opening hours. and a sharp drop in customer traffic, said CEO Kevin Johnson and chief financial officer Patrick Grismer in a letter. to stakeholders on Thursday.

Before the epidemic, the company expected sales of stores open at least 13 months to jump 3%. Now he estimates a 50% drop, and a hit between $ 400 million and $ 430 million of his revenues in the country compared to previous expectations. And that could delay the opening of some stores in the country.

Since then, it has reopened most of its locations. Today, more than 90% of Starbucks stores in China are open for business. But things did not return to normal in these places. Open stores still have reduced opening hours and limit seats to keep customers away from each other. Some cafes only offer delivery. The company predicts that 95% of stores will be open by the end of the second quarter, but with this type of service limited.

Starbucks ((SBUX) is taking other steps to help stop the spread of the virus, which has made more than 95,000 people sick and killed more than 3,300 people worldwide. Most of the victims are in China, the country of origin of the epidemic.

Employees wear masks and undergo temperature checks daily. They also avoid reaching customers by using the "contactless" service.

The financial impacts are "temporary," Johnson and Grismer said in the letter. "We remain confident in the strength of the Starbucks brand and the long-term profitability and growth potential of our business in China." They added that the signs of recovery in China are "encouraging".

As the virus continues to spread, the company has also started to adjust its activities in North America. Starbucks announced on Wednesday that it is suspending the use of personal mugs in its stores. Typically, employees fill personal cups instead of paper cups on request and give a small discount to customers who bring reusable cups. The chain has been trying for years to reduce waste from its cups.

The company is also improving the cleaning of its stores in North America. The virus has had no impact on business in the United States at this point.

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