Starbucks is exploring the possibility of allowing some cafes to take to-go orders, according to a letter to employees from Starbucks CEO Kevin Johnson. He said the company, which has been offering only drive-thru or delivery service since March 21, is transitioning to a "monitor and adapt" phase. While cafes in areas where the spread of COVID-19 has stalled or declined may reopen for to-go orders, others located in hot spots will continue to serve customers only through delivery and drive-thru.

"As we have experienced in China, we are now transitioning to a new phase that can best be described as ‘monitor and adapt,’" Johnson wrote Thursday in the letter.

This is a similar tactic used in China, where Starbucks closed its locations in January and began reopening stores last month in areas with low infection rates. About 95% of China's Starbucks cafes are now open, Johnson wrote in a separate letter issued April 8.

"We are leveraging our experience in China to inform our COVID-19 response strategy in the U.S.,"  he said in that letter. "Although the virus did not begin to materially impact our U.S. business results until mid-March, we took progressive steps to contain the spread of the virus starting in late February."

Those steps included elevating cleaning and sanitizing protocols, temporarily closing mall stores and other locations with high levels of customer congregation, shifting to a "to-go" model and eventually restricting company operations to drive-thru and delivery channels.

Johnson said leaders would use the local status of the health crisis, guidance from officials, community sentiment and operational readiness of each location to inform the brand's reopening decisions. 

Starbucks,which is extending catastrophe paid leave for baristas until the end of May, is also giving working employees an extra $3 per hour. Like most restaurant brands, however, the pandemic has hit Starbucks where it counts: the bottom line.

"Comparable same-store sales in the U.S. began to decline March 12 and steadily worsened as we temporarily closed more stores and traffic slowed in response to the rise in shelter-in-place mandates and social distancing requirements across the country," Johnson wrote. "During the last week of the month, comparable store sales declines stabilized in the range of -60% to -70%, with 44% of U.S. company-operated locations operating, most under modified store hours, primarily through the drive-thru channel."

At quarter-end, 58% of U.S. company-operated stores were drive-thru locations, of which 76% were open; additionally, about 55% of U.S. licensed stores remained open.

"Notwithstanding the very strong performance for the first 10 weeks of the quarter, comparable-store sales in the U.S. were down approximately 3% in Q2 versus the prior year, reflecting the very rapid onset of COVID-19 business impacts in the final three weeks of the quarter."

Johnson said, however, that he expects the impact of COVID-19  to be temporary.

Starbucks shares, which have a market value of $85.2 billion, have fallen 17% this year.

Read more COVID-19 coverage here.

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