Starbucks’ Grande Post-Pandemic Plan

Executives Expect a Quick Rebound

Yesterday Starbucks (SBUX) held its biennial investor meeting. COVID-19 has battered many industries, and the coffee shop industry is no exception. Starbucks’ sales fell 40% during the first months of the pandemic, but executives expect business to fully bounce back around the world before next September. “People will be back in Starbucks stores at a rate far beyond what they were pre-pandemic,” CEO Kevin Johnson said earlier this week.

Even as COVID-19 cases surge and certain parts of the US impose new lockdowns, Johnson has high hopes for Starbucks once a vaccine is widely distributed. Though it will likely take several months for vaccines to be manufactured, delivered, and administered, Johnson believes the vaccine will bring more stability for Starbucks and the rest of the economy.

Shaping the Starbucks Experience

The pandemic has given Starbucks an opportunity to rethink its strategies around store layouts and locations. The pandemic revealed that Starbucks is perhaps too dependent on foot traffic in city centers. It has also highlighted the opportunities for growth using a drive-thru model.

Starbucks expects demand for drive-thru coffee to be strong even once people return to pre-pandemic routines, and it is responding accordingly. As part of this new strategy, the chain will close 1,050 Starbucks branches and will open 2,150 new shops in different locations. But Starbucks is not completely tossing out its sit-down structure in favor of the drive-thru. Johnson said the cafe experience that has been so central to Starbucks’ model will only become more desirable after the pandemic ends.

To improve the in-person cafe experience, Starbucks is investing in technology that will allow employees to spend less time on inventory and administrative tasks and more time on customer service. As a part of this strategy, Starbucks also announced it will boost US wages by at least 10%.

Growth is an Anomaly in Coffee Space

Despite Starbucks’ optimism, the United States is on track to lose nearly 2,000 coffee shops in 2020. The pandemic has brought years of growth for the coffee shop industry to a halt. Starbucks’ balance sheets were able to withstand the pandemic downturn, but sadly, many smaller coffee shops will not be able to weather the storm.

Wall Street is watching Starbucks closely, and analysts expect it will be one of just a few of the large consumer companies whose earnings will see double-digit growth in 2022 and beyond. Despite the challenges it has faced, Starbucks’ stock now sells for 13% more than it did before the pandemic.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT SoFi SoFi helps people achieve financial independence to realize their ambitions. Our products for borrowing, saving, spending, investing, and protecting give our more than one million members fast access to tools to get their money right. SoFi membership comes with the key essentials for getting ahead, including career advisors and connection to a thriving community of like-minded, ambitious people. For more information, visit Want an easy and convenient way to manage your financial life? Get the SoFi app. For iOS and Android.

TLS 1.2 Encrypted
Equal Housing Lender