Will Starbucks go bankrupt because of Covid? The answer is a resounding “yes.” Earlier this year, Starbucks announced that its third-quarter sales dropped 40% year-over-year. The company lost nearly $2 billion in revenue. Its key business was in urban office corridors, but that business has been decimated by economic retrenchment. While airport locations are barely functioning, they still play an important role in the coffee chain.
As a result, the company announced plans to close about 400 company-operated stores over the next 18 months, while opening new ones in different locations. It plans to introduce new on-the-go options to attract customers who are on the go. It also plans to reassess its business model. It said that in major cities, customers typically order coffee on-the-go, and 80% of transactions at its nearly 15,000 stores are “on-the-go” purchases.
Despite the growing challenges, the company has resorted to letting store managers make decisions based on the needs of their local market. This means that many of its stores now have take-out-only service and fewer staff. Additionally, the company told its employees that the number of Covid-19 cases in U.S. stores has risen and it plans to make local adjustments. Ultimately, the question is, will Starbucks go bankrupt because of Covid 19?
Despite the dire circumstances, the coffee company has remained relatively resilient. So far, it has donated more than 47.3 million pounds of food and provided nearly 40 million meals to local organizations. Additionally, the company has invested $50 million into hunger relief through its Foundation. The company’s employees are responsible for much of the charity work, and the Foundation has distributed $1 million to 400 organizations in the Seattle area. A recent Covid-19 response fund that Starbucks will support through the end of July is another example of its commitment to the local community.