Starbucks will bring back U.S. marketing next week as it reopens more stores
Starbucks is preparing a fresh round of marketing as it gets ready to reopen many of its shuttered U.S. locations beginning next week.
Starbucks has been operating a limited number of U.S. shops since mid-March, when the coronavirus pandemic led to shutdowns. Currently, only about half of the company’s own U.S. shops are open for business. The shops that are open are mainly its drive-thru locations and those located near healthcare centers, as shelter-in-place and social distancing plans across the country meant people weren’t going out as often and weren’t allowed to linger in cafes.
Now, as restrictions begin easing in parts of the country, the largest coffee chain is eager to bounce back. Starbucks says its stores in the U.S. and Canada will begin to open more broadly starting May 4. Not all of the shuttered stores will reopen immediately. But enough of them are slated to begin operating that the chain will resume marketing.
Ads are slated to include a variety of messages, including spring beverages, Double Star days for loyalty program members, Happy Hours deals and reminders about its app, ordering ahead and delivery, Chief Operating Officer and Group President Roz Brewer said on a conference call. Marketing spending will be within the plans it had set for fiscal 2020, just in a condensed period, Brewer said.
“We have really turned off any marketing in this time,” Brewer said.
The uptick in marketing will be broad, with plans for digital, TV, paid, owned, earned and social, she said. Starbucks is also likely to promote that it is waiving delivery fees through May as it expands delivery with Uber Eats.
Currently about half of Starbucks’ company-owned U.S. locations are open. It expects to have about 90 percent of those stores open by early June. Still, the company expects to feel significantly greater pressure from COVID-19 throughout the fiscal third quarter versus what it experienced in the second quarter and expects the impact to continue into the fourth quarter.
The company’s sales at longstanding U.S. locations are down about 25 percent in April, Starbucks executives said. The number of transactions has fallen, but people on average are spending more per trip, whether doing a coffee run for the entire family or making a big purchase as they bring coffee and food to first responders.
A majority of stores will continue to run with a drive-thru only model at first, Starbucks said. At stores where customers can head inside, a limited number of people will be allowed in at a time, where they will see floor markers and other signs to promote social distancing. Some locations may also offer curbside pickup, where parking is available. Starbucks said staffers will have their temperature checked before their shifts and take other measures that have become more common at restaurants in recent weeks, including wearing masks and gloves.
CEO Kevin Johnson said the company’s fiscal second quarter was shaping up to be an exceptional one prior to the coronavirus pandemic hitting the U.S., its largest market. U.S. same-store sales were poised to be up 8 percent in the quarter but wound up falling 3 percent, with a 7 percent decline in visits and a 5 percent increase in the average spent.
After dealing with a massive shutdown in China, now nearly all of its stores there are open. Same-store sales in China are down about 35 percent in April, after being down 50 percent in the fiscal second quarter and as much as 90 percent during points of February.
Global second-quarter same-store sales were down 10 percent, with the number of transactions down 13 percent and the average spent per transaction up 4 percent.