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Fri 6th Mar 2020 - Starbucks reports China sales down 78% in February, but insists impact is temporary
Starbucks reports China sales down 78% in February, but insists impact is temporary: Starbucks has reported that sales at stores open at least 13 months in China dropped by 78% in February compared to the prior year because of temporary store closures, reduced hours of operation and a sharp decline in customer traffic, chief executive Kevin Johnson and chief financial officer Patrick Grismer noted in a letter to stakeholders yesterday. The disruption means that Starbucks has had to significantly adjust its second-quarter outlook in China. Before the outbreak, the company expected sales at stores open at least 13 months to rise by 3%. Now, it estimates a 50% decline, and a hit of between $400 million to $430 million to its revenue in the country compared to earlier expectations. And it may delay opening some stores in the country. The coffee chain closed about 80% of its Chinese locations in February. Since then, it has reopened most of its locations. Today, more than 90% of Starbucks stores in China are open for business. But things aren’t back to normal at those locations. The open stores still have reduced hours and are limiting seating to keep customers at a distance from one another. Some cafes are just offering delivery. The company expects 95% of stores to be open by the end of the second quarter, but with this type of limited service. Starbucks is taking other measures to help curtail the spread of the virus, which has affected circa 95,000 and killed over 3,300 people worldwide. Employees in China wear masks, and undergo temperature checks daily. They also avoid touching customers by using “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 making adjustments to its North America business. On Wednesday, Starbucks announced that it is pausing use of personal mugs at its stores. Generally, employees fill personal mugs instead of paper cups upon request, and grant a small discount to customers who bring in reusable cups. The chain has been trying for years to reduce waste from its cups. The company is also enhancing cleaning in its North American stores. The virus has not impacted business in the United States at this point.

New speaker joins Delivery Conference line-up, open for bookings: A new speaker has been added to The Delivery Conference line-up. The UK’s leading dessert parlour operator Creams, which has more than 90 sites in the UK and opened 21 last year, will discuss the challenges and considerations of delivery working within a franchised business model. The conference takes place at Painters Hall in Little Trinity Lane, London, on Tuesday, 21 April and is open for bookings. The ground-breaking event will cover all aspects of this fast-growing sector, offering expertise, ideas and insights. Other speakers are NPD Group foodservice director Dominic Allport; Robin Himmels, of Eatclever; Just Eat UK head of strategic accounts Amy Heather; AlixPartners US director Eric Dzwonczyk and UK counterpart Steve Braude; Susan Martindale, group HR director at Mitchells & Butlers; Tortilla chief executive Richard Morris; and Nigel Sherwood, UK managing director of Wagamama. Meanwhile, Alasdair Murdoch, chief executive of Burger King UK, will talk to Propel insights editor Mark Wingett about early adoption of delivery during his time at Gourmet Burger Kitchen, challenges and opportunities, and how delivery is working for Burger King. Deliveroo director of national accounts Matt Ring will talk to Mark Wingett about how the business continues to innovate, its use of data to create virtual brands and the challenges it faces to stay ahead. A panel featuring Macro Foods founder Kirsty-Lee Griffiths, Crosstown Doughnuts’ JP Then, Yard Sale Pizza founder Johnnie Tate, and Bababoom founder Eve Bugler will discuss launching, operating and growing in a delivery-focused world. Tickets to the event cost £295 for Propel Premium members, £345 for operators and £395 for suppliers. Email anne.steele@propelinfo.com

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