Coffee shop giant Starbucks Corp. (Nasdaq:SBUX) plans to downsize its Canadian operations, the company said in a June 10 corporate filing.
"We will restructure our company-operated business in Canada over the next two years, with the potential of up to 200 additional stores being closed, with some of those stores being repositioned," the company said.
Starbucks operates approximately 1,400 stores in Canada so the closures amount to a nearly 15% reduction.
Factors related to the global COVID-19 pandemic have prompted Starbucks, across the Americas, to revise its plans and only open 300 net new stores in its current fiscal year. That is down from the 600 net new stores that it had previously forecast to open this year.
"They’re going to forecast decreased demand because more people are going to be working from home," suggested retail analyst and Retail Insider Media owner Craig Patterson.
"This in itself is going to result in a decrease in foot traffic, both in urban centres, such as downtown Vancouver, and in suburbs."
He told Business in Vancouver that with fewer people working in office towers, there will be a substantial decline in foot traffic for nearby coffee shops.
Glowbal Restaurant Group owner Emad Yacoub told BIV last week that he has kept his small quick-service eatery, Nosh, closed near the Telus Garden office building because occupancy in that building is so low. The data he received from the building manager, he said, was that on a regular pre-pandemic work day, about 2,600 people worked in the building. Data for late May showed that only about 80 people were using cards to access the building, Yacoub said.
Workers have started to return to offices and TransLink on June 10 said ridership was up 85% in the week of May 31 through June 6, compared with a week in early April. Many workplaces, however, continue to have staff who work entirely at home, or who work at home at least part of the time.
Those workers who go to the office and need coffee are increasingly likely to use Starbucks' app to order and pay in advance so they can simply pick up their coffee, said Patterson.
"I think that the sit-down socializing situation is changing now and the best experience is a contactless payment through an app, and being able to pick up your drink," he said.
Starbucks said that some of the 200 affected Canadian stores could be "repositioned," and Patterson said he thinks that will mean locations where there is less dine-in space and more counter space where pre-made drinks and snacks can be picked up.
Starbucks calls this new kind of location a "Starbucks Pickup" store.
"Our vision is that each large city in the U.S. will ultimately have a mix of traditional Starbucks cafés and Starbucks Pickup locations," the company said in its filing.
"With Starbucks Pickup stores located within walking distance of a traditional Starbucks café, customers can choose to enjoy their Starbucks experience in a Starbucks café or pick up their order at either that café or a nearby Starbucks Pickup store. Starbucks Pickup stores will provide more points of presence to better serve 'on-the-go' customers while reducing crowding in our cafés, thereby improving the 'sit-and-stay' experience for 'third place' occasions."
