Starbucks to close up to 400 locations over the next 18 months

Starbucks plans to close hundreds of company-owned locations as it begins transforming its business model across the U.S.
In suburban areas, many Starbucks locations will be revamped to have more curbside pick up space as well as more drive-thrus and walk up windows.
In suburban areas, many Starbucks locations will be revamped to have more curbside pick up space as well as more drive-thrus and walk up windows.MATT GLAC / Courtesy of Starbucks
/ Source: TODAY

As social distancing continues amid the coronavirus pandemic, coffee giant Starbucks says its bottom line is hurting — and it's changing the way it does business.

Starbucks confirmed Wednesday that the company plans to transition many of its stores to pickup-only locations in major cities and add curbside pickup, as well as drive-thru and walk-up windows in suburban areas. Some high volume stores will also be renovated to create a separate counter for mobile orders to make pickup easier.

The company plans to shutter as many as 400 company-owned cafes over the next 18 months as part of its plan to accelerate changes to U.S. stores, CNBC reports. Before the pandemic, Starbucks reported 80% of its orders were already on-the-go and as more customers ordered through the Starbucks app, the company planned to modify its cafes over the next three to five years. The pandemic moved up that timeline.

A pick up window for Starbucks.Lara Swimmer / Courtesy of Starbucks

“Starbucks stores have always been known as the ’third place,’ a welcoming place outside of our home and work where we connect over a cup of coffee,” Starbucks CEO Kevin Johnson said in a statement. “As we navigate through the COVID-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers.”

A statement from Starbucks points out the shift to higher levels of mobile ordering, contactless pickup and fewer people inside actual stores “naturally allows for greater physical distancing.”

A pickup location for Starbucks.Courtesy of Starbucks

Though some locations, mostly in the New York City area, remain closed, about 95% percent of U.S. locations have reopened since shutting down in March due to coronavirus. Meanwhile, in China, about 90% of cafes are back to pre-pandemic operating hours and 70% have full seating available.

New Starbucks locations have started to open in North America as well, though the company now expects to open about 300 new locations this year instead of its previous estimate of 600.

CNBC reported Starbucks is predicting the company lost as much as $3.2 billion in revenue due to the coronavirus pandemic. The company currently has more than 32,000 stores around the globe.

CNBC contributed.