Starbucks has closed more than half of its roughly 4,300 Chinese stores, as the deadly coronavirus continues to spread in the country.
The company said Tuesday it is continuing to “monitor and modify the operating hours of all of our stores in the market,” in light of the outbreak.”This is expected to be temporary,” Starbucks added.
Over the weekend, the company said that it was closing shops and suspending delivery services in the city of Wuhan, the epicenter of the outbreak, and the wider Hubei Province.
John Culver, the company’s international president, said that the “situation accelerated” over the past few weeks, adding that Starbucks is evaluating closures “each and every day.” Stores that are open still offer delivery but may have a more limited menu, based on supply chain constraints, and different hours, he said.
The Wuhan Coronavirus has so far killed more than 100 people and infected thousands. It has reached more than 17 countries.
CEO Kevin Johnson promised transparency into the company’s response to the “extraordinary circumstances,” in a statement Tuesday.
“We remain optimistic and committed to the long-term opportunity in China,” he added.
Johnson noted in a call with investors that Starbucks is prioritizing the health of customers and employees and working with officials to help contain the virus.
An important market
China is one of Starbucks (SBUX)’ leading growth markets, along with the United States. In the first quarter, sales at Chinese stores open at least 13 months grew 3%. McDonald’s has been expanding rapidly in the country, opening about 600 stores last year. Digital sales grew in China as well, jumping to 15% of total revenue — up from 10% the past quarter. About 9% came from delivery, and 6% from pickup and mobile orders.
It’s not clear how the closures will affect business, the company said. China accounted for 10% of global revenues in the quarter. Still, Starbucks does expect to take a hit in the second quarter and fiscal year 2020, and plans to update its guidance once it can better evaluate the impact. The company’s stock dipped slightly after the bell Tuesday.
Starbucks said that prior to the closures, it was expecting to raise its financial forecast for the year because of its strong first-quarter results. Sales at US stores open at least a year grew 6% during that period.
Global companies have been responding to the outbreak with store closures and increased safety measures.
McDonald’s (MCD) said on Friday that it had closed locations in five cities to and from which the Chinese government restricted travel. McDonald’s (MCD) said open stores were following strict hygiene practices.
KFC and Pizza Hut restaurants also closed in the city of Wuhan. And Disney (DIS) has closed its parks in Shanghai and Hong Kong.
New menu items
To help bring in US customers, Starbucks is leaning into plant-based dairy and protein alternatives.
Earlier this month, Starbucks added an oat milk latte to the menu in about 1,300 locations in the Midwest. Roz Brewer, Starbucks’ chief operating officer, said that more alternative dairy drinks are coming.
And the chain is introducing a breakfast sandwich made with a plant-based patty in the United States and Canada this year, she added.
— CNN Business’ Sherisse Pham contributed to this report.