Starbucks on Wednesday unveiled plans to switch to the digital direction and invest in its digital platforms.
Following months of tailwind revenue amid the coronavirus epidemic, Starbucks on Wednesday unveiled plans to switch to the digital direction and invest in its digital platforms, offering options to take over.
Starbucks has had a tough year
Starbucks has faced major challenges over the past few months as the coronavirus epidemic hit the world. The company reported that the widespread closures caused some store sales to exceed 40%. It estimates a revenue loss of $3.2 billion in its third fiscal year.
In March, U.S. When the first cases of COVID-19 began to erupt, Starbucks was forced to discontinue catering services. The coffee company has been able to reopen 95% of its US locations, although store operations are still limited.
Most stores are restricted by limited hours and in-store capacity, while others restrict entry by guests and offer exclusive drive-thru service.
Also, storefronts are closed in dense cities like New York, which became the epicentre of the epidemic.
Despite its reopening, Starbucks stock fell 4.5% on Wednesday’s dark announcement. Shares are down 12% year-to-date, compared to the S&P 500’s 1.6%.
Starbucks has long relied on expanding its model on the go, recognizing that takeout is the only way to keep the store running, in light of recent events. With a dramatic change in the consumption culture made by the epidemic, Starbucks is moving toward full steam to improve digital and drive-thru infrastructure.
Starbucks will invest in creating more drive-through locations, taking up space and delivering services. Up to 400 stores in the U.S. and Canada will be closed, renovated or moved by the end of 2021, according to Wednesday’s report. (You have to go where you want to go to see if you’re going!)
This shift reflects a larger trend toward comfort-focused sites in the retail and food industry. The epidemic has changed the quality of how consumers receive their goods.
But long ago, Starbucks had invested in franchise locations to make it look more like local cafes. The latest decor changes to include armchairs and porcelain vases for in-house customers may suggest that they will not ditch the more traditional cafe model.
Even though shares are down today, investors are feeling very positive about the future of Starbucks.
According to Bloomberg , about 40% of Wall Street analysts consider Starbucks a “buy”, while 57% of analysts call it a “hold”, which means the consensus is that Starbucks still has a lot of value as an investment.
The main reason for such sustained confidence is that the Starbucks brand continues to be invaluable. The green, white and black logo is seen almost everywhere in city squares and Instagram photos.
Investors believe it will evolve with time, as Starbucks embraces the inevitable changes that consumers brought about by the history-changing epidemic.