Let’s face it, everyone has been impacted by the arrival of the Covid-19 pandemic. Even those stores that you would have thought could have made it through an upheaval like this seem to have been impacted. A good example of this is Starbucks. The Starbucks product managers, like everyone else, have had to close their stores for a while. Now that they are once again able to reopen them, they need to revisit their product development definition and find new ways to generate money for the company in a world that has completely changed.
Things Change At Starbucks
The first step that the Starbucks product managers are taking is to close some traditional cafes and open more to-go locations as the company known for spreading coffee shops across the globe bets more on convenience and speed. Starbucks plans to close, renovate or move 400 traditional cafes in the U.S. and Canada in the next 18 months. The product managers plan to open least one alternative location for every store that is closed. Going forward, the product managers are aiming to open 40 to 50 pickup-only stores in the next year-and-a-half. Starbucks owns about 10,000 stores in its Americas division, which includes the U.S. and Canada.
If you can remember that far back, Starbucks supercharged the establishment of coffee shops across the country that aimed to be a “third place,” where people could commune outside home and work. However, in recent years many consumers migrated toward takeaway orders, and the company was planning to change to some smaller store footprints over the next three to five years. The product managers at Starbucks are speeding up that work because of the coronavirus pandemic. About 80% of sales at U.S. company-owned stores are takeaway, and Starbucks expects that portion to grow as the pandemic changes commutes and routines.
Right now times are tough for Starbucks just like for everyone else. The company said it expects revenue declines of $3 billion to $3.2 billion because of the pandemic in its current third quarter. Companies including big retailers and airlines are making longer-lasting changes as the coronavirus reorients daily life in the U.S. As the economy reopens, brands are re-evaluating their stores and how customers want to interact with them. States have begun to allow more freedom of movement for residents, but many consumers continue to avoid shopping in stores and opt for delivery and pickup options. Many fast-food chains haven’t restored sit-down service, relying on sales from busy drive-throughs.
What’s Next For Starbucks
Starbucks closed dine-in service in the U.S. in March. It began to restore limited operations to most of its company-owned stores last month. The bulk of its stores are serving customers through drive-through, delivery and pickup at entryways. Dine-in service remains suspended at most of its U.S. locations. The plans are for Starbucks to restore in-store service for customers in some U.S. counties in the months ahead. For now, the company is further limiting employee hours to reflect the paired-back U.S. operations. Many workers are expected to decide this week whether to remain working with reduced hours, take a leave of absence or resign.
The product managers hope that Starbucks’s new format for some of its stores won’t result in a drop in overall employment. The Starbucks product managers believe that the pandemic has provided an opportunity for Starbucks to re-evaluate its stores—particularly in big cities, where they expect commercial rents to fall. The company is focusing on New York, Chicago, Seattle, San Francisco and other dense urban areas for its shift to pickup-only locations. If they can open new locations in these cities, then that will look good on somebody’s product manager resume.
The product managers’ thinking is that there are a lot of real estate opportunities for them to capture. Starbucks said U.S. same-store sales fell 43% in May. Declines have improved from a drop of 63% in April. The company has had six weeks of same-store sales growth in the U.S. since it restored limited service. The company hopes the U.S. will return to quarterly same-store sales growth early in its next fiscal year. It expects to add a net 300 stores in its fiscal year ending in September.
What All Of This Means For You
The Covis-19 pandemic has changed life for just about everyone. It turns out that the coffee company, Starbucks, who seemed to be almost invincible before the pandemic hit has been affected also. Starbucks had to close stores and even though most of they are now open, people are still staying away. The Starbucks product managers have to take a close look at their product manager job description and move fast to find a way to get their customers to come back and buy some coffee.
The Starbucks product managers understand that things have to change. That is why they are planning on closing some traditional cafes and opening more to-go locations. In recent years many consumers migrated toward takeaway orders, and the company was already planning to change to some smaller store footprints over the next three to five years. These plans have now been sped up. The pandemic has hit Starbucks bottom line just like it has hit everyone else’s. Starbucks does plan on opening their stores for sit down service as soon as they are permitted to do so. The pandemic may provide the product managers with an opportunity to get cheap sites in major cities. The chain plans on continuing to grow.
The world has certainly changed. Starbucks has been hit by the Covid-19 pandemic just like so many other companies have been. However, the Starbucks product managers understand that the world won’t be getting back to normal any time soon and so they have already started to make changes. The changes that they will be implementing will be with the company for a long time. We’ll have to see if the new way of getting coffee is as popular as the old way used to be.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: Do you think that Starbucks should just shut all of their dine in locations and make them drive thrus?
Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
The arrival of the Covid-19 pandemic has resulted in a lot of different changes that have swept through many industries. Many have had to shut their doors and even more have lost customers as people have been forced to stay at home. However, out of all of this madness, there have been some companies that have actually been able to use the pandemic to prosper. One such firm is in the business of connecting people who may live next door to each other.