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Sadly, the casualties among businesses during the pandemic have been small businesses. Small coffee shops have not been spared. The beneficiaries of this ugly reality are big businesses. Starbucks is taking market share from mom and pop coffee shops that are closing their doors. Starbucks shares are trading at record highs.
Andrew Edgecliffe-Johnson and Alistair Gray report in the Financial Times:
If housebound consumers have discovered how much they can save by skipping their morning lattes, nobody told Starbucks’ chief executive.
The global pandemic will only briefly interrupt Starbucks’ industry-beating growth, Kevin Johnson told the Financial Times, as he overhauls cafés, deploys artificial intelligence and raises wages to sharpen the competitive advantage of the world’s biggest coffee chain.
“People will be back in Starbucks stores at a rate far beyond what they were pre-pandemic,” he said in an interview on the eve of a biennial investor day.
Covid-19 hit Starbucks hard, cutting sales by 40 per cent year on year in the three months to June. However, Mr Johnson expects its business in China to recover fully in the current quarter and, with the rest of the world also improving, the group’s earnings for the year to next September to approach or beat 2019’s figure.
He will detail how he plans to stage such a rapid recovery at Wednesday’s event — where even the coffee tasting will be virtual, using samples of its holiday blend sent in advance to analysts.
Yet his confidence contrasts with the crisis engulfing smaller rivals. The US alone will lose almost 2,000 coffee shops this year, Euromonitor forecasts, ending years of expansion.
“Smaller speciality chains, the mom and pop coffee shops . . . don’t have the balance sheets that Starbucks has,” said RJ Hottovy, consumer equity strategist at Morningstar.
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